"Let's be reasonable" Vs "It's a dis-arrs-ter!"

The media divide on economics commentary is shown in hilarious contrast in Fairfax Vs News Ltd papers today.

From Fairfax:  Tim Colebatch reinforces Michael Pascoe's line from yesterday with this:

We could try to put the budget back into surplus now, but to do so we would have to make at least $30 billion a year of spending cuts and/or tax rises. That amounts to taking 2 per cent out of an economy in which growth is running at only 2.25 per cent to start with.

What would happen if we did that? Very likely, Australia would go into recession. Unemployment would rise rapidly, output would fall. Welfare spending would rise, and revenue would fall, so we would be back in deficit, and would have to make even steeper budget cuts to get back into surplus. Europe provides plenty of examples of the consequences of this policy error.

Which would you choose? To get the budget back into surplus even if the economy goes backwards, or to keep the economy growing, even if the budget goes backwards?

It's important to get our priorities right. The budget deficit is the result of a weak economy, not the cause of it. One of Wayne Swan's worst mistakes as Treasurer was to lock himself into a commitment to deliver a surplus in 2012-13, and treat it as a test of good economic management - a test he then failed.

(Interestingly, further down, he says the carbon price is estimated by Toyota to only put $115 on the cost of a new car made here.)

And Peter Hartcher talks about Ken Henry's view that government is simply not facing up to the need to increase revenue in light of the future needs of an ageing population.

Meanwhile, at Murdoch's "The Australian"  (new masthead features the sub-heading "Labor - It's a dis-arrs-ter", some anonymous economist tells us we're heading into a recession we don't have to have, and cites all the usual Right wing suspects - we need a budget surplus, less regulation, more flexible IR laws, etc.  He complains that Treasury hasn't been giving independent and fearless advice about the problem:  presumably he hasn't caught up with what Ken Henry has been saying for some time.  And funny how he can be talking about Australia's cost competitiveness problems without mentioning the unexpectedly persistent high Australian dollar for the last few years.

Then Judith Sloan regales us with a tabloid "it's so unfair to hit the poor with higher tobacco taxes" (what's the bet Sloan was a smoker at one point in her life?  It's virtually a requirement to any participant at Catallaxy.)  And speaking of Catallaxy, Sinclair Davidson gets quoted in a lengthy article featuring a line up of economists, but only ones who are small government/less regulation advocates from way back, about how bad spending and unnecessary regulation under Labor has become.  

The disappearance of Fairfax would be a disaster for political discussion in Australia.