04/04/2010 05:12 am ET | Updated May 25, 2011

FY 2011 Budget Proposal Sends WaPo Into A Blind Panic

Your Washington Post editors looked at the FY 2011 budget and predictably responded with panicky wailing and seemingly self-contradictory demands for solutions that don't make sense:

This time around, the job of making hard choices is put in the hands of a presidentially created fiscal responsibility commission that is to report back after the November election. We support the notion of the commission but we are also realistic -- which is to say, pessimistic -- about its prospects, especially given the apparent unwillingness of congressional Republicans to play a responsible role in crafting the recommendations.

One has to wonder about the cogency of lending support to an idea that you are ultimately "pessimistic" about -- but I guess someone has to be the King Of The Mountain Of Super-Serious Yet Ultimately Pointless Genuflections. The WaPo goes on to say that the "wiser, more productive course, officials say, is to press for the commission to succeed." Clap your hands, and Tinkerbell is going to be okay, right?

Actually, I'd have to imagine that the wiser course is to press the Obama administration to not inundate America with more pointless political chicanery. As Matt Yglesias puts it: "People are upset, and they say they want a smaller deficit. So Obama's proposing to give it to them, and seems to have no intention of doing anything about its own forecast of a years-long bleak economic situation."

That's why this depresses "left wing blogger" Paul Krugman, who correctly notes that a spending freeze, erected to smear some lipstick onto the pig of Democratic political fortunes "will depress demand during a period in which, according to the administration's own projections, unemployment will stay very high." The Washington Post manages to get through its entire, shrieky screed without mentioning the concept of "jobs" or "employment" even once. Instead, the editors accuse the president of being responsible for the behavior of his opposition:

The president would have more credibility if he had pressed harder, and earlier, for a legislatively created commission that could have put more pressure on Republicans to cooperate.

At some point, I wonder when it's going to sink in that no amount of "pressure" is going to engender "cooperation" from Republicans. It's like the editors of the Washington Post have been far away, on some distant planet, where news of the Legislative Reality of 2009 has not yet been beamed. Are they even aware that Republicans in the Senate withheld their "cooperation" for the very budget deficit commission that the Post "supports," but is also "pessimistic" about, for some reason? Some reason that maybe I have just explained, in this very paragraph?

On the other hand, we have the Financial Times's take on the matter. The FT harbors many of the same concerns, urging Obama to "push harder" because the fact of the matter is that "structural fiscal problems" that "are not of his making does not make them any less of his responsibility." They further address the way "real fiscal threats" are off the table:

In the fine tradition of US budgets, however, the real fiscal threats are left unaddressed: untamed growth in health spending; demographic pressures on social security; and waste and lack of control over military spending, a sacred cow comfortably nestled in every congressional district. A proposed three-year spending freeze signally fails to apply to any of these.

Nevertheless, there's considerably more reasonableness in the way the FT sees the current situation:

For fiscal 2010, which ends in September, the administration predicts a record deficit of $1,556bn or 10.6 per cent of gross domestic product - the largest since the second world war. Faced with the steepest fall-off in demand in an equally long period, it did the right thing in relaxing the fiscal stance further than previously planned.

Sadly, reckless politicians have persuaded voters that runaway deficits threaten their livelihoods more than a renewed slowdown. This makes the administration sound a bit like a small European country eager to reassure Brussels: it wants to cut the deficit to 4 per cent of GDP within three years.

Such a large swing is fine if growth proves robust, but dangerous if it does not, which is far from unlikely. Unemployment is likely to stay above 9 per cent into 2011. The last growth spurt reflects a one-off boost from restocking. Households' return to thrift (Americans now save 4.8 per cent of disposable income, more than double the average of recent years) means consumption remains sluggish.

Deficit-reduction noises may be no more than that: what matters politically is to be seen to care about the deficit but not do anything painful to shrink it. Besides, the US can afford a few more large deficits: net public debt, now just over half of GDP, is manageable.

I trust that you can discern the difference between an informed take on the matter and a rant that's more or less based in the need to wildly flap one's arms around, pretending to take the matter seriously. In case you're still confused, here's the super-serious take on the matter from esteemed reporter Dana Milbank, who asks the question that's surely on the minds of every American, concerned about their household's long-term fiscal health: "Why is Peter Orszag so sexy?"

So much depends on getting to the bottom of that!

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