Reich and Krugman Agree: The Government Needs to Forget About the Deficit and Fix Unemployment
You have to give him pundit props: Krugman said from the start (this video is from February) that Obama's stimulus package was too small, and he was right. As expected, the unemployment claims went up to record-breaking levels this week. Via Bloomberg:
The unemployment rate rose to 9.8 percent, the highest since 1983, from 9.7 percent in August, the Labor Department said today in Washington. Payrolls fell by 263,000, following a revised 201,000 decline the prior month that was less than previously reported.
As someone who's sent out 250+ resumes in the past year and gotten one face-to-face interview and one phone call in return, I can tell you first-hand it's not looking good on the job front.
Krugman says if we don't do something about this, not only will the human costs will be high but our economic growth will be depressed for a long, long time:
Wait. It gets worse. A new report from the International Monetary Fund shows that the kind of recession we’ve had, a recession caused by a financial crisis, often leads to long-term damage to a country’s growth prospects. “The path of output tends to be depressed substantially and persistently following banking crises.”
The same report, however, suggests that this isn’t inevitable: “We find that a stronger short-term fiscal policy response” — by which they mean a temporary increase in government spending — “is significantly associated with smaller medium-term output losses.”
So we should be doing much more than we are to promote economic recovery, not just because it would reduce our current pain, but also because it would improve our long-run prospects.
But can we afford to do more — to provide more aid to beleaguered state governments and the unemployed, to spend more on infrastructure, to provide tax credits to employers who create jobs? Yes, we can.
The conventional wisdom is that trying to help the economy now produces short-term gain at the expense of long-term pain. But as I’ve just pointed out, from the point of view of the nation as a whole, that’s not at all how it works. The slump is doing long-term damage to our economy and society, and mitigating that slump will lead to a better future.
What is true is that spending more on recovery and reconstruction would worsen the government’s own fiscal position. But even there, conventional wisdom greatly overstates the case. The true fiscal costs of supporting the economy are surprisingly small.
You see, spending money now means a stronger economy, both in the short run and in the long run. And a stronger economy means more revenues, which offset a large fraction of the upfront cost. Back-of-the-envelope calculations suggest that the offset falls short of 100 percent, so that fiscal stimulus isn’t a complete free lunch. But it costs far less than you’d think from listening to what passes for informed discussion.
Look, I know more stimulus is a hard sell politically. But it’s urgently needed. The question shouldn’t be whether we can afford to do more to promote recovery. It should be whether we can afford not to. And the answer is no.
Robert Reich agrees, saying this is certainly not the time to worry about the deficit, and predicts if we do, the politics are going to get much uglier:
Let me say this as clearly and forcefully as I can: The federal government should be spending even more than it already is on roads and bridges and schools and parks and everything else we need. It should make up for cutbacks at the state level, and then some. This is the only way to put Americans back to work. We did it during the Depression. It was called the WPA.
Yes, I know. Our government is already deep in debt. But let me tell you something: When one out of six Americans is unemployed or underemployed, this is no time to worry about the debt.
[...] People who now obsess about government debt have it backwards. The problem isn’t the debt. The problem is just the opposite. It’s that at a time like this, when consumers and businesses and exports can’t do it, government has to spend more to get Americans back to work and recharge the economy. Then – after people are working and the economy is growing – we can pay down that debt.
But if government doesn’t spend more right now and get Americans back to work, we could be out of work for years. And the debt will be with us even longer. And politics could get much uglier.
There are converging factors which Krugman as an economist is unable to factor in.
Peak ecology is that primary factor.
Everything humans do on Earth is a subset of the ecology.
Reich likewise fails in this consideration.
We need a system that promotes harmony between our existence and the Earth without which we have nothing.
Unless we learn to live within the means of the finite Earth, there are no long run prospects.
Repeal Capitalism before it destroys the Earth.
The top 1% control half of the wealth. Begin there.
statusquObama, change you can only pretend in
...we're in big trouble...
I have the solution for reducing deficit!!!!:
Stop spending more than half of our Money in "National Defense" and Imperial words:
http://www.nationalpriorities.org/node/6916
PS
Please don't start talking about Terrorism and Communism.
There is no Real enemy but the Greedy MIC!
