What we're not being told about Paul Ryan's Medicare plan

The mainstream media has failed to report that the Ryan plan is a privatisation programme that will hand $30tn to insurers

Dean Baker
guardian.co.uk,Tuesday 26 April 2011 14.30 BST

The film Casablanca features one of greatest moments in movie history. With Humphrey Bogart standing with a smoking pistol over the body of the dead Gestapo major, Claude Rains, in the role of the French colonel, tells his troops: "the major has been shot, round up the usual suspects."

Unfortunately, the Washington policy gang is busy following Claude Rains' instructions. The nation is drowning in endless accounts of how the huge deficit will sink the economy and the country. These accounts invariably feature stories of a Congress addicted to spending and a nation that wants government benefits that it doesn't want to pay for.

This story has nothing to do with reality, as all budget analysts know. The explosion of the budget deficit in the last three years is a response to the plunge in private sector demand following the collapse of the housing bubble. If the budget deficit were smaller, we would simply have less demand and fewer jobs.