Tongue Firmly Planted in Cheek

Here's a fun piece from Dean Baker's blog at The American Prospect:

Can Someone Help AP Find Information on Interest Rates on Treasury Bonds?

Interest rates on U.S. Treasury bonds are among the most widely circulated pieces of information in the world, running alongside information on the current time. However, AP's reporters apparently do not have access to this information.

How else can someone explain the assertion in an AP article that: "the Treasury is finding it harder to find new lenders"? The interest rate is the direct measure of the ease with which the Treasury can find new lenders. With interest rates on 10-year Treasury bonds well under 4.0 percent, the Treasury is obviously finding it very easy to get new lenders. By contrast, the interest rate on 10-year bonds was typically in the 6.0 percent range when the budget was balanced at the start of the decade, suggesting that the Treasury was having much difficulty finding new lenders back then.

Part of the problem may stem from the fact that the reporter writing the piece was apparently staggered by the numbers involved, having described the country's $11.4 trillion nation debt as "staggering." It would probably be better if AP assigned reporters who could more easily deal with large numbers and write them in ways that put them in context for readers.

Such a reporter would not have written that: "Over the past several decades, it [the debt] has climbed sharply — except for a respite from 1998 to 2000, when there were annual budget surpluses, reflecting in large part what turned out to be an overheated economy."

In fact, the ratio of debt to GDP -- the only measure that serious people would ever look at -- fell through most of the 90s. Even though the country ran deficits in most years, GDP grew more rapidly. In fact, the debt to GDP ratio fell sharply from 120 percent at the end of World War II to less than 30 percent in 1980, even though the government ran deficits in nearly every year. The reason was that the economy grew far more rapidly than the debt.

It is also not at all clear how the reporter determined that the economy was overheated in 1998 to 2000. It had healthy growth, but no inflation or other evidence of being overheated.

It is also worth noting that extraordinary debt to GDP ratio after World War II did not lead to an "economic crisis," as warned by the headline of the article. This high debt to GDP ratio was followed by the three most prosperous decades in the country's history. The article does not explain why it believes the lower debt to GDP ratios we presently face will produce a crisis.

Finally, the article refers to the $56 trillion debt figure highlighted by the Peter G. Peterson Foundation, an institute financed by a billionaire investment banker. Most of this projected debt assumes that U.S. health care costs continue to explode and that the country maintains protectionist policies that prevent its citizens from benefiting from lower cost health care in other countries.

The assumed level of health care costs in this scenario will wreck the economy even if the government had no debt. In other words, this is like saying that if the U.S. is the victim of nuclear attack that it will have a very serious budget problem. That may be true, but serious people would focus on preventing the nuclear attack. In this case, that means fixing the broken health care system.

Peter Peterson has consistently used the projections of exploding health care costs to advance his agenda of cutting Social Security and Medicare.

What I find funny about the American media is that Baker -- month after month, year after year -- makes the same pointed critique but nobody in the media pays any attention. Obviously the US media is not interested in facts, accuracy, or truth. They are pushing a product. And that product is a set of lies that build a web of deceit that pleases the elite. So nothing changes.