[Peace-discuss] Air for arrivistes

[C. G. Estabrook]

[There are few groups more disgusting on the US political scene than those who 
think that NPR brings them The Truth, in contrast to what the red-neck masses 
believe (e.g., that elitists are running our government), and fail to see it as 
propaganda for the political class. --CGE]

      NPR Presents More Misleading Commentary on the Deficit
      Monday, 22 November 2010 05:18

The lead story on Morning Edition presented Joe Minarik, from the Committee of 
Economic Development, as a neutral budget expert to talk about the deficit. 
Minarik assured listeners of the need to both cut spending and raise taxes. Mr. 
Minarik never bothered to point out that the long-term deficit problem is 
entirely a health care cost problem. If per person health care costs in the 
United States were comparable to costs in any other wealthy country (all of 
which enjoy longer life expectancies) the long-term projections would show huge 
budget surpluses, not deficits.

The piece also implies that the deficits being run at present pose a serious 
problem, with the host asking Mr. Minarik whether some of the current $1.4 
trillion deficit can be seen as a "good" deficit since it involves an investment 
for the future.

In fact, all of the current deficit can be seen as a "good" deficit since it is 
increasing output and employment. If the government was currently spending less 
or taxing more it would be putting less money into the economy. This would lead 
to less demand and fewer jobs. In other words, we would be throwing our 
children's parents out of work. It is difficult to see how this helps them.

It would also have been useful to find a budget expert who knew that when a debt 
is accumulated makes a difference in terms of its burden. A debt that is run up 
as a result of deficits when the economy is far below its potential need pose no 
burden whatsoever. The central bank can simply hold the bonds issued to finance 
the debt. This means that the interest is paid to the central bank which in turn 
pays it right back to the Treasury.

If debt is run up due to a weak economy, then an economy can sustain much larger 
levels of debt. For example, Japan now has a debt to GDP ratio of almost 230 
percent. Yet, it can still borrow long-term in financial markets at just a 1.0 
percent interest rate. This indicates that debt levels that are far higher than 
anything currently projected for the United States can be easily sustained. A 
real budget expert would know this.

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