The Red Herring Discussion That Dominates the Media

Somehow, the national media has turned an important discussion about economic revival into a single-minded referendum on the wrong issue: the budget deficit alone. Furthermore,  by identifying the budget with “entitlement programs,” it has created a false causality.  Could the framing of the issue in such a singleminded, simplistic and ideological manner be mere coincidence?
An article by titled The fraud that is ‘Fix the Debt’ and a New York Times story expose it as collusion of self interest. The “Fix the Debt” coalition is exposed as:
a coalition of extremely well-heeled and well-connected former politicians and current CEOs masquerading as a public interest group. The organization, headed up by our foremost catfood pushers Alan Simpson and Erskine Bowles, is replete with old white guys who get paid very well by a number of industries to make sure that any budget cuts don’t hit them.

Economic Paul Reality Check

Economist Paul Krugman, in his New York Times commentary continues to point out some fundamental economic truths that can scarcely be found in mainstream media. He cites the Center on Budget and Policy Priorities  graph shown above. The chart measures the projected ratio of federal debt to GDP. Note that the continuously rising blue line  represents the projected path as of early 2011. The discussion of the nation’s debt ratio in the national media focuses on that line – even though it no longer holds. Krugman writes:

But a lot has happened since then. The orange line shows the effects of those spending cuts and tax hikes: As long as the economy recovers, which is an assumption built into all these projections, the debt ratio will more or less stabilize soon. CBPP goes on to advocate another $1.4 trillion in revenue and/or spending cuts, which would bring the debt ratio at the end of the decade back down to around its current level. But the larger message here is surely that for the next decade, the debt outlook actually doesn’t look all that bad.

True, there are projected problems further down the road, mainly because of the continuing effects of an aging population. But it still comes as something of a shock to realize that at this point reasonable projections do not, repeat do not, show anything resembling the runaway deficit crisis that is a staple of almost everything you hear, including supposedly objective news reporting.

So you heard it here first: while you weren’t looking, and the deficit scolds were doing their scolding, the deficit problem (such as it was) was being mostly solved. Can we now start talking about unemployment?

Conclusions: Cooked Books

In other words, the media and Washington, led by influential business leaders and their shareholders, have cooked the books to narrowly reframe the larger economic issue as a simple call for austerity. The narrowminded economic policies that have suppressed the demand side of the consumer economy and culminated in the Great Recession aren’t something that originated with the Bush Administration; they have been rolled out over several decades, and continue to gather steam as the media and congressional representatives roll over and engage in the kabuki theater debate over austerity.

Surely, it doesn’t take a Noble laureate like Krugman to start asking questions?