In two previous articles, “Maintain Tax Cuts for the Rich? Americans Don’t Seem to Buy the Conservative Argument” and the “Efficacy of Tax Cuts Is now Questioned” I laid out two basic premises. One was that a majority of the American people did not buy into the conservative argument that tax cuts had to be maintained for the richest among us. The second was that the use of tax cuts in this type of economic downturn had been called into question by some very prominent economists and that those same economists just happen to be on the right side of the political spectrum.

Orszag’s maiden voyage at the New York Times entitled “One Nation, Two Deficits,” is full of myths, and that’s the polite way to say it. I’ll review these and comment on each of them one-by-one.

Laurence Kotlikoff has been making waves by using “inter-generational accounting” and CBO and IMF data, to compute a fiscal gap of $202 Trillion in present value. He concludes that this gap shows that the US is “bankrupt” as of now. Evidently, publications like Bloomberg take this sort of thing seriously since they publish it. But Modern Monetary Theory (MMT) economists, think it’s nonsense, due to the inapplicability of inter-generational accounting to Governments sovereign in their own currency.

Mike Norman, an MMT economist with a very good blog, got the chance to comment on Kotlikoff’s views, and also some nonsense of Tim Geither’s and President Obama’s, at RT.com.

Today, Dean Baker questioned the sanity of The Washington Post, after its editorial staff once again came out for cuts in Social Security to avert a crisis which will not be manifest until 2037. In reply to the Post’s observation that this year is the first in which the Social Security program will pay out more than it takes in, and that this is a warning sign, Dean points out that it:

. . . certainly is a warning sign. The falloff in Social Security tax revenue is a warning that the economy is seriously depressed due to the collapse of the housing bubble. Double digit unemployment leads to all sorts of problems, including the strains that it places on pension funds like Social Security.

He then goes on to criticize the Post for not advocating the urgency of the need to get back to full employment to solve any pending shortfall in Social Security, and for advocating instead for possible Fiscal Commission–recommended “balanced” measures, including Social Security spending cuts to be implemented gradually to avert the projected 2037 crisis.

Dean then advocates that we reject this recommendation and wait to act. He says:

The Washington Post editorial page has been one of the primary MSM outlets for aggressive deficit terrorism. There is an axis of deficit terrorism in Washington DC today. It runs from Hooverite Republicans such as Judd Gregg and Mike Spence, to Blue Dog Democrats like Evan Bayh and Kent Conrad, to media organizations like CNN, WaPo, and the Peter G. Peterson funded The Fiscal Times, to foundations like The Peter G. Peterson Foundation, and Peterson-funded think tanks like AmericaSpeaks, to the Congressional Budget Office (CBO), to high-level Administration people like OMB Director designate Jack Lew, and judging by his speech and actions, to Barack Obama himself. This axis has been laying down a carpet of continuous propaganda for many months now distracting attention from the immediate problem of getting people back to work, and toward doing something about an assumed long-term problem, that some argue is fictional, and that many others think may, but, will most probably not, occur

Last Saturday, the WaPo added to its place in progressive infamy with an editorial that managed, in a few short paragraphs, to repeat many of the false arguments the deficit terrorists use to scare Americans into thinking that we really have to cut Government spending as soon as we can or we will be facing unbearable suffering in future years. This post will review that editorial in detail. It begins:

The debates between the deficit doves and the deficit owls continued at New Deal 2.0 (ND20) today. Jeff Madrick, a dove, gives us a post entitled: “Stimulate Now: On Inflation and Deficits.” In this post, I’ll evaluate Jeff’s views paragraph by paragraph.

Jeff says:

The Left finally makes an effort to debunk the historic “successes” of the Supply Side Economic theory.

In my previous three posts analyzing the June 26th AmericaSpeaks Community Conversation event I attended in Falls Church, VA, I presented the steps in the decision process used for the event, and discussed the pre-conference phase and the first four steps. These reflect a strong and consistent bias toward socializing participants into the idea that there is a deficit problem and that it has to be treated by cutting expenditures and/or raising taxes. The bias was reflected in many little ways in the materials used for the meetings and in the way the first four steps were carried out. The framing of exercises in the decision process continually restricted choices to ones that bring participants back to the supposed problem of a deficit and debt crisis. The web-streamed talks about national conference proceedings and orientations, and the brief constricted discussions of major values issues all worked to fit participants’ thinking to the ideas and frames presented in worksheets and the Federal Budget 101 presentations. Lines of discussion that would have led outside of the intended framing were politely aborted by the facilitators, pleading limited time, and the need to get through the agenda, and give everyone a chance to speak, so that any person developing counter-themes to the major narrative did not have a chance to develop these counter-themes and counter-narratives in the context of the supposedly unbiased process. In this post I’ll continue with my examination of step five of this process.

After going to one of the AmericaSpeaks community conversations Saturday, I’m even more confident that the deficit crisis being promoted by the Peter G. Peterson Foundation, AmericaSpeaks, the National Commission on Fiscal Responsibility and Reform, and the Obama Administration, as well of much the world’s global elite is a fantasy. There is no truth to it, and it is a dangerous fantasy, because if one believes it, then that can be a self-fulfilling prophecy. The austerity they recommend for the long-term can make the slow growth and difficult times they project come true. It can catch us all in a nightmare of their making. The “reasoning” behind their fantasy is simple enough.

Paul Krugman agrees that “We’re Not Greece.” But he only appears to have a glimmer of an understanding of the most important reason why this is so. We hope this commentary on his op-ed piece improves his understanding, and that of other deficit doves who appear to disagree with the deficit terrorists, but who in the end share their false basic assumptions about deficits, national debts, fiscal responsibility, and fiscal sustainability.