The Washington Post Outlook section had an interview with David Walker. It introduces the piece by telling readers: "This time last year, David Walker -- who quit his job as U.S. comptroller in March 2008 to sound the alarm about rising national debt -- was being called 'Chicken Little.' Now, not so much." I would start typing "wrong, wrong, wrong," but my computer does not have enough "wrong"s. The explosion of the deficit in the last year did not come from the sources of which David Walker had warned. It came from the collapse of an $8 trillion housing bubble, which David Walker (and the Washington Post) almost completely ignored. The collapse of the bubble threw the economy into the worst downturn since the depression. It also forced the government to spend hundreds of billions of dollars bailing out failed financial institutions. Walker never talked about this threat in his anti-deficit tirades. A nuclear war also would lead to enormous deficit problems. It would hugely increase medical care costs and destroy much of the country's productive capacity. By the Post's logic, if a country used nuclear weapons on the United States and thereby created an enormous deficit problem (in addition to killing millions of people), Walker's deficit warnings would have been vindicated. In fact, Walker's deficit warnings would have been a distraction from the real problem; the risk that a country was about to use nuclear weapons on the United States. As it was, Walker's deficit warnings distracted the public (and certainly the media) from the real danger to the economy, an enormous housing bubble that was about to collapse.
--Dean Baker
