Blog on the Run: Reloaded

Tuesday, June 1, 2010 10:54 pm

Memo to the deficit commission; or, Yet another example of how U.S. journalism sucks, cont.

Filed under: Aiee! Teh stoopid! It burns!,Journalism — Lex @ 10:54 pm
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It is the prevailing conventional wisdom among both Washington politicians and Washington “journalists” that despite 10% unemployment and near-zero inflation, we must rein in U.S. deficits very soon or else the bond market will be destroyed.

Only here’s the thing (Rule 5 of investigative journalism: Always do the math.): The U.S. government is having no trouble finding buyers for its bonds, despite the fact that right now they’re paying historically low rates of interest. The Washington Post’s Neil Irwin, who will probably be sent to bed without supper for this misbehavior, highlights the inconvenient truth:

The U.S. government debt is rising inexorably, according to the conventional wisdom in Washington, and the political system is too paralyzed to take unpopular actions to rein it in. Privately, many policymakers take it as a given that the situation will change only when the nation faces a Greek-style fiscal crisis.

But apparently nobody told the people who lend the U.S. government money. On Friday, they were willing to hand over their cash to the Treasury for 10 years for 3.3 percent interest, a level so low it implies they consider the United States among the safest investments in the world. Collectively, those investors — think mutual funds, pension funds and foreign central banks — could lose hundreds of billions of dollars if they’re mistaken and the United States has a debt crisis.

It is the Beltway vs. the bond market, and they can’t both be right.

The problem is that the deficit commission in particular and most of the anti-deficit movement in general is being driven right now not by hysteria, but by the purely political, and, frankly, greedy desire to cut entitlements — to screw middle-class and poor people. And while it’s becoming more acceptable to admit that, it still isn’t all that acceptable, thank God, so people use “deficits” as the excuse.

And the Washington media, by and large, and perhaps most prominently the Washington Post’s editorial page, let them get away with it.

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