Monday, February 25, 2013

Stop the deficit hysteria

I was reading this post from Andrew Sullivan today when this caught my attention and prompted the email I have copy and pasted below the quote:

The committee failed; the elections loomed. Ezra’s right, I think, to see the elections as an endorsement of a mixed approach: raise revenues, reform taxes, and cut entitlements. Now some revenues have been raised – but only because without some modest concessions from the GOP, even more revenues would have been raised, tipping the economy into recession. But the implemented tax hikes, as the GOP has consistently and rightly argued, are nowhere near enough to tackle the debt. So we still do need real spending cuts in the medium and long run, especially in Medicare, and we do need defense cuts, to reduce a military-industrial complex now costing twice as much as it did a decade ago; and we desperately need tax reform and simplification. In that last option – tax reform and simplification – lies the least damaging way to raise essential revenues.

I'm sure (or hope) many people have said this in response to your desire to cut spending in the many times you have advocated it over the past few years. And I certainly respect your view more than any cowardly politician advocating the same. But fuck the deficit. We need jobs.

I really don't see how the benefits for cutting spending outweigh those for increasing spending, much less keeping it level. It all boils down to either a fear of inflation that is unsupported by facts, but rather a fear that we are always living in 1979. Or it comes from some abstract idea that the gov't must "act responsibly". Whatever it is, it's bullshit.

The federal gov't isn't a state gov't, or a business, or a household. Hell, even those entities that must "act responsibly" borrow money and take on debt. The difference is that they can't print their own money. As you well know, the federal gov't can. And it has, with very minimal increases in inflation and interest rates. That's because demand is still too low. And the effects that level of demand is having, namely high unemployment, are far worse than the notion that the federal gov't has to "act responsibly" or whatever you want to call it, and cut the deficit right now.

What isn't responsible is sitting by and letting millions of people suffer. I'm kind of nitpicking on one part in your post. If the economy wasn't still so shitty I would be chomping at the bit to cut the Pentagon's budget. Actually, I wonder if it would make sense to just take from their budget and spend it in places that would more directly help the economy. Anyway, I wanted to respond because as long as the narrative is so heavily focused on the deficit we will continue to get horrible policies like the sequester. Until the narrative shifts to jobs a ridiculous number of people will continue to suffer.

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