December 02, 2010
The Washington Post told readers today that the plan put forward by the fiscal commission: “could ignite a serious effort to reduce government debt and spare the nation from a European-style fiscal crisis.” This assertion does not appear in an editorial, nor is it presented as the view of any expert or political figure cited in the article.
Rather this is an assertion of fact in a front page “news” story. Of course those who know economics would find this assertion laughable. Unlike the European countries facing fiscal crises, the United States has its own currency. This means that the country need never face the same sort of constraints as these countries. The worst case scenario would be the country would see a bout of inflation from an overstimulated economy. Of course the country is nowhere near this situation now and need never come close to it if the health care sector is fixed, a point never discussed in this article.
Unfortunately, this is not the only piece of editorializing in this article. The article describes the willingness of people on both the left and right to compromise as setting “aside ideological orthodoxy.” This sort of condescending characterization of people’s positions is left for the opinion pages at serious newspaper.
The article also took sharp issue with the judgement of financial markets telling readers that the Bowles-Simpson proposal: “would bring it [the debt] down to a more manageable 40 percent of gross domestic product over the next 25 years.” This implies that the current debt to GDP ratio is not manageable, disputing the assessment of investors who are willing to make long-term loans to the government at interest rates of less than 3.0 percent. In Japan the debt to GDP ratio is 227 percent and investors are willing to make long-term loans to its government at interest rates of close to 1.0 percent. It would be interesting to know what metric the Post has used to determine that current debt to GDP ratios are unmanageable.
The Post also implicitly patted itself on the back, telling readers that:
“the commission has already attracted more attention and received more respect than nearly anyone predicted.”
The extensive and almost completely uncritical coverage that the Post has given the commission co-chairs is a big part of the “more attention” and “more respect” to which this statement refers. More objective reporting might have noted an apparent conflict of interest when one of the co-chairs gets $335,000 from a major Wall Street bank and the financial industry somehow escapes unscathed from taxation in their proposal. It might have also highlighted the ill-informed and sexist e-mails of the other co-chair, which almost certainly would have led to the summary dismissal of a progressive member of the Obama administration.
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