Article image
Dean Baker
Published: Wednesday 21 November 2012
“You can get big bucks spinning scare stories of huge budget deficits that will bankrupt the government and sink the economy.”

The Shrill and the Serious

Article image

Washington policy debates are primarily about being admitted to the club of participants rather than about logic and evidence. Until the public understands this fact, there is little chance that the vast majority of people will have much ability to influence the course of policy.

The budget deficit is the current obsession in Washington. You can get big bucks spinning scare stories of huge budget deficits that will bankrupt the government and sink the economy. However, the indisputable reality is that the large budget deficits of recent years are due to the economic downturn following the collapse of the housing bubble.

But the people who make this point are not invited to take part in the discussion. Pointing out this fact makes one shrill; you have to say that the deficit is a huge problem to be a serious person in Washington.

This sort of defiance of reality is not new for the serious people in Washington. Back in the late 90s when the stock market bubble was reaching its peak, you could find folks like James Glassman, the co-author of Dow 36,000, presenting their wisdom on a weekly basis in the Washington Post.

In fact, at the peak of the stock bubble, serious people in both the Republican and Democratic parties insisted that the stock market could continue to provide historic rates of return, even though the price to trend earnings ratio was more than twice its historic level. In fact, they wanted to invest Social Security funds in the stock market.

Some of us did try to warn that this defied basic arithmetic. We argued that lower future rates of return would mean problems not only for Social Security if its funds were placed in the market, but also for pensions and individuals who had invested their retirement money. This view was not allowed into the debate at the time; such warnings were dismissed as “shrill.”

Ironically, the argument that the stock market will not provide its historic rate of return going forward, even though the ratio of stock prices to trend earnings has returned to historic levels, is currently fashionable among the serious people. This argument receives great favor in the context of the need to cut workers’ pension benefits, especially in the public sector. The arithmetically grounded counter-argument, that when the price to earnings ratio is near its historic level returns will be near their historic level, has been virtually excluded from the Washington policy debate.

Of course it is not just economic policy where the outcome of the debate is determined by who is allowed to take part in the discussion. We went to war with Iraq to keep Saddam Hussein from using his weapons of mass destruction on neighboring countries. All the serious people agreed that the invasion was necessary. There were certainly people who disputed the evidence that Iraq had weapons of mass destruction or was close to developing them, but the Washington media largely excluded them from the debate or dismissed them as unserious types whose views should not be given credence.

Perhaps the best demonstration of the corruption of the Washington policy debate is that former Federal Reserve Board Chairman is still a member in good standing among the serious people. Last week he told a conference organized by Wall Street investment banker Peter Peterson that a recession would a price worth paying to get the cuts to Social Security and Medicare that he wants to see.

According to calculations by the financial reform group Better Markets, based on the Congressional Budget Office’s projections, Greenspan’s incredible mismanagement cost the economy more than $7 trillion in lost output, or more than $60,000 per household. But once you’re admitted to the club of Washington’s serious people, it takes more than a small mistake to get you thrown out.  

The point here, as Greenspan put it so eloquently last week, the rich and powerful want to cut your Social Security and Medicare. They will say lots of things that are untrue about the debt and deficit to scare you. There will be few opportunities for correcting this nonsense, because hey, they control the news outlets.

So just remember, it’s not even a bad movie. It’s just the serious people trying to take money out of your pocket and put it in theirs.



Get Email Alerts from NationofChange
Author pic
ABOUT Dean Baker
Dean Baker is co-director of the Center for Economic and Policy Research in Washington, D.C. He previously worked as a senior economist at the Economic Policy Institute and an assistant professor at Bucknell University. He is the author of several books, including Plunder & Blunder: The Rise and Fall of the Bubble Economy, The Conservative Nanny State: How the Wealthy Use the Government to Stay Rich and Get Richer and The United States Since 1980. He was the editor of Getting Prices Right: The Debate Over the Consumer Price Index, which was a winner of a Choice Book Award as one of the outstanding academic books of the year. He appears frequently on TV and radio programs, including CNN, CBS News, PBS NewsHour, and National Public Radio. His blog, Beat the Press, features commentary on economic reporting. He received his B.A. from Swarthmore College and his Ph.D. in economics from the University of Michigan.

Top Stories

5 comments on "The Shrill and the Serious"

brad roon

November 22, 2012 9:42am

Typical ploy of the corporations. Frame the "debate" and only cover their slant in the media - which of course they own.

In the FDA there was a serious question about a new "anti-obesity" drug that the drug companies want to push on your children. It actually is made of two drugs that failed FDA approval because of health risks, each drug increasing the risk of it's users (victims?) of alternately death by stroke, and death by heart attack.

The panel to review this "new" and magically safe concoction allowed people on the panel who had economic conflicts of interest, but rejected a researcher/doctor who questioned the safety of this proposed poison, especially with children.

He was rejected because the FDA (the heads are drug company execs and people that work with/for drug companies. Otherwise known as the biggest drug pushers in the world) stated he had "an intellectual conflict of interest" and thus couldn't be on the panel.

A blatant and stupid modus operandi, but one that flies because we allow it.

greggerritt

November 21, 2012 12:02pm

Dean Baker pretty well describes the environment I work in with my message that economic growth is basically gone bye bye permanently and that our task is to heal ecosystems and provide ways for people to make a living as the economy gets smaller in the industrial west. But I also see that nearly everyone is getting more ready to listen, and I am organizing a conference for next fall on how the fantasy of growth needs to go away if Rhode Island communities are to prosper. I expect it will actually help shift the debate and slightly redirect that process in the direction of ecological healing and community involvement. Resistance is not futile. Even if we are unsure of the outcome.

FullBlad

November 21, 2012 11:19am

Baker is right on in this damning indictment of the fools who are running the system. Or maybe they're not such fools and know exactly what they want to accomplish as far as restructuring the western concept of economic and societal life. That concept being the neo classical notion that social Darwinism will float the most vicious to the top. This kind of thinking will slow or halt the forward progress of humanity as those with intelligence and the ability to advance knowledge may never get the chance of developing their minds, not being the most vicious soul walking the valley. The elites won't care though, as a halt in emergence with themselves at the top is what they desire....

guyachs

November 21, 2012 11:15am

You are right. If you aren't saying the politically correct thing, the press doesn't want to hear you. I've been emailing and writing to news groups, and tv shows about representing the other side. I just heard Tavis Smiley interview Maria Bartirolom and she was talking about how much Social Security and Medicare are running up our deficit. It's not true but how do you break through?
I've suggested they get Nancy Altman ontheir shows because she is an expert and knows what's true. I can't even get a response from them. I even approached Tom Ashbrook on On Point and got no answer. How we we break through and get the truth represented in this argument?

enuf

November 21, 2012 6:38pm

Since Smiley does a weekly show with Cornell West I can't believe this hasn't been discussed, despite your suggestion that someone of your choosing hasn't been interviewed.