WASHINGTON — Three years after our worst recession since the Great Depression officially ended, the U.S. economy is still very weak.
The people most hurt by this weakness are the unemployed and the poor, and of course the two problems are related. We have 23 million people who are unemployed, involuntarily working part-time, or given up looking for work — nearly 15 percent of the labor force. And poverty has reached 15.1 percent of the population; amazingly, a level that it was at in the mid-1960s.
The first priority of the U.S. government should therefore be restoring full employment. This is a relatively easy thing to do. As Nobel laureate economist Paul Krugman aptly put it: “It’s like having a dead battery in a car, and while there may be a lot wrong with the car, you can get the car going remarkably easily, if you’re willing to accept that’s what the problem really is.”
Most economists are well aware of what the problem really is, since it is so simple and basic. The economy lost about $1.3 trillion in private annual spending when the real estate bubble burst in 2007, and much of that has not recovered. State and local governments continue to tighten their budgets and lay off workers.
If the federal government had simply funded these governments’ shortfalls, we would have an additional 2 million jobs today.
The right says we can’t borrow and spend our way to full employment, but there is no economic basis for their arguments. In fact, the federal government can borrow at 1.6 percent interest today for 10-year bonds. This is basically free money; and for those who want it to be absolutely free, the Federal Reserve has created $2.3 trillion since 2008 and can create more if the federal government is willing to spend it.
The inflation-paranoids haven’t noticed, but the Fed hasn’t created any inflation problem in the United States: the Consumer Price Index is currently running at just 1.7 percent annually.
We don’t have a federal public debt problem either, at least not any time soon. The easiest way to see this is to look at the net interest payments on our federal public debt: these are less than 1.4 percent of the Gross Domestic Product, which is as low as it has been in the post-World War II period.
This is the real burden of the debt; all those big numbers you hear about trillions of dollars are mainly thrown around to frighten people.
In the long run, there is a budget problem — but this is entirely due to health-care spending. If you pick any country with as high a life expectancy as ours, and plug their health-care costs per person into our budget, our long-term budget deficit will disappear. So we just need to have normal health-care costs — not budget cuts.
If this sounds different from what you have been hearing from the media, that is a problem of public education. The airwaves and cyberspace are filled with junk promoted by people who would like to cut spending on Social Security, for people receiving an average of just $1,100 a month. Most of these senior citizens are relying on this modest payment for most of their income.
There are plenty of things that the federal government can spend money on that will make this a better country, like funding for state and local governments so they don’t have to lay off teachers; or public transportation and renewable energy.
The government can also save millions of jobs, as Germany has successfully done, by subsidizing employers to keep workers on the job at shorter hours, rather than laying them off. The problem is not a lack of solutions, but a lack of political will.
• Weisbrot is the co-director of the progressive Center for Economic and Policy Research.
Comments (20)
Add commentSSDD
Seriously, isn't this argument getting old? Obama promised that the unemployment rate would be 5.6% in June 2012 after his big spending bill. A trillion dollars or so later and what do we have? 8.2%. Another losing argument is that "inflation" hasn't increased. Those numbers ignore food and fuel, resting primarily on general consumer goods. Since there are so many people out of work, and household income is back to 1992 levels, and so much more of "disposable" income is being spent on food and fuel, there's a decided lack of consumer spending on those things that are counted, keeping the prices artificially low.
"We don’t have a federal public debt problem either, at least not any time soon." These same people were screaming when Bush's deficits were reaching toward $500 billion. With the national debt now at $15.8 trillion this moron doesn't think we have a public debt problem....yet.
Another trash filled opinion
Another trash filled opinion piece from a Soros funded outfit.
Not only is the ideology all wrong, it's filled with lies, but since when did the left let facts get in the way?
No one on the right has said anything about cutting spending on Social Security. They've talked about reforming Social Security but that doesn't perk people's ears up as much as using "cutting", right?
Mr. Weisbrot, explain to all of us little people why $5T in new debt under Obama didn't fix this problem already if solving the problem is as easy as printing more money?
And no we all don't throw about the big trillion dollar numbers to "frighten people". I'd say you're the one that's frightened to speak the truth.
Health care costs are not the main reason the economy is suffering. Housing subsidies, food stamps, disability, social security, medicare, medicaid and education funding, public employee pension plans and all the other progressive feel-good programs are killing us. Just too many sucking from government at all levels right now.
Add the dismal job market (how 'bout those unemployment numbers today, yikes), the onerous regulations, the outdated tax code, the lack of any reasonable national energy program and revenue to the government just isn't coming in.
