The unemployment numbers that came out today were pretty sobering. We now have 15 million people out of work, twice as many as when the recession started. Another 263,000 jobs disappeared last month, and the unemployment rate hit 9.8%. What to do?
Two prominent economic observers have the same answer — more government spending.
Here’s Marketplace Commentator Robert Reich:
Who’s going to buy the stuff we make or the services we provide, and therefore bring jobs back? There’s only one buyer left: The government.
Let me say this as clearly and forcefully as I can: The federal government should be spending even more than it already is on roads and bridges and schools and parks and everything else we need. It should make up for cutbacks at the state level, and then some. This is the only way to put Americans back to work. We did it during the Depression. It was called the WPA.
Yes, I know. Our government is already deep in debt. But let me tell you something: When one out of six Americans is unemployed or underemployed, this is no time to worry about the debt.
Exactly, says New York Times columnist Paul Krugman:
Anyone who thinks that we’re doing enough to create jobs should read a new report from John Irons of the Economic Policy Institute, which describes the “scarring” that’s likely to result from sustained high unemployment. Among other things, Mr. Irons points out that sustained unemployment on the scale now being predicted would lead to a huge rise in child poverty — and that there’s overwhelming evidence that children who grow up in poverty are alarmingly likely to lead blighted lives…
But can we afford to do more — to provide more aid to beleaguered state governments and the unemployed, to spend more on infrastructure, to provide tax credits to employers who create jobs? Yes, we can.
As in — yes, we can create more debt. Back to Reich:
The problem isn’t the debt. The problem is just the opposite. It’s that at a time like this, when consumers and businesses and exports can’t do it, government has to spend more to get Americans back to work and recharge the economy. Then – after people are working and the economy is growing – we can pay down that debt.
But if government doesn’t spend more right now and get Americans back to work, we could be out of work for years. And the debt will be with us even longer. And politics could get much uglier.
I understand the argument — an economy that sits still too long suffers from atrophy. And certainly we do need to encourage businesses to hire or to start up. But that doesn’t necessarily mean we need more government spending to make it happen.
Your thoughts?
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