Deficit Myths

     Many put forth by business, bankers, and political parties, some by individuals often with personal gain as motivation. It is most unfortunate when we see masses in belief of these myths, supporting political action which would not be supported if truth were known.

 Bush Obama Spending    Paul Krugman hit on one this week in his discussion of the national deficit and debt. He points out as many have before the myth that the debt is growing because of massive growth in the U.S Government. It is just not so.    He offers a comparison of deficits among past administrations IF we can consider the GDP as a constant vs the up/down that it really is, just like using 2013 dollars to compare prices.


 

 

  “The fiscal debate in Washington is dominated by things everyone knows that happen not to be true. One of those things is the notion that we have a fiscal crisis, an assertion belied both by the low interest rates at which the Feds can borrow and by the fact that medium-term deficit projections really aren’t that alarming. Another is the notion that our current deficit is driven by a surge in government spending.”

 

 

BUSHvOBAMA_jobsREVWe’ve taken a look here at government employment in the past and the numbers show unequivocally that government has not grown at all; in fact it has gotten smaller over the last four years. Yet we see calls to cut its size, reduce support for programs, and cut back on this “liberal” growth.

 

    This week Mr. Krugman approaches the reasons why. We agree and believe credibility counts. We called out Paul Ryan the day his candidacy was announced. So here is Paul Krugman’s take.

“most of the deficit scolds don’t really care about the deficit; it’s all really about using deficit fears to bully us into downsizing government and tearing down the safety net. Remember, three of the leading deficit-scold organizations gave Paul Ryan an award for fiscal responsibility even though anyone who understood numbers could see that his plans would actually increase the deficit; and David Walker endorsed Mitt Romney despite his budget-busting proposals on taxes and military spending.”

    So where are we? Back where we started this blog in that we, all of us, need to look for reality. Question those cute little soundbites to see if the facts come forth or most likely, they fall apart unsupported. Meanwhile, let’s not hack away at the government safety net until economic growth proves significant. We just might get right back to where the recession started.

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