I received this from the Pete Peterson Foundation in response my article cited below. I didn’t realize that I was so important, but at 5,200 hits/day, I guess I mean something to somebody.
I think Peterson is wrong in many ways. Peterson started yelling about this 30 years ago when our debt was much lower than today. The bit about “declining investor confidence” is deficit hawk nonsense.
According to deficit hawks, the reason the economy is in the tank right now is because of the deficit. The deficit has led to poor investor confidence, using Peterson’s own words. The private sector will not invest as long as the debt is so high. This argument is transparently ridiculous, and I won’t even go into it.
At 90% or higher, the deficit starts to harm economic growth, according to Peterson. I don’t believe this, and I don’t understand the theory that says that high deficits hurt economic growth. I don’t understand how or why they would. It sounds similar to deficit hawk lies about high deficits causing recessions. It’s simply not true – deficits do not cause recessions in any way, shape or form.
I agree that deficits at 200% of GDP don’t sound like a very good idea, but as I understand it, those projections are based on false notions about economics that can’t possibly come true.
Another bugaboo is rising interests rates. High deficits supposedly cause high interest rates and inflation. It’s true that these are risks of high deficits. However, there is no inflation in sight, so there is nothing to worry about. Further, interest rates are at zero, so there is nothing to worry about there either.
The Peterson Foundation is lying about strengthening and preserving what they call “entitlement programs.” Those programs are all self-funded. Social Security is funded until 2037. Medicare is presently fully funded. Neither of these programs add one red cent to the deficit at the moment. It’s all a big bugaboo.
Peterson doesn’t want to strengthen these programs, he wants to kill them, just like his Republican Tea Party pals. All Republicans who want to kill these programs say they are trying to save them. Save them by destroying them! Some Orwellian language there.
Peterson is a billionaire hedge fund manager. He represents the banksters, finance capital. The reason he wants to slash government spending is because he wants the private sector, the banksters, to put that money into the economy instead of the state. When the state puts that money into the economy, it doesn’t charge interest. When the banksters put that money into the economy, they want to charge interest on it. We are talking trillions here. Are the banksters going to charge interest on those trillions or not? See how this works?
Peterson wants to privatize Social Security so Wall Street can get their hands on all that money. He wants to privatize Medicare so all that money going to the state instead goes to his buddies in the insurance industry and on Wall Street. See how the game works?
The deficit is a fake, a lie, a charade, for a game by which our feudal lords and masters, of which Peterson is one, plan to put us all into debt bondage for our entire lifetimes. It’s neo-feudalism, the rentier class (Peterson’s class) seeking to reinstate its feudal role over us that was usurped centuries ago by the overthrow of finance capital by industrial capital.
Every economy taken over by oligarchs (and Peterson is an oligarch) is destroyed by them. Oligarchs always work for the interests of short term profits at the expense of the real economy. This is why the 3rd World lies in ruins. The rich destroy every society they run. The only functional societies are those run more or less democratically, by the people and labor, where the rapacious desires of the rich are held in check by the people exercising their democratic imperative.
I am writing in response to your article, “Galbraith: There is no Debt Crisis.” In the article, you suggest that “deficit hawks are all liars and fakes.” This story does not fairly represent Pete’s views. I would refer you to our website(http://pgpf.org/Issues/Fiscal-Outlook/2011/06/QA-with-Peter-Peterson.aspx), in which Pete states in response to a question about those who think that a future fiscal crisis is overblown:
I wish they were right, but the facts say otherwise. Economists generally believe that a debt level of 60% of gross domestic product (GDP) is sustainable, while debt that remains above 90% of GDP is potentially dangerous to future economic growth.
We currently have a staggering $10 trillion national debt—that’s about 65% of our GDP and more than $31,000 for every man, woman and child in the nation! (The gross debt—which also includes debt issued to Social Security and other trust funds—exceeds $14 trillion.)
If we don’t change our current policies, this debt is projected to double in the 2020s and triple in the 2030s, threatening the nation’s long-term economic prosperity and saddling future generations with an unthinkable burden.
I see two potential crises in the future: a near-term financial crisis rooted in declining investor confidence that leads to sharp rises in interest rates and forces sudden, draconian changes in the federal budget; and a longer-term economic crisis that would result from diverting more and more of our national resources to servicing debt instead of investing in areas that are essential to long-term growth.
These crises are made all the more likely by the fact that growing debts aren’t just an American problem. Projections show that, by 2035, the world’s advanced economies could face debts approaching 200% of their GDP. With countries competing for scarce capital, interest rates are almost sure to rise steeply.
The non-partisan Congressional Budget Office regularly warns that our nation’s fiscal situation is unsustainable. Recently, our Foundation commissioned public opinion research among senior economic officials from the last eight presidential administrations and congressional leaders from the past 30 years.
One hundred percent of participants “strongly agreed” that our nation is on an unsustainable long-term fiscal path. I used to work in market research, and I have never before seen such a consensus. Our fiscal challenges are undeniable.
Pete believes that our nation’s fiscal challenges must be addressed in a compassionate way that maintains a strong safety net. He has said repeatedly that entitlement programs must be preserved and protected. One of our foundation’s goals is to ensure that these programs are strong, solvent and secure for future generations—particularly for America’s most vulnerable populations.