Anyone that touts Mr. Nobel Prize Krugman loses all credibility.
And could the progressives come up with some new talking points besides "education, transportation and public employees" spending as a way to get us out of this mess? It's getting so tiresome...and look to Europe to see how it doesn't work.
laying low...
Where are all the liberals today? Me thinks that the smart ones wouldn't touch this one with a 10' pole!
There are smart ones?
I can sort of understand the 2008 fervor over Obama, but I can only shake my head at seeing 2012 Obama bumper stickers. Are these people really that blind? Are they that out of touch with reality? When job numbers that are half of what it takes to keep up monthly with labor force increases is "a step in the right direction," the economy is in the dumps. I guess it's bound to improve though, Obama took it to rock bottom. Pitiful liberals, brainless morons without a clue.
where are usual liberal suspects?
This thread is spooky. None of the Juneau Libs are running out to defend this piece. Why? Because there is zero justification for any of this drivel. They were taught in school that Keynes economics works without even using an ounce of common sense. Now, I understand that selfishly, these people want and probably need unions and government jobs shored up. The problem is that they are too weak to fight for something better for them and their families using good old-fashioned merit. I keep watching these Obama ads claiming he wants to grow the middle class. Well, what if I want to rise above the middle class? What then? I'm penalized and demonized for all my hard work? That's how progressives think and behave. I'll keep looking for those usual suspects trying to defend this, but 3 1/2 years later, the proof smacks you right in the face.
Here's the liberal!!!!
Hi Everyone! (twiddling fingers, blowing kisses at everyone in the room) ! ! !
SO GLAD you missed me.
First of all, to understand Obama's debt, let's first look at GW Bush's debt...
Bush took a budget surplus of Clinton's (when the American economy was at its absolute best), and turned it into a deficit his first year in office due to tax breaks for the wealthiest of Americans and created his "No Billionaire Left Behind" brand of economics. Then, he started a war in Iraq saying we needed to get Osama, and Al Qaeda, even though neither were in Iraq at the time. Wasted billions of dollars and thousands of American lives.
Then, Bush started another war with Afghanistan not to crush terrorism, but to continue spending $1 billion/week in a plot to make his military industrial complex buddies even richer. I mean, even his VPOTUS was Dick Cheney, former CEO of Halliburton which has made billions off these two wars.
And $1 billion/week in military spending on wars we can't win has translated into the national debt numbers all y'all keep regurgitating. Then, Bush handed the entire terd sandwich mess to Obama.
Obama inherited this mess. He didn't create it.
I also love the way conservatives bash Nobel Laureates. The Nobel Prize is the highest honor in the world. But if it goes to a recipient the right wingnuts disagree with, well then, the entire prize loses credibility in their eyes. Sad. But then again, how many conservative Presidents have won the prize? Um, zero. How many Democrat Presidents? Four! Okay, technically Teddy Roosevelt was initially a republipuke, but then he leaned more and more to the left, then became a progressive (i.e., liberal), then a liberal bull moose.
Oh, and as for my Obama 2012 bumper sticker, that's there because the thought of Romney as POTUS in 2012 scares me a hell of a lot more than Obama. Romney and his weird magic underpants and religion, along with his incredible wealth shows he is so far removed from mainstream, middle class America, that he would continue the same failed policies of George W. Bush, which led us to the mess we are in today.
Obama isn't perfect, but he's a much better promise than Romney.
And that's hope and change we can believe in.
Now, let's all hug and kiss one another. Come here Calypso, it's all about the LOVE! Smooch.
Don't you come near me, jo!!!
Don't you come near me, jo!!! You're not my type, if you get my drift!
I can't let you get away with spreading rumors and untruths about Clinton's supposed surpluses. So for fume et al, here's some "great cut and pastes" to explain the facts because I'm not smart enough to paraphrase -
"Bush supported a tax refund where taxpayers received checks in 2001. The cost was $38 billion. Even if we assume that $38 billion of the FY2001 deficit was due to Bush's tax refunds and not part of Clinton's last budget, that still means that Clinton's last budget produced a deficit of 133.29 - 38 = $95.29 billion.
While the public debt went down in each of those four years, the intergovernmental holdings went up each year by a far greater amount--and, in turn, the total national debt (which is public debt + intergovernmental holdings) went up. Therein lies the lie.
When Clinton (and others) said that he had paid down the national debt, he was lying. As you can see the national debt went up every single year. What Clinton did do was pay down the public debt--notice that the claimed surplus is relatively close to the decrease in the public debt for those years. But he paid down the public debt by borrowing far more money in the form of intergovernmental holdings while still running budget deficits year after year!
