All the talk these days is about how the United States simply must reduce its budget deficit. There’s a target reduction of $1.5 trillion over 10 years. Democrats and Republicans, predictably, differ on how to get that done. I think they’re both misguided at the moment. We need to be focusing on jobs.
We seem to be forgetting our history in this country. It’s a cliché, but those who don’t know history are doomed to repeat it. We’re worried about reducing the deficit at a time when the economy is still sluggish, just as we did in the 1930s. The difference here, though, is that there isn’t another world war on the horizon to pull us out of it.
It all comes back to jobs. If we get people working again, like we did in the 1990s, we will increase tax receipts, which in turn reduces the deficit. We have so many projects that need to be done. The freeways are in horrible shape, as are airports, BART stations (to say nothing of their cars), bridges, and so on. Some of this stimulus was done in 2009. But much, much more is needed. We absolutely have to get people working again.
Despite the Standard & Poor’s downgrade of US Treasury debt, interest rates on that debt remain incredibly cheap. This is definitely the progressive, Keynesian view, but we should be borrowing more, not less, right now. And then we need to be investing in infrastructure and other projects that get people working again. If we can get companies hiring again, the economy will start to grow at a healthy rate. And that will reduce the deficit, and the debt.
But instead, the Democrats (and let’s not forget the mainstream Republican complicity in this, using and abetting the tea party movement as a path back to power) let a small faction of extremely conservative people completely control the debate. So any stimulus is dead on arrival. And the economy just sputters along. People’s lives just sputter along. How does that serve anyone?