The deficit hawks are acting like they just got a shot of steroids. William Gross, the head of Pimco, sold off the government bond holdings of their largest investment fund. The deficit hawks are claiming this as evidence that the sky is now falling and that we have to take steps now to Social Security, Medicare and other important programs.

Before we throw current and future retirees overboard, we may first want to ask a few questions about Mr. Gross's qualifications as an oracle. As a first point, if he was really all-knowing, he would have sold off his bonds in early October when the interest rate on 10-year Treasury bonds was 2.41 percent. If he waited until January and the interest rate had risen to 3.39, then he cost his investors a lot of money. He could have sold these bonds at a much higher price when the interest rate was lower.

Mr. Gross also failed to warn of the housing bubble. It would have been great if the oracle had used his economic insights to warn of this impending disaster at a point when it still could have been averted. We can hope that Mr. Gross's predictive abilities have improved, but we are probably still best advised to instead rely on the evidence.

When we do turn to the evidence we don't see any obvious basis for Mr. Gross's fears. Even after the recent increase, interest rates on 10-year bonds are still lower than at any point in the late 90s, including the years when we had budget surpluses.

Furthermore, there are countries with far higher debt burdens that have low interest rates. Japan stands out in this picture. Its ratio of debt to GDP is more than 220 percent, roughly three times the ratio in the United States. The interest rate on long-term debt in Japan is currently 1.23 percent. Are you scared yet?

If anyone cared about the underlying economics, the issue would be the total demand for savings from both the public and private sector. Right now, demand for borrowing from the private sector is very low, therefore total demand for borrowing is low, in spite of large government deficits.

It's also worth considering what the deficit hawks' horror story looks like. Will foreign investors run from the dollar? If so, then we should expect the Chinese yuan and other currencies to rise against the dollar.

This is exactly what both Presidents Obama and Bush had been demanding from China and our other trading partners. If the dollar does drop then it would give a huge boost to our exports, far more than all the trade deals on the agenda, and it would reduce our imports as well. If the dollar falls enough, we might even get back to balanced trade. Are you scared yet?

The bottom line is that Mr. Gross runs an investment fund. He and his investors will have to live with his judgement calls. We should demand that our representatives in Congress make their decisions based on evidence, not play follow the leader.