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US government debt isn’t the problem newspapers think it is

December 24, 2011

This is from Dean Baker at the Centre for Economic and Policy Research

The Post Disagrees With Financial Markets

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Friday, 23 December 2011 06:26
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In an article discussing House Speaker John Boehner’s performance in his job, the Post referred to his negotiations last summer with President Obama over, “the federal government’s swelling debt problem.” Newspapers interested in maintaining the separation between the news and opinion pages would have simple referred to the debate over raising the debt ceiling, which is what was at issue.

The debt has risen rapidly because of the recession that followed in the wake of the collapse of the housing bubble. Financial markets do not see the debt as a problem, which we know since they are willing to lend the government huge amounts of money at very low interest rates. There was no reason to interject this sort of editorial comment in a news story.

As Paul Krugman says,

… the notion that we’re facing some kind of imminent threat from deficits isn’t based either on what the market is saying or on received economic theory. It is, when you come down to it, based on nothing more than a gut feeling that deficits must be a Bad Thing; and the people whose guts apparently get taken seriously have been wrong every step of the way.

And yet this more or less made-up notion of a debt crisis, which is in the end a prejudice rather than a reasoned conclusion, is reported as a fact in what is allegedly a news story, not an opinion piece.

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