Walker has been in the public eye over for more than a decade as a result of his crusade against the government budget deficit. In fact, he led a “fiscal wake-up tour” around the country in the years 2004-2008 to try to call attention to the problem of the budget deficit.
The great irony of this tour is that the deficit was not actually a big problem at the time, falling to just over 1.0 percent of GDP by 2007. The real problem facing the country was the housing bubble, which was growing ever larger. Unfortunately, people like David Walker and his merry band of deficit hawks, financed by the the likes of Peter Peterson, sucked up much of the oxygen for coverage of economic issues. There were many news shows and stories devoted to their apocalyptic warnings of budget doom. There was no time to waste talking to people yelling about things like an $8 trillion housing bubble.
Of course one of the ironies of this story is that the bursting of the housing bubble led to an economic collapse which resulted in much bigger deficits than anything that Walker and his crew ever warned about. One of the other ironies is that being completely wrong about the nature of the problems facing the economy does not seem to have affected Walker’s standing in public debates one iota, at least it sure hasn’t in Thomas Friedman’s world.
Economist Dean Baker is co-founder of Center for Economic Policy and Research and writes regularly on CEPR’s Beat the Press blog, where this post first appeared.