When politicians say things that are silly (or sometimes not so silly) the media is usually not shy about ridiculing them. Remember the obsession over President Obama's comments about "bitter" working class people in Pennsylvania? The media kept commenting on it for weeks. So, where is the ridicule when Senator Judd Gregg, a person who prides himself as somewhat of a budget expert, was reported in the NYT as saying: "The practical implications of this is bankruptcy for the United States. ...There’s no other way around it. If we maintain the proposals which are in this budget over the 10-year period the budget covers, this country will go bankrupt. People will not buy our debt; our dollar will become devalued." There are probably no economists who would claim that the government will go bankrupt based on the spending path in President Obama's budget. One would expect a member of Congress to be informed about such issues. The dollar will almost certainly fall, but that would happen whether or not the government runs a budget deficit. The dollar will fall because the country is running a huge trade deficit, which is the result of the over-valuation of the dollar. The fall in the dollar is needed to bring down the trade deficit, which will be a necessary part of a stable recovery. It is remarkable that Senator Gregg apparently has no understanding of how the economy works.
--Dean Baker
