Why We Should Stop Obsessing About The Federal Budget Deficit

http://robertreich.org/ ^ | November 18 2012 | Robert Reich

[Beowulf9]

wish President Obama and the Democrats would explain to the nation that the federal budget deficit isn’t the nation’s major economic problem and deficit reduction shouldn’t be our major goal. Our problem is lack of good jobs and sufficient growth, and our goal must be to revive both.

Deficit reduction leads us in the opposite direction — away from jobs and growth. The reason the “fiscal cliff” is dangerous (and, yes, I know – it’s not really a “cliff” but more like a hill) is because it’s too much deficit reduction, too quickly. It would suck too much demand out of the economy.

[Beowulf9]

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.

[Beowulf9]

From Clinton’s economist. Tax less, spend more. Oh boy, is THIS going to be a long 4 years.

These guys are so brilliant. /sarc

[JediJones]

Can’t say I’ve been following Europe closely, but is it a fair comparison? Their economies have been so dependent on government for so long, most of their countries don’t have a strong private sector left. There isn’t much left for government to get out of the way of.

Different here. Obama has just been getting started on crippling the private sector. If the private sector here got a clear signal that the government would be getting out of the way, like with a repeal of Obamacare or a big reduction in the deficit, easing fear of tax hikes in the future, then the private sector would be unleashed at full strength.

[hopespringseternal]

Sounds like an alcoholic. He is starting to feel sick. Time for another drink.

[Monty22002]

The liberals have been saying ‘jobs and growth’ are the problem while the debt skyrockets. The problem? Jobs and growth aren’t coming while it skyrockets.

[Flightdeck]

“Their deficits are ballooning because their austerity policies have caused their economies to sink.”

Is this your sentence? If so, you have zero credibility.

[Graewoulf]

Redistribution Communism File.

[Beowulf9]

“Their deficits are ballooning because their austerity policies have caused their economies to sink.”

Is this your sentence? If so, you have zero credibility.

No, that’s all Reich’s.

[Graewoulf]

” - - - The liberals have been saying ‘jobs and growth’ are - - - “ code names for “more taxes” and “more spending,” respectively.

[mylife]

Robert Reisssssch?

[PressurePoint]

It’s impossible - IMPOSSIBLE - for the government to create growth. The government doesn’t PRODUCE anything.

I’m not being hyperbolic. This is the defining distinction between business and government. Business CREATES. Government REGULATES.

[Olog-hai]

Missing barf alert. Then again, the source ought to be enough warning . . .

[<1/1,000,000th%]

Government spending doesn’t help the economy grow because it’s usually just wasted. Just like Obama’s programs to patch roads that didn’t need patching. It didn’t work for FDR. It won’t work now.

Government spending increases the deficit, which creates inflation as the government struggles to paper over its interest payments on its debts. Runaway inflation will create fiscal uncertainty and we’ll see prime rates back at 18%. Jimmy Carter anyone?

With the states’ and Obama’s taxing and regulatory attacks on business, the 1990’s can’t be repeated. Too many barriers.

What needs to happen is to get rid of the taxes and regulations on businesses all the way back to Clinton’s presidency. Can’t happen with Obama in office.

[onyx]

Tell THIS to your Congress "folks", who are supposedly "looking out for you"!


Support Free Republic.

[TruthWillWin]

(Higher taxes on the rich won’t 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 won’t reduce their incentive to save and invest because they’re already doing as much saving and investing as they want. Remember: they’re taking home a near record share of the nation’s total income and have a record share of total wealth.)

Wrong.

[justa-hairyape]

So he wants to increase the deficit so that he can reduce the deficit. Probably makes perfect sense to a progresso.

[BookmanTheJanitor]

Higher taxes on the rich won’t slow the economy because the rich will keep spending anyway. After all, being rich means spending whatever you want to spend.

completely wrong and idiotic as shown by the luxury tax fiasco of the early 1990's

[dr_lew]

It's not a matter of definition. For me the exemplar of government entrepeneurship is the snack bar at Island Beach State Park in New Jersey, lately in the news, which I patronized back in the seveties or eighties. It was a real snack bar, with government employees and management, so it seems clear its existence was not prohibited by definition. The problem is in the disconnection between the concerns of the management and employees and the functioning of the business, which is almost complete. My memory of it is a hundred or so patrons standing around placidly, if sullenly, while the snack bar attendants processed their snack orders with a preternatural slowness. I recall the scene vividly to this day, as one that should have been buzzing with activity, but was instead a virtual tableau, in which the patrons were indeed virtual prisoners, having paid money to enter the Island at one end, then drive several miles and park their cars, and thus make themselves captives for the day. Of course, I was one of those.

They situation will be no different when we have been coralled by other means and are standing around waiting for government arranged doctor appointments.

[OrangeHoof]

Robert “Third” Reich....the scorched earth econodwarf of the Clinton Administration.

[St_Thomas_Aquinas]

The situation will be no different when we have been coralled by other means and are standing around waiting for government arranged doctor appointments.

DMV healthcare.