The net effect was that the national debt most definitely did not get paid down because we did not have a surplus. The government just covered its deficit by borrowing money from Social Security rather than the public. But do not forget that Social Security will begin cashing in those notes in 2017 in order to fund promises made to baby-boomers and then those intergovernmental-debts are going to come due in a very big way."
http://activerain.com/blogsview/855368/the-clinton-budget-surplus-fact-o...
The Nobel Prize has lost all credibility - just a bunch of progressives patting each other on the back - kinda like Hollywood and the Academy Awards. It's a tight knit circle. No outsiders need apply.
Bashing Romney for his "wealth" is lame and juvenile. Why don't you lay into Gore or Buffett or Gates or any of the other lefties that are "rich"? Did you know that even BO is worth around $10.5 million? And he never worked a day in his life to achieve his wealth!!
Calypso, Great job! I'm glad
Calypso,
Great job! I'm glad your cutting and pasting skills are still up to standard.
@fume - but enuff about me -
@fume - but enuff about me - did you learn anything?
Calypso, On your post I saw
Calypso,
On your post I saw another great example of how statistics can be manipulated to prove whatever point one wants to prove. I'm not saying your stats are false, but there are other stats out there which would disprove your point. I really don't care enough to go out and find them since winning a peeing contest with the likes of you isn't what makes my world go around. Remember, just because something is stated on some right-wing website it doesn't make it anymore gospel than something posted on a left-wing website. It is just something you can throw out here on this forum to justify your particular point of view.
Have a great day cutting and pasting!
J.E
I am pretty sure that you lose the argument and therefore you would also lose the peeing contest!
I guess I could go to Bill
I guess I could go to Bill Maher or Michael Moore's websites and copy and paste something. That's pretty much what Calypso does--he just goes to the Heritage Foundation site or someplace like that.
how about the proof in the
how about the proof in the community you see right before your eyes? forget about left or right, maher or limbaugh. what do you see?
Does this look
Does this look familiar?
http://www.craigsteiner.us/articles/16/
@fume - What the .... "I'm
@fume - What the .... "I'm not saying your stats are false, but there are other stats out there which would disprove your point."
Is that kind of like - 'I'm not saying the sky isn't blue, but there are other colors out there which would disprove that the color of the sky is blue?'
I'm sooooo confused!
You can use whatever sources you like to prove your ideology - Bill Maher may not be the most credible, just saying.
I'll use the sources that I find most credible and of course they'll match my ideology. Why would I go to Huffpo to make a point? The Heritage Foundation more closely mirrors how I think and they have credibility.
And generally it doesn't take long to see which sources are credible and which are full of hot air - you know, like newspapers and the mainstream networks. Numbers of readers and viewers don't lie.
That's the beauty of a free market in regards to free speech - we don't have to only read Pravda - yet.
@ cut-n-paste Calypso
Smooch!
I just feel like canonizing Bill Clinton here because he deserves it:
Gas was $.89/gallon in the late 1990s.
We were at peace. We were not at war with any nation.
Regarding the economy, Greenspan said, "it's as good as it gets."
Clinton was available. He was in the public eye. He held real press conferences. He didn't escape to a Texas ranch to spend 1/3 of his presidency on vacation.
GOD, I miss Bill Clinton! I miss the peace and economic prosperity of the 1990s that he is responsible for.
But watch some Fox TV news blond say that the prosperity of the Clinton years was somehow begun by Reagan 20 years prior. I love silly spin like that, because it's so laughable.
I wish Bill would run for POTUS again. He would easily win. I really, really miss those years.
The score:
J.E. Fume: 2
Calypso: 0 (and counting)
Busted on the craigsteiner link!
Good job Fumey!
Hee hee hee heee....
Don't worry Calypso, we all agree with your statement above that you aren't smart enough to paraphrase, therefore you rely on cut-and-paste from conservative propagandist gun-kissing, conspiracy-huntin' Clinton-bashin' fodder websites of regurgitation.
We understand. It's okay. God made you that way.
(p.s., men really have been on the moon, and there really was a surplus with Clinton, and Obama really was born in Hawaii. Pass it along).
Let's keep it simple,
Hasn't worked, didn't work and still won't work! End of story
@jo - you know, about now,
@jo - you know, about now, I'm missing Bill Clinton too!
What was I "busted" on? I linked to another site to dispute your claims and the Steiner article was listed as a source to my link.
You're just trying to cause trouble and make personal attacks because you have nothing to add to the discussion.
You too fume. Do you ever do anything but personally attack?