I suppose we shouldn’t expect anything else from the Party that brought us the War in Iraq, Terror Alert Color Chart, and Fox News, but the continued arrogance of overstating problems for the use of political gain is becoming very destructive to our stability as a nation. The following Paul Krugman column discusses the threat of impending catastrophe due to our budget deficit is about as factual as the State of the Union Address by George Bush in 2003. The Yellow Cake was a lie. The impending catastrophe of the government spending money to save our economy is a lie.
These days it’s hard to pick up a newspaper or turn on a news program without encountering stern warnings about the federal budget deficit. The deficit threatens economic recovery, we’re told; it puts American economic stability at risk; it will undermine our influence in the world. These claims generally aren’t stated as opinions, as views held by some analysts but disputed by others. Instead, they’re reported as if they were facts, plain and simple.
Yet they aren’t facts. Many economists take a much calmer view of budget deficits than anything you’ll see on TV. Nor do investors seem unduly concerned: U.S. government bonds continue to find ready buyers, even at historically low interest rates. The long-run budget outlook is problematic, but short-term deficits aren’t — and even the long-term outlook is much less frightening than the public is being led to believe.
So why the sudden ubiquity of deficit scare stories?