As the country discusses the Wall Street bailout, Robert Kuttner remarks on the mysterious absence of concern about the federal deficit from former fiscal fear-mongers:
One thing that we haven't heard much about lately is the federal deficit. Not very long ago, a broad and bipartisan assortment of Cassandras was warning that the greatest menace to the Republic was the deficit.These worthies ranged from Democrat Bob Rubin, to the Blue Dog caucus of Wall Street-afflicted Democrats in Congress, to Republican billionaires like Pete Peterson. And they were joined by legions of economists. On this issue, the only difference between the two parties was that the Republican deficit-phobes wanted to reduce the red ink by cutting social programs while the Democrats wanted to raise taxes on rich people. I wrote about the danger that deficit-obsession would pose to an Obama administration in a recent Prospect piece, and in my book Obama's Challenge. But that was then. All of sudden, an administration that can't find a spare nickel for children's health, repair of decrepit infrastructure, education aid, green energy, and other useful outlays is proposing to increase the deficit by more than four percentage points of GDP, because Wall Street made some bad bets. And Treasury Secretary Henry Paulson blithely explains that this gargantuan increase in the deficit is no biggie, because some of it may even be paid back. What a difference a meltdown makes.
Read the rest here. --The Editors
