I know the fad in conservative think tanks is to obsess over U.S. debt, but currently the United States does not have a debt problem. Shocked? You are part of the 90% of Americans polled who think the deficit is growing fast. In fact the deficit has gone down every single year during the Obama administration. Interest rates for U.S. borrowing are at historic lows, and inflation is almost non-existent, something the deficit scolds predicted would be the very opposite of our current situation.
No, what the United States has right now is an employment and inequality crisis. The DOW is at its highest level ever, corporations are sitting on trillions in cash, and the top 1% of earners in this country now take home nearly half of all the income in the nation. The biggest corporations and richest individuals are being sheltered as they pay less in tax burden than they have in half a century. The single largest factor that will be driving U.S. debt in the next decade is the Bush tax cuts, specifically for the wealthy. And these wealthy individuals are not moving this money in the broader economy enough to make much impact beyond Wall Street. This means we don’t have a supply problem, but a demand one. What does it matter if a small business wants to open a new shop downtown if there isn’t a strong middle class that can buy those goods let alone pay their basic bills?
In every recovery since the great depression, the way we have dealt with economic slumps is by bolstering public sector spending for things like public works to give the private sector demand and room to clear its books. Yet the discussion nationally is limited gutting government programs. Without government efforts to bring jobs back in mass, it is futile for us to try and shrink government responsibly and wipe out our debt with so many unemployed needing government services, not adding to economic productivity, and not contributing to the tax base.
Take a look at what countries like Greece, Italy, Britain, and Ireland are doing in response to the crisis. They are imposing the same austerity policies sought by Republicans here in the form of lower taxes and dramatic spending cuts. It’s not working, and in some cases it’s failing to the point where these countries are back in recession with unemployment rates above 20%. Meanwhile our country passed a stimulus package that gave states the funds they needed to keep people on the job, and our economy has fared much better than Britain’s in the recovery, though more is needed. I challenge anyone who thinks stimulus isn’t the answer to find any example in history where tax cuts and spending cuts in response to a crisis has done anything but worsen it.
What should we spend this new stimulus on? The United States Corp of Engineers has graded American infrastructure at a D, just above a failing mark. Our airports, roads, bridges, waste disposal, water treatment, energy grid, you name it, are in in horrible need of repair and retooling for the future. Without the investments for infrastructure that are INCREDIBLY stimulating for economic output, our economy is doomed to be left behind in the 20th century behind China and Germany. There is no better time to do this than during an economic slump to put millions back to work. The time to cut spending is when the private sector and overall economy is robust so it can handle the shocks of government cuts. There was a time the old Republican guard thought this was a win-win. We like Ike! We like Ike!
It should also be clear that we cannot have our cake and eat it to like it was the sweet 80’s all over again. We either fund retirement, food aid, and healthcare for our retired, sick, and poor, or we don’t. We either invest large sums to make our education system world class, or we lag behind. And when that’s dealt with, we decide how to fund these usually accepted expenditures. Hint: One class has a lot of wealth that isn’t doing much trickle down.
Yes we have a lot of mostly publically owned debt, 16 trillion of it. But trying to deal with that debt through major spending cuts amidst 7% unemployment in the aftermath of such a major crisis is fruitless. It’s like asking someone with broken legs to run a marathon. Having such imbalanced policy that leaves so many Americans in the cold only insures a larger government will be needed to pick up the severe slack of markets.
The Republicans have made a bet that the American people forgot how this crisis came about, and what policies have been exacerbating it. It will be interesting to see whether voters punish the party that has dogged our recovery at every opportunity in an honest yet misguided ruse of fiscal responsibility.