Giving billions of dollars to foreign nations like Israel , Egypt and other foreign countries for their public social programs while our infrastructures are falling apart..
Why are we also giving military weapons to these countries while our country falls farther in debt..
We have left these global empires destroy our democrat , constitution , manufacturing capabilities , jobs , economy and country without a fight.
Have you not seem or notice these corporate own elected officials do not give a d... about YOU or ME.. It is Them and Those..
None
you are reminding me of a letter I wrote that was actually published by the LA Times--seriously truncated, of course--in response to some typical pap from Jonah Goldberg.
Here is the much altered text they published:
Goldberg's column lambasting Al Gore and others who are warning us about global warming only serves to amplify the hyperbole characteristic of this burgeoning number of Chicken Littles crying that the sky is falling. We humans are a puny infestation on this amazing planet. How arrogant to presume we're going to have any lasting impact on Earth. We will simply go the way of the dinosaur--no huge loss. The real issue is that we disrespect what we have and fail to understand that our ecosystem tends toward a balance that is beyond our control. When it is time for Earth to roll over in the grass and scrape us off her backside, we'll just have to go along for the ride.
As a mixed media artist, I marvel at what the universe manifests through me, and through myriad others whose artistic natures must find expression--oftimes in humbling, or awe-inspiring ways. I wonder if that creativity continuum at it most extreme yields the control issues that seem to drive our species' self-destructive hedonism...
Why do so many of us feel so small and so powerless, when we are a most amazing part of an overwhelmingly awesome universe?! And, why must those who feel so small and so powerless wreck havoc with those of us who recognize the futility of worshiping at the altar of self-aggrandizement?!?!
will help improve our unemployment problem. What do we make currently? Not much unfortunately. Until we start making stuff again we are in trouble. Krugman is wrong about keeping the economy afloat, our spending is going to come back to bite us in the ass over the next few years. All of our spending is from borrowed money, we are in way over our head now.
Goodnight, Frau Blücher
Susie said:
I can relate. I have started sending some brutally honest cover letters. In one I said, "I am over forty, over-qualified, and over-weight, but I really would like the position advertised." I still don't get a response. ;o}
I pledge allegiance to the Constitution of the United States of America, and to the republic which it established, one nation from many peoples, promising liberty and justice for all
I can totally relate. I've been unemployed--first time in my life--since February. After 6 months, started getting some temp work...but at an unlivable wage.
A for your honest cover letters, of late I've been doing the same thing, figuring what have I got to lose. I've been saying something like, "I realize the job market is such that you have your pick of qualified applicants. But with age comes a experience and a proven record..." Hasn't made a difference but, perhaps like you, I feel the need to kinda lay all the cards on the table.
Good luck to you...good luck to us all. Or should I say, heaven help us all. We're fighting forces that are pathologically greedy and irrational, so it's not a fight that can be won easily, if at all.
Since January 2005 I've applied for everything I'm even remotely qualified for. In that time I've had a handful of interviews and have found a couple of temporary jobs but nothing permanent. In all my working life I've never seen the pickings as slim as they are now.
I have an M.S. in communication and a B.S. in journalism and have worked as an instructor in higher ed, a writer/reporter, weekly newspaper editor, and secretary. In a couple of months I'll be 56. I'm over-educated for the job market in my area and, yes, too old. I keep sending out applications and resumes but have no realistic expectation of a permanent job.
I'm a college-educated veteran reduced to applying for fast-food jobs, and still not getting called back. I'm still young, though...
You certainly did not intend to imply that being over 40 is old, did you? ;o}
This boat is getting crowded. I only have two degrees, but I am working on my J.D.
I pledge allegiance to the Constitution of the United States of America, and to the republic which it established, one nation from many peoples, promising liberty and justice for all
There will be more pain.
Tent cities have become a problem. Homelessness is a huge problem for many families these days.
"I know that there are people who do not love their fellow
man, and I hate people like that! " ~ Tom Lehrer (1928 - )
People need jobs. And homes (houses/apartments) as well. Why oh why are landlords still jacking up rent in this economy?!?
NOBODY 2012
Whenever we see statistics like "the highest unemployment rate since 1983" we MUST substitute "the worst since Ronald Reagan's economically disastrous administration." Republican's still believe the myth that Ronny was some kind of economic genius. He maxed out our national credit cards for eight years and called it economic growth.
