Look, a Deficit!: How NPR Distracts You From Issues That Will Actually Affect Your Life [View all]

[KamaAina]

http://fair.org/home/look-a-deficit-how-npr-distracts-you-from-issues-that-will-actually-affect-your-life/

Billionaire Pete Peterson is spending lots of money to get people to worry about the debt and deficits, and National Public Radio is doing its part to try to promote Peterson’s cause with a Morning Edition piece that began by telling people that the next president “will have to wrestle with the federal debt.”

This is not true, but Peterson apparently hopes that he can distract the public from the factors that will affect their lives, most importantly the upward redistribution of income, and obsess on the country’s relatively small deficit. (A larger deficit right now would actually promote growth and employment.),...

The reason the Fed raises interest rates is to slow the economy and keep people from getting jobs. This will prevent the labor market from tightening, which will prevent workers from having enough bargaining power to get pay increases. In that case, the bulk of the gains from economic growth will continue to go to those at the top end of the income distribution.

The main reason that we saw strong wage growth at the end of the 1990s was that Alan Greenspan ignored the accepted wisdom in the economics profession, including among the liberal economists appointed to the Fed by President Clinton, and allowed the unemployment rate to drop well below 6.0 percent. At the time, almost all economists believed that if the unemployment rate fell much below 6.0 percent, inflation would spiral out of control. The economists were wrong; inflation was little changed even though the unemployment rate remained below 6.0 from the middle of 1995 until 2001, and averaged just 4.0 percent for all of 2000. (Economists, unlike custodians and dishwashers, suffer no consequence in their careers for messing up on the job.)