Is the idea that overspending is the cause of the economic downturn today’s equivalent of the widespread myth that Iraq was responsible for the 9/11 attacks?
At the recent Republican convention, speaker after speaker, culminating in the presidential and vice-presidential nominees, decried overspending as the source of the nation’s economic ills. “The choice is whether to put hard limits on economic growth or to limit the growth of government,” declared Paul Ryan, as if reciting a mathematical equation.
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No one is suggesting that the spending binge our country has has was the cause of the recession. No one. But the GOP is correct in warning of its dangers, which are evident in countries like Greece and states like California. These are places where government expanded ad infinitum, and came to realize it did not have the money to meet its obligations. The pain caused by these over reaches is devastating, and far worse than the "future increase in interest rates" suggested by Canellos as the only possible consequence. NEW PARAGRAPH: Several cities in California have filed for bankruptcy protection, and are now FORCED to reduce government services, and to live within their means. These are the dangers that await our nation, if we do not stop the spending binge.
Such naive commentary. This sounds like "I know you are, but what am I?" No, deficit spending didn't cause the recession. It did help cause the bubble that caused the recession. GNMA and FNMA loans were (and are), in effect, spending when the government lent its credit guarantee to loans to private individuals with bad credit. The author also points naively to low interest rates as disproving the theory that overspending leads to higher rates and inflation. We have lower rates and will continue to have them as long as the government supports the bond market by expanding the money supply. All h--l will break loose as soon as they stop. So add addiction to our maladies, an addiction to free money.
To add to excellent first two commentaries: oh heck, how to improve on "naive commentary" and "no one is suggesting that the spending binge caused the recession.. No one." But have to express amazement that Canellos mentioned the name Frank as part of "Dodd-Frank" without mentioning Barney Frank's defense of Fannie Mae and Freddie Mac when the Bush administration tried to address them, the beginning of the real cause of the melt-down and recession.
For some it seems that the failure to regulate, the failure of ethics, the failure of Wall Street should not be addressed. No let us find a way some way anyway to blame the excesses of the financial system on the government. I didn't realize that Fannie Mae and Freddie had changed their names to AIG and various other derivative holding companies. No, it has to be government at fault, not the free enterprise system. After all we know that government hates the nation it represents and desires only evil fo rthe people while big business, Wall Street and the bankers have only love and concern for the people. After all for government it's all about profit and for business it is all about serving the social good. Yikes.
Good points, attaturk. And let's not forget to state that the so-called overspending has to be paid back, yet the moral, political, and economic failure known as the Republican party refuses to acknowledge that it will take both additional income and spending cuts to put our economic house in order. Romney-Ryan would be calamitous for our country's future since their version of social good is so acutely selfish and un-American that it is shocking they retain any credibility. Let's hope American voters see them for the frauds and liars they are.