Dean Baker, Truthout - Fans of arithmetic everywhere know that the large deficits of the last five years are the result of the economic downturn caused by the collapse of the housing bubble. But those taking part in deficit discussions in Washington won't allow such numbers into the discussion.
The Serious People in Washington, such as The Washington Post (both the opinion and news sections), the Wall Street Campaign to Fix the Debt, and the Republican Congressional leadership are in full budget-cutting frenzy. They demand cuts to Social Security, Medicare, Medicaid and everything else that benefits middle income and poor people because, well, because the market demands it.
And we know the market demands these cuts because the Serious People told us the market demands these cuts. The fact that the cuts have the effect of redistributing income from the rest of us to the Serious People and their friends is just a coincidence.
Those of us who focus on numbers and data might see that we actually have near-record low interest rates on U.S. government debt, suggesting that the markets aren't at all concerned about budget deficits. We can also point out the obvious truth that budget deficits are supporting the economy, given the loss of more than $1 trillion in annual construction and consumption demand as a result of the collapse of the housing bubble.
But the Serious People in Washington don't have the time to deal with the stinkin' numbers. They have worked themselves into a full-fledged budget-cutting frenzy.