Saturday, July 30, 2011

The debt ceiling circus is another media debacle

If you compare the media coverage about the current debt ceiling "discussions" in the US to abroad, it is a stark contrast of style. While the US media is focused on the power haggling of politicians, ignoring completely policy matters, foreign media puzzle why such a silly policy the Republicans are proposing is even being discussed. And once more, it makes me wonder why the US media is sleeping.

Roughly, the Republicans want to erase the public deficit from one day to the next, in the middle of difficult times, and without raising taxes, cutting anything to defense expenses and farm subsidies or closing corporate tax loopholes. This is mathematically simply impossible and must results in partial default on public debt, a major increase in interest rates and in then more public expenses to service the debt. In other words, this is an own goal. To top it, the policy uncertainty is severely hurting the US economy which does not seem to be able to get back on track.

The saddest aspect of this is that the media is completely oblivious to this. It is so obsessed to present both views that it shows without critical discussions complete absurdities from the Republicans. I have a hard time understanding the motivations of the right, except hurting the economy ahead of elections or participating in some grand scale insider trading, and nobody in the media is pointing this out. In fact it is relaying the arguments that decreasing taxes will increase revenue, especially if the rich get those breaks. To repeat myself, this is so wrong, especially now. If you want to improve the economy and insist on reducing the deficit, give tax breaks or transfers to the poor and tax the rich significantly more.

The worst is that there are some serious negative externalities on many who have absolutely no say here, and not just the US tax payers, but also foreign economies. Rarely have I seen such a policy kamikaze, say since Saddam Hussein invaded Kuwait. But at least the US media was then on top things.


Allison said...

I completely agree with everything you've said here, especially the point about how poorly the US media is covering this whole debacle.

mOOm said...

Obama seems pretty calm. I've got to think he is going to pull out the 14th amendment trick on Monday, or that makes no sense either.

Charles N. Steele said...

The entire "debate" is about posturing and positioning for 2012. There's no other reason for most of the haggling -- I think this is true for both parties. But it seems to be only Republicans who have the bizarre notion that no real harm would follow from default.

Anonymous said...

I don't think that there will be a default though. If it means holding talks to the very last minute then so be it. Congress needs to come up with a solution soon or else it will have negative effects on business in general and no one needs that right now.