From Calculated Risk, this morning.
We have spent six months in an invented political crisis about the nightmare "emergency" of the federal deficit.
The federal deficit is a serious challenge in the long run. The real emergency is how many people are still out of work. That's the deficit that matters. Almost nothing can do more harm to a nation's cultural, social, political, and of course economic fabric than sustained high joblessness. And of nothing can do more, faster, to reduce a federal deficit than a restoration of economic growth. That political and media attention got hijacked to a fake debt-ceiling "emergency" is 1937 all over again -- but worse, because in principle we had the real 1937 to learn from.
[ Be sure to see Don Peck's cover story on exactly this topic in our upcoming September issue (subscribe!). Also, on some unexpected political fallout from the (unnecessary) debt fight, see 'Between the Lines.' ]