CNN's Fareed Zakaria Thursday called the debt ceiling battle a "sideshow" caused by the Tea Party.
Appearing on "In the Arena" as a supposed "astute observer of the economy," Zakaria proceeded to bungle economic and historic facts like a high school dropout (video follows with transcript and commentary):
TOM FOREMAN, HOST: We asked Fareed Zakaria, an astute observer of the economy and what he calls are dysfunction of politics, to talk it over a little while ago.
Astute observer of the economy? Watch how astute Zakaria is:
(BEGIN VIDEOTAPE)
FOREMAN: Fareed, we've been hearing so much about what will go wrong if the debt ceiling is broken. And yet I feel this rising current of people saying, make no mistake about it. Even if we solve this, there are going to be some hard times for this country as a result of the solution.
FAREED ZAKARIA, HOST, FAREED ZAKARIA GPS: Well, the debt ceiling itself is almost a -- you know a sideshow. The fact that it has become center stage is just because, you know, one group, the Tea Party, within the Republican Party, decided to make it that. This -- the debt ceiling simply reflects the fact that we are spending more than we take in.
Correct. But that inconvenient truth isn't necessarily just something the Tea Party is concerned with. Here's what Senator Barack Obama said in March 2006:
The fact that we are here today to debate raising America's debt limit is a sign of leadership failure. It is a sign that the U.S. Government can't pay its own bills. It is a sign that we now depend on ongoing financial assistance from foreign countries to finance our Government's reckless fiscal policies. … Increasing America's debt weakens us domestically and internationally. Leadership means that ‘the buck stops here. Instead, Washington is shifting the burden of bad choices today onto the backs of our children and grandchildren. America has a debt problem and a failure of leadership. Americans deserve better.
Our total debt was $8.3 trillion. Now it's 14.3 trillion, a staggering 72 percent rise in a little over five years.
If Americans deserved better when the debt was $8.3 trillion, don't they even more $6 trillion later?
Not surprisingly, Zakaria ignored this little bit of history:
FOREMAN: And then we have an economy in shambles right now all over the country.
ZAKARIA: And that we don't have growth. The only way you're going to get this economy back on track, Tom, is if you get growth. If you look historically, the times that the budget deficit has gone from being a number one concern to moving down when we've solved the problem, it's all been that we grew faster than we thought we would.
Amazing idiocy. As NewsBusters reported in March, arguably the two strongest economic decades in the 20th century occurred when the federal government was intensely focused on slowing spending.
The '20s was by far the strongest economic decade in recent memory and was accompanied by a 48 percent decline in federal outlays. Please remember this, for Zakaria referred to that decade later in the program very much contradicting himself.
But before we get there, the '90s was also a strong economic decade that saw federal spending rise roughly at the rate of inflation creating the first so-called budget surpluses in years.
The primary focus of the new Republican Congress in 1995 was to slow the growth of government.
With the examples of the '20s and the '90s, Zakaria going on national television claiming the economy solves budget deficits and not fiscal restraint is absurd.
But he was just getting warmed up:
You know you -- because what does it mean to cut government spending? It means to lay off people who now don't have jobs. They can't pay taxes, they can't go to the diner, they can't buy stuff. So it may work in theory, but in practice, the more you cut, the more you're depressing the economy.
FOREMAN: One of the predictions I've read is that the solution to the debt ceiling problem could cost us a million jobs over the next few years. We could lose, you know, what we've created in a very short period of time.
Do you think that's too dire? Do you think that's possible?
ZAKARIA: It depends on how much we cut and how fast we do. I think what President Obama has been trying to do -- again, I think, quite wisely -- is push some of these cuts off into the future. When you signal to the markets we're getting our budget deficit under control but don't do it in an economy that is fragile right now.
But if we were to precipitously start laying off wholesale school teachers, firemen, policemen, then, yes, because all of a sudden you have fewer people paying taxes, you have fewer people buying goods, you have fewer people buying products.
Not surprisingly, Zakaria was parroting the Paul Krugman/Robert Reich employment philosophy: the more people government employs, the more people you have paying taxes and the easier it is to balance the budget. However, every person the government employs increases the deficit.
Let's say the federal government hires someone at $50,000 per year. Assume that between federal income taxes and payroll taxes, the government receives $10,000. Its therefore paid $50,000 to earn $10,000.
Sound like a good plan to you?
If government simply hiring everyone solved the problem, the Soviet Union would still be around today.
But math isn't Zakaria's strong point. Neither is his recollection of history:
ZAKARIA: We really need to look at what's happening in Europe. The governments that cut too fast too far actually depressed their GDP growth and increased their budget deficits as a result.
FOREMAN: Talk to me about some of these key building blocks that have to be restored. I have had many conversations over months where people have said, if we do not restore the value of housing in this country and the construction market, nothing else we do will solve this.
Is that a fair building block to begin with?
ZAKARIA: I think it's absolutely fair. The problem is it is the most difficult building block to restore because housing went through probably the biggest bubble since the 1920s.
That deserves repeating: "Housing went through probably the biggest bubble since the 1920s."
Yep. And as previously noted, federal spending declined 48 percent that decade as taxes came down.
Maybe if America tried doing that now rather than the failed Roosevelt-Keynesian policies Zakaria and his colleagues adore we'd right this ship like Presidents Harding and Coolidge did before most of us were born.
(HT RCP)
