Robert Reich argues repeatedly that the budget deficit is not the biggest problem facing us now, economy-wise.
Though obviously I'm not as well-versed in economics as he is, the arguments ring true.
The biggest Republican lie
Perhaps most importantly, it advances the Republican's biggest economic lie - that the budget deficit is "the transcendent issue of our time," in McConnell's words, and that balancing the budget will solve America's economic problems......
Big lies can do great damage in a democracy. This one could help Republicans in their coming showdowns. But it could keep the economy in first gear for years, right up through the 2014 midterm elections, maybe all the way to the next presidential election.
Republicans who say the budget deficit is responsible for this are living on another planet. Consumers still don't have the jobs and wages, nor ability to borrow, they had before the recession. So their belts are still tight. To make matters worse, the temporary cut in Social Security taxes ended January 1, subtracting an additional $1,000 from the typical American paycheck. Sales taxes are increasing in many states......
Under these circumstances, government deficits are not a problem. To the contrary, they're now essential. (Yes, we have to bring down the long-term deficit, but that's mostly a matter of reining in rising healthcare costs - which, incidentally, are beginning to slow.)
If Republicans paid attention they'd see how fast the deficit is already shrinking. It was 8.7 percent of the Gross Domestic Product in 2011. The Congressional Budget Office forecasts it will shrivel to 5.3 percent by the end of 2013 if we go over the fiscal cliff on March 1 -- and some $85 billion is cut from this year's federal budget. Even if March's fiscal cliff is avoided, the CBO expects the deficit to shrink to 5.5 percent of the GDP, in light of deficit reduction already scheduled to occur.
This is not something to celebrate. It translates into a significant drop in demand, with nothing to pick up the slack.
Wish there were intelligent Republicans to listen.