hard heads soft hearts
Friday, June 14, 2002
Fred Barnes in a recent article said any link between
the current recession and projected deficits was
ludicrous, and symptomatic of Democratic demagoguery.
I sent him an (somewhat unnecessarily uncivil, in
hindsight) email scolding him for overlooking the link
between deficit projections and long-term rates, and
this was his reply, FYI:
"Are you sure you're not kidding? Long term rates
Then why is everybody refinancing their homes? And
projected deficits a reason for Bush's recession? The
recession began, according to the NBER, months
before deficits were projected. Now I don't mean to
say Bush's economic policies are perfect. But
consider this: the actual downturn in the economy
began in mid-2000. It fell to recession-level in
March, two months or less after Bush took office. So
who might the president be who's responsible? Not
He actually misrepresented my views a bit: I never
said this was "Bush's recession", just that the charge
he was mismanaging the economy was perfectly valid.
Criticizing Greenspan for tending to his legend is not
*entirely* fair: It was useful in 1998, for example.
His tax cut shenanigans, OTOH. . .
Also, do you really think Greenspan should go on
television and say that people should not expect a
quick recovery? Mightn't that backfire?
I agree with you that exports & interest-rate
sensitive sectors should be the drive train of
recovery, but I'm not sure I agree that the reason
(apart from deficits) that the Dollar and long-term
rates aren't dropping is because of self-defeating
optimism. Mightn't structural factors like
demographics have something to do with it?