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Economy
In reply to the discussion: WEE Gather Together, November 22, 2012 [View all]Demeter
(85,373 posts)11. It's Simple: Cutting Deficit Will Kill Jobs & Hurt Growth; Taxing the Rich Won't By Robert Reich
http://www.alternet.org/its-simple-cutting-deficit-will-kill-jobs-and-hurt-growth-taxing-rich-wont?akid=9706.227380.5I7c0e&rd=1&src=newsletter748506&t=12&paging=off
I wish President Obama and the Democrats would explain to the nation that the federal budget deficit isnt the nations major economic problem and deficit reduction shouldnt be our major goal. Our problem is lack of good jobs and sufficient growth, and our goal must be to revive both. I WOULD CALL IT--GETTING THE MONEY TO CIRCULATE THROUGH THE ENTIRE POPULATION, NOT GROWTH....Deficit reduction leads us in the opposite direction away from jobs and growth. The reason the fiscal cliff is dangerous (and, yes, I know its not really a cliff but more like a hill) is because its too much deficit reduction, too quickly. It would suck too much demand out of the economy.
But more jobs and growth will help reduce the deficit. With more jobs and faster growth, the deficit will shrink as a proportion of the overall economy. Recall the 1990s when the Clinton administration balanced the budget ahead of the schedule it had set with Congress because of faster job growth than anyone expected bringing in more tax revenues than anyone had forecast. Europe offers the same lesson in reverse: Their deficits are ballooning because their austerity policies have caused their economies to sink. The best way to generate jobs and growth is for the government to spend more, not less. And for taxes to stay low or become even lower on the middle class.
(Higher taxes on the rich wont slow the economy because the rich will keep spending anyway. After all, being rich means spending whatever you want to spend. By the same token, higher taxes wont reduce their incentive to save and invest because theyre already doing as much saving and investing as they want. Remember: theyre taking home a near record share of the nations total income and have a record share of total wealth.)
Why dont our politicians and media get this? Because an entire deficit-cutting political industry has grown up in recent years starting with Ross Perots third party in the 1992 election, extending through Peter Petersens Institute and other think-tanks funded by Wall Street and big business, embracing the eat-your-spinach deficit hawk crowd in the Democratic Party, and culminating in the Simpson-Bowles Commission that President Obama created in order to appease the hawks but which only legitimized them further...Deficit hawks routinely warn unless the deficit is trimmed well fall prey to inflation and rising interest rates. But theres no sign of inflation anywhere. The world is awash in underutilized capacity As for interest rates, the yield on the ten-year Treasury bill is now around 1.26 percent lower than its been in living memory. In fact, if there was ever a time for America to borrow more in order to put our people back to work repairing our crumbling infrastructure and rebuilding our schools, its now...
So can we please stop obsessing about future budget deficits? Theyre distracting our attention from what we should be obsessing about jobs and growth.
I wish President Obama and the Democrats would explain to the nation that the federal budget deficit isnt the nations major economic problem and deficit reduction shouldnt be our major goal. Our problem is lack of good jobs and sufficient growth, and our goal must be to revive both. I WOULD CALL IT--GETTING THE MONEY TO CIRCULATE THROUGH THE ENTIRE POPULATION, NOT GROWTH....Deficit reduction leads us in the opposite direction away from jobs and growth. The reason the fiscal cliff is dangerous (and, yes, I know its not really a cliff but more like a hill) is because its too much deficit reduction, too quickly. It would suck too much demand out of the economy.
But more jobs and growth will help reduce the deficit. With more jobs and faster growth, the deficit will shrink as a proportion of the overall economy. Recall the 1990s when the Clinton administration balanced the budget ahead of the schedule it had set with Congress because of faster job growth than anyone expected bringing in more tax revenues than anyone had forecast. Europe offers the same lesson in reverse: Their deficits are ballooning because their austerity policies have caused their economies to sink. The best way to generate jobs and growth is for the government to spend more, not less. And for taxes to stay low or become even lower on the middle class.
(Higher taxes on the rich wont slow the economy because the rich will keep spending anyway. After all, being rich means spending whatever you want to spend. By the same token, higher taxes wont reduce their incentive to save and invest because theyre already doing as much saving and investing as they want. Remember: theyre taking home a near record share of the nations total income and have a record share of total wealth.)
Why dont our politicians and media get this? Because an entire deficit-cutting political industry has grown up in recent years starting with Ross Perots third party in the 1992 election, extending through Peter Petersens Institute and other think-tanks funded by Wall Street and big business, embracing the eat-your-spinach deficit hawk crowd in the Democratic Party, and culminating in the Simpson-Bowles Commission that President Obama created in order to appease the hawks but which only legitimized them further...Deficit hawks routinely warn unless the deficit is trimmed well fall prey to inflation and rising interest rates. But theres no sign of inflation anywhere. The world is awash in underutilized capacity As for interest rates, the yield on the ten-year Treasury bill is now around 1.26 percent lower than its been in living memory. In fact, if there was ever a time for America to borrow more in order to put our people back to work repairing our crumbling infrastructure and rebuilding our schools, its now...
So can we please stop obsessing about future budget deficits? Theyre distracting our attention from what we should be obsessing about jobs and growth.
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