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Posted by: Michael Mandel on August 17
As I’ve pointed out repeatedly, harping on the budget deficit is a political loser for the Democrats…and it doesn’t make much sense economically either.
Max Sawicky, an economist at the liberal Economic Policy Institute for one, has begun to realize this:
….these deficits are not sustainable, but they are digestible.
They are not sustainable because they cannot continue indefinitely. But they won’t continue indefinitely, because they can’t. In the meantime, nothing horrible will result from them. If you want to get hysterical, there’s a stupid war to scream about. In the latter regard, a draw-down in defense spending from cut-and-run victorious withdrawal in a year or two would further lighten the deficit load in the near term.
In addition, if there’s still slack in the labor market, as Max seems to believe, then that’s part of the reason for the current deficit. An improvement in the labor market would send more people back to work and paying taxes, generating more revenue.
Michael Mandel, BW's award-winning chief economist, provides his unique perspective on the hot economic issues of the day. From globalization to the future of work to the ups and downs of the financial markets, Mandel-named 2006 economic journalist of the year by the World Leadership Forum-offers cutting edge analysis and commentary.