They'd just blame Carter, then point out how "the economy turned around" in 1984 enough to give Ronnie his huge re-election win.
Meanwhile, on planet Wingnuttia, Obama's failure to fix eight years of disastrous Bush-onomics in just 200 days is evidence his economic policies aren't working rather than blame his predecessor (see above).
* There are two types of Republicans: millionaires and suckers.
"Mugsy's Rap Sheet": Recording history for those who seek to rewrite it.
If Carter was responsible for the state of the economy in 1983, then, despite that universal slogan of the punditocracy, Obama cannot "own" this one until 2011.
(And Reagan's economy didn't turn around until he'd raised taxes.)
the first trade deficit in our nation's history.
...yeah, St. Ronnie really did this nation a world of hurt.
I think you'd be hard pressed to name the last time the govt acted in a way that showed they were concerned in anyway with the human cost of anything!
UNLESS they were acting to REDUCE the impact of the human cost upon industry as a consequence of their behavior.
can stop blaming 'the government.' We ARE the government!! Blaming 'the government' enables those who seek to oppress us to vilify government, calling into question our nation's incredible Constitution and Bill of Rights.
The people who are destroying our nation -- hell, why mince words?!? -- our WORLD are the corporate megalomaniacs who own and control better than 45% of our world's resources (including our HUMAN resources!).
This handful of hedonists now control the majority of our world's media, and most of our nation's politicians. If we expand their number to 400 individuals (adding only about 40 to the number that a key UN report identified as the most wealthy corporatists worldwide), these few people represent a 5.97 X 10 to exponent -10 percentage of our world's entire population!!!!!!
If we don't address this horrific inequity, we won't have a system of government about which to complain, because we will be completely subsumed by the fascists who have usurped our nation.
We ARE NOT the government. Our government is made up of representatives (that we chose) and whether or not they choose to represent YOU is another matter. Do you feel represented?
I was speaking both rhetorically, and not a wee bit ironically. We ARE our nation, and our government. The fact that so few of us vote, and that so few of us are educated enough to understand our system of 'government' and our economy is an egregious reality nurtured in no small measure by the corporate megalomaniacs who are bent on securing their primacy.
I've been out of work since February. I've had only one interview since then. I have more than 10 years experience in IT and 15 years as a mill rat. That's a 25 year verifiable, consistent work history. I've never been fired. I can do anything from hard labor to white collar management. I can't even get a job at McDonald's or Home Depot.
I'm bankrupt and almost on the verge of foreclosure. I know how it feels to be turned down and turned away!
"Yes, I know. Our government is already deep in debt."
Government need not be run primarily as a business always focused on the bottom line.We live in "societies" that should be respected and nurtured.The market should function in service of those ideals rather than the other way around.
"To me, truth is not some vague, foggy notion. Truth is real. And,
at the same time, unreal. Fiction and fact and everything in between,
plus some things I can't remember, all rolled into one big "thing."
This is truth, to me. "
-Jack Handy
I'm not a socialist by any degree, but people need to remember that society exists to benefit the members of that society. If the members of a given society are, by and large not enjoying the benefits of that society, it can be said that that society is a failure.
down the amount they owe creditors our economy is not going to improve. Thanks to credit and bankruptcy laws that insure people remain good little economic slaves the recovery date is far, far off.
Out economic 'health' was predicated by our incredibly irresponsible financial habits. Now that we've crashed, we can't recover without being as financially irresponsible as before, but now everyone knows that being that financially irresponsible is what lead to the crash.
From Common Dreams:
If the Russians Did This to Us, We’d Kill ‘Em
From Guardian UK:
Will California become America's first failed state?
Democracy is too important to be entrusted to politicians.
Rise Up!
Protest!
Oh yes... lets keep spending beyond our means and hope it fixes things! Hogwash...
Even IF spending more money that we don't have would "fix" the economy, who is going to lend us the money? *crickets*
If we don't get lent the money, the only way we can spend money we don't have is to first create it out of thin air. This method of creating money is extremely inflationary and screws the people on fixed incomes (the elderly and poor).
