Friday, January 04, 2013

The December jobs report proves the fiscal cliff deal a farce

I agree with Ezra Klein, The December jobs report proves the fiscal cliff deal a farce

"Let’s say I gave you three pieces of information about the U.S. economy. First, we have a terrible unemployment problem that’s not solving itself anytime soon. Second, we’re running big deficits that we expect will become unsustainable in the coming years, though there’s no evidence that the market is even mildly concerned about them right now. Third, we can borrow for next to nothing because the world sees us as a rare safe harbor during a time of global economic turmoil. What sort of economic policy would you design?

It’s not a particularly hard question. First, you’d want policies to create jobs, like a big tax credit for businesses that hire new workers and a large investment in rebuilding infrastructure. Then, you’d want a plan that brought both deficits and debt-to-GDP down in the coming years.

Typically, this is where you’d run into trouble: The policies to create jobs cost money, making it harder to reduce the deficit. The policies to reduce the deficit require you to cut spending and raise taxes, which tend to destroy jobs.

But, happily, America’s lucky situation means you don’t have to choose. We can borrow for nearly nothing right now — actually, less than nothing after accounting for inflation — and so the obvious answer to your dilemma is to borrow now to create jobs while putting in place a significant deficit-reduction plan that would begin once unemployment fell below, say, seven percent. If you didn’t want to work very hard at coming up with all these plans yourself, you could just pass the White House’s American Jobs Act now and then the Simpson-Bowles deficit-reduction plan after that."

This all makes so much sense to me and liberals have been saying it for years (and I've been linking to them). I know that politics is polarized and I know that in negotiations if the two sides both say "I want this" and "I want that" you don't get very far. But I always got around that by saying "I want this because…" and explaining what the problem is and why I think the thing I want will help that. Usually that means the other side will offer solutions they think will help the problem and we can figure out which is better. But with polarized sides each getting information from their own sources I don't expect that much in the media.

That's sad and wrong but shouldn't be destroying our country's ability to function. But I don't see the elected officials having talks like this (see this from yesterday). I keep wondering, if Boehner can't rally the tea partiers, when does Obama meet with them (or have Biden or Geithner meet with them) to explain the above and explain why they have their positions? I don't expect Eric Cantor to be convinced while on TV but in a closed meeting with the president? As Paul Krugman says, the facts have a liberal bias, it should be easy to use them to convince someone (anyone) to change their position. But no, as Ezra points out, Washington continues to have the wrong debate.

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