Rob Reich is upset that the New York Times and Center for American Progress are taking the question about rising levels of U.S. debt seriously. He is so upset that he goes back into 1990s memoir mode and starts rolling out the conspiracy theories:
Odd that it would return right now, when the economy is still mired in the worst depression since the Great one. After all, consumers are still deep in debt and incapable of buying. Unemployment continues to soar. Businesses still are not purchasing or investing, for lack of customers. Exports are still dead, because much of the global economy continues to shrink. So the purchaser of last resort -- the government -- has to create larger deficits if the economy is to get anywhere near full capacity, and start to grow again.
Odder still that the Debt Scare returns at the precise moment that bills are emerging from Congress on universal health care, which, by almost everyone’s reckoning, will not increase the long-term debt one bit because universal health care has to be paid for in the budget. In fact, universal health care will reduce the deficit and cumulative debt -- especially if it includes a public option capable of negotiating lower costs from drug makers, doctors, and insurers, and thereby reducing the future costs of Medicare and Medicaid....
Why are the ostensibly liberal Center for American Progress and New York Times participating in the Debt Scare right now? Is it possible that among the President’s top economic advisors and top ranking members the Fed are people who agree more with conservative Republicans and Wall Streeters on this issue than with the President? Is it conceivable that they are quietly encouraging the Debt Scare even in traditionally liberal precincts, in order to reduce support in the Democratic base for what Obama wants to accomplish? Hmmm.
I actually think Reich has half a point -- if you read either Tim Geithner or Paul Volcker's speeches over the past few years, they've been sounding the debt alarm for some time.
That said, the notion that this is a non-issue being pushed by conservatives and conservative lackeys borders on the absurd. Daniel Gross is pretty sympathetic to Reich's substantive view on the U.S. debt issue, but in this Slate essay he's also pretty clear about why the debate has moved to the forefront:
The interest rate of the 10-year Treasury bond has spiked from 2.07 percent in December 2008, when the world was falling apart, to a recent high of 3.715 percent on June 1—a 79 percent increase. The 30-year bond has risen from 2.5 percent last December to about 4.5 percent today.
You can debate about why this is happening (Gross is worth reading). A simple dismissal of the issue, however, seems kinda loopy.
[So you think Reich is wrong on policy?--ed.] Right now, no -- jumpstarting the economy has priority over mounting levels of U.S. government debt.
I suspect, however, that my concerns about rising U.S. debt levels will start rising before his. Anyone who can write this sentence scares me:
True, [the debt/GDP] ratio is heading in the wrong direction right now. It may reach 70 percent by the end of 2010. That’s high, but it’s not high compared to the 120 percent it was in 1946, after the ravages of Depression and war.
Hey, we're not as indebted now as we were after
a decade of depression and four years of World War II!! Yippee!! We can all breathe easy now!
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