January 03, 2013
The Washington Post is continuing its drumbeat for deficit reduction devoting an entire article to the views of the business lobby without ever presenting the possibility that their claims may not be accurate. In fact the piece explicitly endorsed the business perspective wrongly warning readers in the first sentence that the deficit deal “won’t unlock investment.”
This assertion can easily be shown to be wrong since fans of Commerce Department data know that investment is not “locked.” In fact, equipment and software investment is almost back to its pre-recession share of GDP. This is quite impressive since many sectors of the economy still have large amounts of excess capacity.
Source: Bureau of Economic Analysis.
The relatively strong pace of investment suggests that there is nothing to be “unlocked” by the sort of budget agreement the Post would like to see. It is of course advantageous to proponents of such a deal to have the public believe that there would be a flood of investment if Congress pushed the spending cuts they wanted.
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