Budget Deficit vs. Job Growth
This article was published pre Obama's speech Thursday so disregard the heavily affiliated political conclusion. The author, Paul Krugman, discussed his distaste for what has taken place (what hasn't taken place) in Washington over the last couple of years.
It is most definitely a horrifying statistic seeing the federal debt, and even more so when you combine the increasing health care costs. However, the Unemployment rate remaining idle at 9.1% must be the main focus of everyone involved in stimulating the economy. All of the scare linked to the budget deficits have acted as blinders to Congress.
It is impossible to tell if Obama's newest stimulus is going to be effective in dealing with the mass unemployment. We should all be able to agree that in order to deal with the budget deficits we must first and foremost do whatever is necessary to create new jobs. The budget deficit talks are still going to be around in a couple years, hopefully the unemployment isn't!
What interested me most about the article was the author’s suggestion that the last year has been almost a test case for the belief that cutting government spending creates jobs. The author makes it clear that there has been a trend in politics to spend less. Stimulus spending is on its way out and politicians across the country are lobbying for balanced budgets or cuts in spending. Yet if the result of this strategy is a lack of demand and stagnant high employment rate then I agree with the author that Washington should probably try a new direction with the economy.
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