Last week, Dean Baker (co-director of the Center for Economic and Policy Research) wrote a critical essay on the danger the deficit peacocks, who seem to be winning this round of debate (Bayh's pending retirement notwithstanding), can do to the nation's shaky economy.
The country faces a serious crisis in the form of a manufactured crisis over the budget deficit. This is a crisis because concerns over the size of the budget deficit are preventing the government from taking the steps needed to reduce the unemployment rate. This creates the absurd situation where we have millions of people who are unemployed, not because of their own lack of skills or unwillingness to work, but because people like Alan Greenspan and Ben Bernanke mismanaged the economy.
.....
In spite of the deficit hawks’ whining, history and financial markets tell us that the deficit and debt levels that we are currently seeing are not a serious problem. The current projections show that even 10 years out on our current course the ratio of debt to GDP will be just over 90 percent. The ratio of debt to GDP was over 110 percent after World War II. Instead of impoverishing the children of that era, the three decades following World War II saw the most rapid increase in living standards in the country’s history.
.....
The story is that we are forcing people to be out of work – unable to properly care for their children – because people like billionaire investment banker Peter Peterson and his followers are able to buy their way into and dominate the public debate. The reality is that we have an unemployment crisis today, not a deficit crisis. The only crisis related to the deficit is that people with vast sums of money (i.e. the people who wrecked the economy) have been able to use that money to make the deficit into a crisis.
The crisis in our country is a jobs crisis. Deficit commissions and budget freezes, even though they might just be gimmicks, still buy into this manufactured deficit crisis. That makes the job of trying to do anything to substantially increase employment and inject the kind of spending that the country needs to get back in track nigh on impossible.