Well this economy ain't doing much for people on NO income. Something *has* to be done, what do you propose? Everybody hoisting themselves up by their bootstraps? Spare me the libertarian fantasies.
It is fantasy to believe this country will be able to continue to get loans from other nations to finance an even increased level of deficit spending.
Lenders aside, it is fantasy to believe that we can spend our way out of this financial crisis. Spending beyond our means is how we got into it!
If we REALLY want to start fixing things we need the government to get involved in a postive way.
All the "adjusted" statistics just hide the real problems. Do you believe their unemplyment numbers? Do you believe their inflation numbers? If no, then why would you trust them to take on even more debt in your name to fix the problem that they very likely had a hand in creating in the first place?
Could you please explain what you mean by, "involved in a positive way"?
I pledge allegiance to the Constitution of the United States of America, and to the republic which it established, one nation from many peoples, promising liberty and justice for all
I might be able to buy that a much larger stimulus is needed but that would only work if that additional national debt in the form of taxpayer stimulus money were to go towards something useful.
Expanding the government or creating more service sector jobs will only go so far. We did that in the 90s and it crashed. You can only do each others laundry so many times before that money goes to the orignial makers of the shirt we are washing. I would like to see that stimulus money go towwards manufacturing so that we can boost our exports to other countries.
really bad news for you, noitaluspacne: the Fed has been printing money and pressuring our 'trading partners' to purchase our worthless government bonds based on these worthless dollars for quite some time now. Why do you think the Fed stopped reporting the M3?
What???? They would never do anything like that! That private banking cartel setup by Congress is looking out for the little guys... I mean come on... they saw that the M3 wasn't really useful and they could save us money by not reporting it anymore.
It has nothing to do with them wanting to hide anything... Noooooo.
when us little people print worthless money, it's called counterfeiting. If we get caught, it's called "Go to jail, go directly to jail, do not pass go, do not collect..."
The Obama administration is bowing to republicans who want him to fail. Any more appeasement to the people who got America into this depression and he will lose his majority support which is what the goopers want.
This is not my father's America
Unfortunately Republican = Democrat. They might say they have different views on things, but if they really were as opposite as people make them out to be, why wouldn't things "revert to normal" when democrats regain control?
While this is unfortunate, the GOP wpuld have nothing if Obama knew how to lead. Some things actually are Obama's fault.
follow the corporations...
they all moved overseas...they now operate in China, Brazil, Phillipines, Mexico.
follow the money!
audit-prosecute-incarcerate
I'm actually considering this. My brother and his wife, for example, said they would sponsor me for a move to Canada. I'm not sure what that entails as I've only entertained the conversation briefly.
I know it's not always greener on the other side, but things aren't exactly rosy in my neck of the woods.
(wink/nod)...your best bet!...(IMHO)
audit-prosecute-incarcerate
I wouldn't bet on Canada, at least not B.C. Maybe the Alberta oilfields, but the boom is off there too I hear.
Damn! Edmonton is where my bro is at and in the oil fields.
sponsor me as well? I could be your sister, or your second cousin twice removed... I'm a hard worker... I'm educated... sigh... you've probably had hundreds of similar requests, huh?
I was talking with a friend just yesterday about how much worse is the hateful rhetoric of the M$M rabble-rousers. We both feel that the fuse on the powder keg has almost reached the critical mass...
When I was doing social work in Northwest Arkansas, we were not allowed to go into certain communities without an escort of at least four sheriff's deputies, because the kkk and various other militarists and survivalists have achieved complete dominion in a number of isolated areas.
These fearful, bigoted people are heavily armed. They will not hesitate to 'defend' their homes, and whatever part of their microcosm they deem their own personal property (legally or not). Ruby Ridge merely reinforced for them that the US government is a corrupt, oppressive, deadly foe.
I soooo don't want to be caught in the maelstrom we're about to witness...
On Foc Snooze this morning, the roundtable was POSITIVE that the rising unemployment was PROOF POSITIVE that the stimulus was a total failure and we shouldn't spend another dime.
* There are two types of Republicans: millionaires and suckers.
"Mugsy's Rap Sheet": Recording history for those who seek to rewrite it.
From The Real News Channel at YouTube:
International support for USW strike
Democracy is too important to be entrusted to politicians.
