Why the falling deficit is terrible news for the economy right now

[Triana]

. . . As economist Dean Baker (who was a guest on Moyers & Company last week) put it, “celebrating the sharp drop in the deficit… is a bit like celebrating a sunny day in a region suffering from drought.”

A simple truth — one based on math rather than ideology — is that in an economy like ours, which is slowed by sluggish private-sector demand for goods and services, every dollar of federal deficit spending either puts a dollar more in our pockets, or results in a dollar less in debt owed by American families and businesses. That’s because it’s offset by either a dollar less in public spending in the economy or a dollar more that we pay in taxes.

So while the deficit is indeed shrinking fast, the CBO estimates that the austerity package known as “the sequester” will cost the American economy 1.6 million jobs through the end of next year.

While many conservatives rail about “out of control public spending,” the reality is that federal spending, as a share of the economy, has dropped in each of Obama’s five budgetary years (XL).

THE REST:

http://billmoyers.com/2013/11/05/obama-brags-about-falling-deficit-as-jobs-disappear-and-public-spending-falls-to-post-wwii-low/

(PS: I do not like the title they chose for this article ie: "Obama brags" so I chose a different one for this post. The substance of the article is important, nonetheless.)

[Jim Lane]

1. I agree with the post but alas the "Obama brags" headline was accurate.

You said you didn't like the title chosen by the source. I don't like the fact that Obama is bragging about the falling deficit, but there it is.

I wish that, a few years ago, Obama had gone on nationwide TV to take on the deficit hysteria. The truth is that we have two deficit problems. First, for the long term, the structural deficits are too high, chiefly because of bloated military spending and the aspects of the Bush tax cuts that remain in place. Second, for the short term, the immediate deficits are too small, for the reasons Dean Baker says. That's been true since Obama took office.

If Obama had given a speech about deficits being too small, he would have faced a storm of right-wing criticism, but he would have been able to fight on a ground where he had the advantage. As it is, throughout his presidency he's been explicitly or implicitly accepting the deficit hysteria, and thus trying to fight on the basis of the enemy's assumptions.

[Triana]

2. Sadly, I can't disagree with you.

And it is true Obama has bought into the "deficit = bad" argument. Either that or he isn't willing or able to deal with the "storm of right-wing criticism" you know he'd surely face if he said (and said why per the OP) they are currently too small.