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Dean BakerOne of the country’s keenest economic policy observers, Dean Baker, has an excellent take down of Washington Post columnist Robert Samuelson’s latest demands that the U.S. slash social spending this morning at the Center for Economic and Policy Research website. His message: America’s obsession with near-term deficits remains utterly illogical and counterproductive: 

“First, the budget is only constrained at the moment by superstition. There is no obstacle to the government borrowing more money to meet needs and put people back to work. We are not spending more money because we have superstitious people with large amounts of power who are making claims about the dangers of deficits that they cannot support with evidence. Rather than lecturing seniors, who have a median income of $20,000, on the need for lower Social Security and Medicare benefits, Obama could try to confront the people spreading superstitions about deficits….

…In fact, according to the Social Security Trustees projections, Read More

On Wednesday, the US House voted to suspend the federal debt ceiling—the statutory limit on the amount the US Treasury can borrow to finance existing obligations—until May, backpedaling on previous threats to withhold the debt limit increase unless Congress and the White House agreed to significant cuts in federal spending.  As a result, Congress managed to avoid default and a potential financial crisis that risked the nation’s creditworthiness and economic recovery. At the same time, however, House leaders promised to use three additional chokepoints in the budget process as leverage to secure their ultimate objective—deficit reduction based entirely on unspecified but dramatic reductions in federal spending and the transformation of entitlement programs Social Security and Medicare.

Although achieving a sustainable course for the national debt is clearly important to putting our nations’ fiscal house in order, any deficit reduction plan must take a balanced approach that includes new revenues (beyond the first step achieved in the Fiscal Cliff deal) and strategic spending cuts that do not disproportionately impact working families or damage state budgets.

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