Forty percent of our national deficit is due to the Great Recession. The rest is mainly due to two wars funded off the books, massive tax cuts that benefited the wealthy, and run-away healthcare costs. There are structural issues in our economy that also need to be addressed: long-term adjustments to Social Security and Medicare.
So the obvious, glaring reality is: When we put people back to work, close to half of the nation’s deficit goes away. When America works, taxes are paid, and the deficit declines. No one denies this fact.
The President and his party desperately want to put people back to work and are doing everything they can to jump-start this economy. And, they also are ahead of the curve in addressing the structural issues around Healthcare, Social Security, Medicare. The President’s Deficit Reduction Commission is on its way to presenting a plan to correct these long-term issues.
But, the most immediate thing that needs to happen right now is putting people to work, and keeping the economy from falling backward, by continuing to provide stimulus in the form of unemployment checks until the nascent recovery can be firmed up.
Mark Zandi is a former adivsor to John McCain, and chief economist with Moody’s Economy.com. He has recently been quoted as saying that the expired unemployment aid needs to be reauthorized, and fast. The unemployment checks are helping to keep our economy afloat, and underpinning the fragile recovery.
“The odds that the economy will slip back into the recession are still well below even,” Zandi said. “But if Congress is unable to provide this help, [aid for the jobless] those odds will rise and become uncomfortably high.”
One of the most important pressures on the economy is consumer confidence. Everything looks good-to-go to get this economy moving. But, consumer confidence is lagging, and without it we could fall back into recession. We can’t help but wonder if all the negative, gloom and doom talk coming from the Right isn’t impacting that confidence.
And, here is the dilemma on moving forward: The Dems believe that the lesson of the Great Depression is that if a government removes stimulus spending too soon, before the economy is stabilized and the recovery established, that the economy can slide backward into trouble; the Republicans believe that if a government cuts spending in a recession and balances the budget that the economy will recover.
History tells us that the Republicans are wrong. Nobel Prize winning economist, Paul Krugman, has been on an absolute rant for weeks over Europe’s determination to pursue frugality, and America’s inability to reach political consensus to continue stimulus spending over the short-term, while developing a plan to address the long-term structural issues. Check-It-Out: Myths of Austerity.
Add a Comment
You must be logged in to post a comment