The economy continues to lurch along, gaining a little bit of steam, then falling back again. Unemployment stays stubbornly around 9%, homes are still being foreclosed at a ferocious rate, and the housing industry remains in a deep funk, Meanwhile, official Washington is consumed with the debate over the debt ceiling. Will someone please explain to me how cutting long-term spending (something I agree we need to do sometime soon) is going to jump-start the economy so that it can create the jobs needed to pull us out of this trough? Several of the conservative friends I’ve asked this question insist that solving the deficit now will give businesses the market certainty they need to start hiring again. Even if they’re right, his seems like awfully week tea, given the depth of the problem. These are the same folks who recite the mantra that cutting taxes always produces economic growth and reduce the deficit (See effect of Bush tax cuts). They are, of course, also the people who claim that the stimulus did nothing at all (See auto sales, GM. See also, state budget cuts after the stimulus money was exhausted). If anyone can tell me when an austerity budget ever pulled us out of a recession, I’d be willing to listen. I can’t think of one. I do know that the rush to cut the deficit during the Great Depression helped lengthen it by a decade.
What annoys me the most in all of this is that Democrats lack the courage to lay out an ambitious plan for jobs and economic growth based on the principles that they know work. Instead, they negotiate with deficit hawks and tax-cut absolutists whose ideas have been repudiated again and again by history, but who cling to the same tired theories no matter the evidence. As a result, Congress and the president play Russian roulette with the debt ceiling at a time when we should be focused on creating jobs, and the Great Recession lingers on and on.
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