Rise Up!
Protest!
nationalize all natural resources and banks as well .
Utahred ,
Untill we have a solid base , we will be forever doomed to be top heavy .
RE: no jobs
40 + yrs exp ( and yes I used to belong to the USW , joined in 1965 ) as a country if this ( or any other ) admin. does not stop all of the outsourcing , MFG may never come back and fliping burgers is not MFG .
Outsourcing = Gut & Run
every time you throw a little mud , you lose a little ground .
Traveling through Wyoming two weeks ago, my wife I and passed several large wind farms. My wife took some pictures and when I downloaded them I could read the manufacturers name on the generator housing. Suzlon. India's Suzlon is the world's fifth-largest wind-turbine maker by unit sales in the world.
To me this is total madness buying wind-turbines or solar panels from overseas. We have the capacity, knowledge, and skilled workers to make our own. Even if T. Boone Pickens gets his adventure in energy production off the ground, he can't do it alone.
Our economy will continue its downward trend until we begin to rebuild our manufacturing capacity. And, right now the Government has to be the main source of funding. This economy is headed for a long, long slump at the rate it's going.
One out of two unemployed?
http://imgur.com/Prk56.jpg
"every cloud is silver liney"
You'd think they might hire a Chyron operator...
same old republican liars!!!
OK. We are now officially totally f**ked. Reich and Krugman both agree that only a massive new stimulus will save us and there is no way in hell that Obama will propose it or that Congress will pass it (wouldn't be bipartisan, ya know).
like a grain of salt by both Dems and Cons. He's been reduced to a talking head. Of course our Governments overlords have other things in mind.
http://www.forbes.com/feeds/reuters/2009/10/0...
Something I'd like to see anyone talk about is the problem of the older Hi-Tech crowd. I'm 58 years old and been a programmer the entire time. Most of the work I used to to has been sent off-shore and what is going to a much younger work force, as everyone knows only the under 30's understand computers. I've worked on the Space Shuttle, to computer games, to websites and I still get little to no response to my resumes. I've even been told that I should lower my expectation when asking for pay. In desperation I've taken a 1099 contract job as a "Personal Property Agent", that's right I sell 2nd hand goods on eBay.
I would very much like to see some programs targeting those people who are over 55 years old and still have a viable skill set in Hi Tech. We Need help too.
It's true.
Too bad Obama thinks everything can be fixed with another speech about his childhood. Raise your hand if you have voters remorse over B.O.
The cumulative value of all homes in America is now an astounding $12.04 trillion. The gov't should simply buy everyone's mortgage - kind of like single payer for health care - single provider for mortgages.
Yes, it would blow out the debt big time - but: this would be a debt that would get paid. Also, it would eliminate homelessness. You would "own" your house in the same sense you own it today. The mortgage "rates"could be re-amortised out beyond centuries (300 year mortgages?) or simply liquidated.
Housing values would collapse, but your cost for housing would also collapse. And with socialised housing, the USA would be better equipped for the coming resource induced "collapse".
It's called the American Dream because you have to be asleep to believe it.
-George Carlin
i love 'shudda been treasury secretary or fed chairman krugzilla', but you can help lower the unemployment rate w/out ignoring the debt, 1st you need to change the framing of what the talking heads on the teevee are talking about, it's NOT one OR the other, you CAN do both
Until the federal government decide to spend enough money to jump start the economy. People forget that government revenues and expenses are tied to the economy. As the economy spirals downward revenue will decrease and expenses will increase and the deficit will growth. It would be much better for the government to spend the money to jump start the economy which will increase revenue and lower expenses and reduce the deficit. It may not be obvious but the true is that the more money the government spends the more money it collects in revenues. During a recession if the government decides to cut spending you will end up with a depression. What maybe true for an individual is not true for the collective.
up untill your second to the last sentence , ending the funding for the MIC , bank bailouts , INS and Pharma hand outs , this would jump start the economy 10x over and out .
every time you throw a little mud , you lose a little ground .
what is this moron talking about?
scarborough sounds like a complete f****** idiot. filibustering with complete nonsense. let a man who knows something speak. jesus. that clip gave me headache , im going to bed.
Scarborough is obviously out early with the Republican talking point for he 2010 midterm elections.
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