Power of Story
Send a Tweet        
- Advertisement -

Share on Google Plus Share on Twitter Share on Facebook Share on LinkedIn Share on PInterest Share on Fark! Share on Reddit Share on StumbleUpon Tell A Friend 1 (1 Shares)  

Printer Friendly Page Save As Favorite View Favorites (# of views)   3 comments
OpEdNews Op Eds

AUSTERITY 101: The Three Reasons Republican Deficit Hawks Are Wrong

By       Message Robert B. Reich     Permalink
      (Page 1 of 2 pages)
Related Topic(s): ; ; ; , Add Tags Add to My Group(s)

View Ratings | Rate It

opednews.com Headlined to H3 10/16/15

Author 47089
Become a Fan
  (120 fans)
- Advertisement -

Reprinted from Robert Reich Blog


(Image by YouTube screen grab)   Permission   Details   DMCA

Congress is heading into another big brawl over the federal budget deficit, the national debt, and the debt ceiling.

- Advertisement -

Republicans are already talking about holding Social Security and Medicare "hostage" during negotiations -- hell-bent on getting cuts in exchange for a debt limit hike.

Days ago, U.S. Treasury Secretary Jacob Lew asked whether our nation would "muster the political will to avoid the self-inflicted wounds that come from a political stalemate."

It's a fair question. And there's only one economically sound answer: Congress must raise the debt ceiling, end the sequester, put more people to work, and increase our investment in education and infrastructure.

- Advertisement -

Here are the three reasons why Republican deficit hawks are wrong. (Please watch and share our attached video.)

FIRST: Deficit and debt numbers are meaningless on their own. They have to be viewed as a percent of the national economy.

That ratio is critical. As long as the yearly deficit continues to drop as a percent of the national economy, as it's been doing for several years now, we can more easily pay what we owe.

SECOND: America needs to run larger deficits when lots of people are unemployed or underemployed -- as they still are today, when millions remain too discouraged to look for jobs and millions more are in part-time jobs and need full-time work.

As we've known for years -- in every economic downturn and in every struggling recovery -- more government spending helps create jobs -- teachers, fire fighters, police officers, social workers, people to rebuild roads and bridges and parks. And the people in these jobs create far more jobs when they spend their paychecks.

- Advertisement -

This kind of spending thereby grows the economy -- thereby increasing tax revenues and allowing the deficit to shrink in proportion.

Doing the opposite -- cutting back spending when a lot of people are still out of work -- as Congress has done with the sequester, as much of Europe has done -- causes economies to slow or even shrink, which makes the deficit larger in proportion.

This is why austerity economics is a recipe for disaster, as it's been in Greece. Creditors and institutions worried about Greece's debt forced it to cut spending, the spending cuts led to a huge economic recession, which reduced tax revenues, and made the debt crisis there worse.

THIRD AND FINALLY: Deficit spending on investments like education and infrastructure is different than other forms of spending, because this spending builds productivity and future economic growth.

It's like a family borrowing money to send a kid to college or start a business. If the likely return on the investment exceeds the borrowing costs, it should be done.

Keep these three principles in mind and you won't be fooled by scare tactics of the deficit hawks.

Next Page  1  |  2

 

- Advertisement -

View Ratings | Rate It

http://robertreich.org/

Robert Reich, former U.S. Secretary of Labor and Professor of Public Policy at the University of California at Berkeley, has a new film, "Inequality for All," to be released September 27. He blogs at www.robertreich.org.


Share on Google Plus Submit to Twitter Add this Page to Facebook! Share on LinkedIn Pin It! Add this Page to Fark! Submit to Reddit Submit to Stumble Upon



Go To Commenting
/* The Petition Site */
The views expressed in this article are the sole responsibility of the author and do not necessarily reflect those of this website or its editors.

Writers Guidelines

Contact AuthorContact Author Contact EditorContact Editor Author PageView Authors' Articles
- Advertisement -

Most Popular Articles by this Author:     (View All Most Popular Articles by this Author)

The Republican's Big Lies About Jobs (And Why Obama Must Repudiate Them)

Paul Ryan Still Doesn't Get It

What Mitt Romney Really Represents

What to Do About Disloyal Corporations

The Gas Wars

The Minimum Wage, Guns, Healthcare, and the Meaning of a Decent Society