Robert Reich: The great deficit scare returns

http://www.salon.com/opinion/feature/2009/06/11/deficits/


The great deficit scare returns

Even liberals are getting antsy about debt and government spending. Stop worrying. The deficit hawks are wrong.

By Robert Reich


June 11, 2009 | It's the kind of thing I expect to hear from deficit hawks and chicken littles -- from the self-described "fiscally responsible" right, from the scolds Ross Perot and Pete Peterson, from my former cabinet colleague Bob Rubin. But yesterday I was shown slides developed by the putatively liberal Center for American Progress intended to make the point. And today's front page story in the New York Times, by the eminent David Leonhardt, entitled "Sea of Red Ink: How It Spread From A Puddle," puts the issue right before our progressive noses, so to speak.

The Great Debt Scare is back.

Odd that it would return right now, when the economy is still mired in the worst depression since the Great one. After all, consumers are still deep in debt and incapable of buying. Unemployment continues to soar. Businesses still are not purchasing or investing, for lack of customers. Exports are still dead, because much of the global economy continues to shrink. So the purchaser of last resort -- the government -- has to create larger deficits if the economy is to get anywhere near full capacity, and start to grow again.

Odder still that the Debt Scare returns at the precise moment that bills are emerging from Congress on universal health care, which, by almost everyone's reckoning, will not increase the long-term debt one bit because universal health care has to be paid for in the budget. In fact, universal health care will reduce the deficit and cumulative debt -- especially if it includes a public option capable of negotiating lower costs from drug makers, doctors, and insurers, and thereby reducing the future costs of Medicare and Medicaid.

Even odder that the Debt Scare rears its frightening head just as the President's stimulus is moving into high gear with more spending on infrastructure. Every expert who has looked closely at the nation's crumbling infrastructure knows how badly it suffers from decades of deferred maintenance -- bridges collapsing, water pipes bursting, sewers backed up, highways impassable, public transit in disrepair. The stimulus, along with the President's long-term budget, also focus on the nation's schools, as well as America's capacity to reduce emissions of greenhouse gases. These public investments are as important to the nation's future as are private investments.

snip//

So, back to the mystery. Why are the ostensibly liberal Center for American Progress and New York Times participating in the Debt Scare right now? Is it possible that among the President's top economic advisors and top ranking members the Fed are people who agree more with conservative Republicans and Wall Streeters on this issue than with the President? Is it conceivable that they are quietly encouraging the Debt Scare even in traditionally liberal precincts, in order to reduce support in the Democratic base for what Obama wants to accomplish? Hmmm.

Yesterday the NYT had an article putting the price of this squarely on the * admin, but some people think it's fruitless to look back. Not me; I want 'credit' put where it's due.

For two years economists Mr. Reich included, have insisted that this was a recession

"Odd that it would return right now, when the economy is still mired in the worst depression since the Great one."

It is not the money spent but what it is spent on that matters. Pouring money in at the top mirrors Hoover not FDR.

By the time they officially call what we are in as a depression, we will probably be at war with another country.

the slam against Ross Perot was funny coming from you. It seems Mr. Perot was 100% correct about NAFTA too bad you and your slime ball boss "The Big Dog" (pile) couldn't have paid a little attention to him. Instead you have recommended continuing the policy of sending jobs by the millions to cheap labor or slave labor countries for the benefit of your corporate masters to the determent of your underclass betters.

"So, back to the mystery. Why are the ostensibly liberal Center for American Progress and New York Times participating in the Debt Scare right now?"

Well maybe it's because our economy is based on Wal-Mart selling us stuff made in other countries? Maybe it's because most of the debt we are incurring is going to support bank losses and Wall Street bumblers and plunders? Maybe it's because what's needed besides your recommended spending on infrastructure is a huge effort to permanently replace lost American jobs with good paying work producing needed items (especially green stuff). How about high speed rail, renewing the electric grid and using the sun and wind to produce power with the goal of becoming fossil fuel free in X number of years. How about an all out "Manhattan style project" to replace the internal combustion engine in our cars and trucks. How about we spend the money on something that will set us free instead of killing our fellow human beings in the Middle-East?

You may be correct in that their (CAP & NYT) motives are to help the Robber Barons of today but you are incorrect to think we are not in debt trouble because of the way the President and his advisers have handled the Federal spending to date.

As I said I may not know much about the economy but I do have some commonsense. Until recently I was gainfully employed and worked a regular middle-class job. How about you disclose exactly how you became a millionaire and who pays your way now? Who do you owe, Mr. Reich, who do you speak for? Certainly not the average American.

you're simply railing against Mr Reich because you are, as you said, unemployed. You don't understand that the only way for the economy to pull itself out of this mess we are in is through strong government intervention, as we saw in the 1930s-40s. The reason that our current economic condition is most comparable to the Great Depression is because we have observed the scientific validity of the Keynesian economic policies that helped pull the current out of depression, namely deficit spending, massive infrastructure investment, and increased social spending. The economy plugged along perfectly fine in the 90s, when more Americans than ever were employed. However, we got in this quagmire when corporations and individuals leveraged themselves out the ass. What fueled the 30 years of economic success post-WWII was the work and save mentality of the nation, instead of the credit house of cards we are currently living under. In order for people to get back on their feet and the economy to return to sustainability, it will take government investment. Your failure to understand any of this shows your ignorance.

post you will find I don't object to the spending, just what the money is being spent on. WAR, bad banks and rip-off wall st. Much more spending on programs to create jobs in AMERICA is what I believe is needed.

oh and by the way from your post it's obvious you are an ass.

These asshole pundits weren't saying a damn thing when the Bushes and Reagan were running up the tab. Yet when Clinton and Obama try to deal with the results, they scream to the hills. IT SHOULD HAVE BEEN THE EXACT OPPOSITE!! Fucking hypocritical deuchebags.