The debate in Washington about deficits has lost touch with reality. The emerging conventional wisdom inside the beltway has taken aggressive job creation strategies off the table because of the deficit crisis. This "eat your spinach" approach is bad politics and disastrous economics guaranteed to produce not only a longer, deeper period of economic hardship but also, ironically, higher deficits. The Great Depression and John Maynard Keynes taught us a fundamental lesson: when you're in a deep economic tailspin, the private sector won't get the economy moving, only aggressive and sustained action by government can turn things around. The solution to the unemployment crisis and the deficit crisis is one and the same: a much greater investment by the federal government in creating jobs and helping struggling families. So why isn't Washington listening? Republicans are playing politics and too many Democrats are running for cover.
For eight years during the Bush Administration, we've seen out of control spending that swung our $236 billion surplus to a $2.5 trillion deficit. Conservatives were nowhere to be found on the deficit issue when it came to tax cuts for the wealthy, George Bush's bailout of Wall Street or the Iraq war. Check out this chart that shows that the recovery act is a tiny part of the deficit puzzle.
Source: CBPP analysis based on Congressional Budget Office estimates via newsreview.com.
The lion's share of the blame goes to Republican policies of tax cuts and wars, together with the effect on revenue of the recession that was itself caused by deregulation and the casino economy. The Republicans of today remind me of Captain Renault in Casablanca who said he was "shocked, shocked!" to find that gambling was going on in Rick's Cafe Americain right before receiving his winnings.
Now that government spending to create jobs is absolutely necessary to address a massive shortfall in demand (and many economists argue to prevent a deflationary spiral), Republicans have decided to manufacture a deficit crisis for political gain. Their plan is simple: block real solutions that would create jobs and jump start the economy, then go to the voters and blame Democrats for high unemployment. It's cynical politics trumping good economics.
Are Democrats calling out the GOP for this morally corrupt strategy? Are they making the case for a different economic paradigm that solves both the deficit and the unemployment challenge through robust government intervention to jumpstart growth and hiring? Too many have already waved the white flag of surrender, having made no major effort at bold job creation since the stimulus package. The White House has sunk lots of political capital into a deficit commission that is likely to come back and recommend deep cuts in social security and other key programs.
The Democrats failure to articulate a different economic vision on deficits, employment and growth is political malpractice. Americans overwhelmingly favor reducing unemployment over reducing the deficit, 64-30 according to a mid-July Quinnipiac poll and 70-28 according to a Bloomberg poll.
Many of life's problems are not subject to simple solutions. This is not one of them. The silver bullet that can address both our unemployment crisis AND help bring down deficits over the long term is bold job creation investments by the federal government. Soon, all Americans will have a chance to make their voices heard in Washington on such a unifying message. On October 2, 2010 in Washington, D.C., tens of thousands of people are expected to gather for the "ONE NATION, Working Together" march to demand a reordering of our nation's priorities. ONE NATION seeks to challenge the politics of division and fear with a message of hope, determination and unity.
The only cure for the beltway economics that ails us is mass mobilization by concerned Americans. It's only when our voices are heard that there is any hope that Washington will stop presenting America with the false choice between deficit reduction and job creation.
Decades ago, there was a great T-shirt logo that read: I must hurry and catch up to the others for I am their leader. We need our leaders to catch up with where Americans already are. On October 2, let's show them where we are, and allow them to catch up with us and lead.