Did You Know the Deficit Is Shrinking? Most Americans Don't, Thanks to Shameless Deficit Hawk Propaganda
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Remember all those deficit hawks who screamed that the federal deficit is spiraling out of control and must be stopped with spending cuts that have a funny way of hurting the pocketbooks of the most vulnerable Americans? Their excuse for ripping us off has been literally disappearing, but a new Google survey shows that not only do the vast majority Americans not know it — half of the public actually believes that the deficit is growing.
Here are the facts: The U.S. budget deficit has been shrinking at a rapid rate over the last few months. The deficit peaked at 10.2 percent of GDP in 2009, but over the past four quarters, it has shrunk to a mere 4.2 percent of GDP. What’s more, the Congressional Budget Office predicts that the deficit will fall to 2.1 percent of GDP in 2015.
Why such a disconnect? Unfortunately, disgraceful propaganda has left the public misinformed and confused.
Over in Economic Wonderland, the deficit hawk duo of Alan Simpson and Erksine Bowles have made a second career over the last several years wildly exaggerating the deficit issue and scaring Americans into thinking that deep cuts in the federal budget were necessary for the economy. The reality was just the opposite. If these two had ever sat down to read John Maynard Keynes, whose work is vital to understanding how to respond to economic crises, they would have known that cutting the federal budget when the economy is weak actually slows it down even more. Yet to this day, Simpson and Bowles continue waging battle for a “grand bargain” that would shred the social safety net and cost many Americans their jobs by requiring trillions of dollars to be cut from the federal budget over ten years. All in the name of a “problem” that doesn’t even exist.
Deficit hawks like Simpson and Bowles, and their grand funder, hedge fund billionaire Pete Peterson, go on promoting the nonsense that the deficit is the major economic problem of 2013 despite the obvious facts and a growing consensus from economists that such a claim is utterly absurd. Incredibly, they do it even after the faulty work they relied on to make their case – a paper produced by two Harvard economists, Carmen Reinhart and Kenneth Rogoff – was discredited by a mere grad student in one of the great academic revelations of our time. Even conservative economists are bowing to reality. The folks over at the conservative American Enterprise Institute, for example, have come to the conclusion that austerity is a terrible idea and that without proper stimulus, the U.S. economy would look a lot more like Europe’s, where individual countries without sovereign currency have been forced to go the austerity route. It’s getting increasingly hard to deny that things have gotten pretty ugly over there because of deficit hawks and their ilk.
But deficit hawks are paid well to misinform the public. They write reports. They get corporate honchos to help them run campaigns with innocent-sounding names like “Fix the Debt.” They build websites. They write articles. They hold conferences. They pay off think tanks – even progressive ones – to play ball with them. And the corporate dominated major media frequently are happy to play along. On it goes, until the lies repeated to the public take on the ring of truth.
So it’s no surprise that the public is not aware of the important news that the deficit is shrinking. Or that it is shrinking precisely for the reason progressive economists have been saying all along. When you have a recession, you have to juice the economy through government investment. That, in turn, reaps you the benefit of more money in people’s pockets, which leads to more jobs, more tax revenue for the government, and less reliance on social safety net programs like unemployment insurance or food stamps. If the original stimulus package had been bigger, the deficit would have shrunk even faster.