WPost ‘Reality’: Another Depression Would Do Us Good

The Washington Post‘s Steven Pearlstein (11/11/10), one of the few Americans (by his own account) who DOESN’T need to have his wages cut, writes:

Reducing the federal deficit won’t by itself do much to balance the U.S. trade account by increasing exports, but to the degree it involves increases in taxes or decreases in employment and income of government workers, demand for foreign imports will also decline. Such are the harsh realities of bringing an economy back into balance.

The U.S. had a trade deficit of $380 billion last year. To eliminate thisby lowering overall demand in the U.S., you’d have to reduce U.S. GDP by something like $1.5 trillion, since trade accounts for only about one-quarter of U.S. economic activity. So you’d be shrinking our economy somewhere in the neighborhood of 10 percent. Harsh realities, indeed.

About Jim Naureckas

Extra! Magazine Editor Since 1990, Jim Naureckas has been the editor of Extra!, FAIR's monthly journal of media criticism. He is the co-author of The Way Things Aren't: Rush Limbaugh's Reign of Error, and co-editor of The FAIR Reader: An Extra! Review of Press and Politics in the '90s. He is also the co-manager of FAIR's website. He has worked as an investigative reporter for the newspaper In These Times, where he covered the Iran-Contra scandal, and was managing editor of the Washington Report on the Hemisphere, a newsletter on Latin America. Jim was born in Libertyville, Illinois, in 1964, and graduated from Stanford University in 1985 with a bachelor's degree in political science. Since 1997 he has been married to Janine Jackson, FAIR's program director. You can follow Jim on Twitter at @JNaureckas.