There is no serious plan in DC World to reduce the deficit. No plan offered to date addresses the issue that caused the deficit in the first place: Unemployment brought about by the Wall Street housing bubble.

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DC World – the land of the fairytale deficit. And other amusing myths as well.

Taxpayers bailed out the tyrannosaurs on the Street and have been getting the back of the hand since.

The economic flunkies in the administration, also referred to as Obama’s advisers, failed abjectly when they evaluated the crisis exacerbated by the policies of the previous administration. Their assessment that the economy would cycle out of the Great Republican Recession in about two years or so in the manner of previous recessions, missed the mark by a wide margin.

It’s clear now that Obama hired on a bunch of tired old timers who served him poorly. Those who remain continue to do so.

Their miscalculation could prove fatal to Obama’s reelection chances as unemployment will continue to hover above 8% into the election. Real unemployment and under employment will remain in the high double digits – right now near 20%.

And Obama will take the flak for what is clearly a Republican downturn.

As far as the media and its members are concerned, they merely wish to remain cozy with their sources and will report nothing that might disturb the relationship. Hence, the shoddiness of Beltway journalism.      

Read the article by Dean Baker, co-director of the Center for Economic Policy and Research.  Mr. Baker blogs at Beat the Press.  

Dean Baker's picture

By Dean Baker

May 20, 2011 – 3:10pm ET

That is the conclusion that readers of a Politico article headlined, “budget surplus to deficit: how we got here,” must conclude. This article attributes the increase in the deficit in the Obama years to increased spending coupled with tax cuts, only mentioning in passing at the end of the article that the single biggest factor in the rise of the deficit was the economic collapse. It fails to point out that virtually all of the additional spending and tax cuts by President Obama was carried through for the explicit purpose of counteracting the loss of private sector demand due to the collapse of the bubble.

It is absolutely inexcusable for a serious news organization to run a piece like this. The collapse of the housing bubble was by far the biggest economic disaster since the Great Depression. Complaining about the size of the deficit under President Obama, while only mentioning in passing the reason for the deficit, is like complaining about a city’s use of water without mentioning that it had been trying to extinguish a massive fire.

If reporters and editors were held accountable for the quality of their work in the same way as dishwashers and schoolteachers, people would be fired for this piece.

Originally published at Beat The Press.


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