In case it’s necessary to remind people, our economy plunged due to the collapse of a Wall Street-fueled housing bubble. The loss of demand from the collapse of the housing bubble both led to a jump in the unemployment rate from which we have still not fully recovered and also the large deficits of the last five years.
Prior to collapse of the bubble, the budget deficits were quite modest. In 2007 the deficit was just 1.7 percent of GDP, a level that can be sustained indefinitely. Furthermore, the Congressional Budget Office projected that the deficits would remain small for the near future, with the scheduled expiration of the Bush tax cuts in 2011 projected to push the budget into surplus.
“Did Social Security and Medicare Crash the Economy?,” Dean Baker
One of my favorite bands, The Gang of Four, has a song (“History is Bunk“) based on Henry Ford’s famous contention that “History is bunk” (or myth or several other things Mr. Ford said). The thing is, to a capitalist, or to capitalism, anything that cannot be used for generating profit is bunk. That’s what Ford meant– and what he felt, no doubt, at a very visceral level– and even after 100 years of more history piling up, modern capitalism is no different.
Capital seeks profit, not knowledge or insight. This is one of the many ways that critical thinking is, by definition, anti-capitalist: analytic thinking is founded on the idea that history, even for its own sake, isn’t bunk. Yet American culture has a remarkably poor memory and the commercial media, in its rush to profit, seems all too ready to declare history bunk again and again and to forget even the most basic, very recent, historical facts.
As Baker emphasizes, we cannot forget this fact: it was not the elderly and the poor who collapsed the economy and it should not be the elderly and the poor who pay for the repairs. So far, the people who caused the collapse have escaped all of the possible repercussions, from criminal charges to fines. That history really is bunk. Any budget fix that touches Medicare, Medicaid or Social Security will turn more history into more bunk.
