FacebookTwitterGoogle+RedditEmail

Full-Employment and Political Will

by MARK WEISBROT

Three years after our worst recession since the Great Depression officially ended, the U.S. economy is still very weak.  The people most hurt by this weakness are the unemployed and the poor, and of course the two problems are related. We have about 23 million people who are unemployed, involuntarily working part-time, or have given up looking for work — nearly 15 percent of the labor force.  And poverty has reached 15.1 percent of the population;  amazingly, a level that it was at in the mid-1960s.

The first priority of the U.S. government should therefore be restoring full employment.  This is a relatively easy thing to do.  As Nobel laureate economist Paul Krugman aptly put it: “It’s like having a dead battery in a car, and while there may be a lot wrong with the car, you can get the car going remarkably easily, if you’re willing to accept that’s what the problem really is.”

Most economists are well aware what the problem really is, since it is so simple and basic.  The economy lost about $1.3 trillion in private annual spending when the real estate bubble burst in 2007, and much of that has not recovered. State and local governments continue to tighten their budgets and lay off workers.  If the federal government had simply funded these governments’ shortfalls, we would have another two million jobs today.

The right says we can’t borrow and spend our way to full employment, but there is no economic basis for their arguments.  In fact, the federal government can borrow at 1.6 percent interest today for 10 year bonds.  This is basically free money, and for those who want it to be absolutely free, the Federal Reserve has created $2.3 trillion since 2008 and can create more if the federal government is willing to spend it.  The inflation-paranoids haven’t noticed, but the Fed hasn’t created any inflation problem in the U.S.:  the Consumer Price Index is currently running at just 1.7 percent annually.

We won’t have a federal public debt problem either, at least not any time soon.  The easiest way to see this is to look at the net interest payments on our federal public debt:  these are less than 1.4 percent of GDP, which is as low as it has been in the post-World War II period.  This is the real burden of the debt; all those big numbers you hear about trillions of dollars are mainly thrown around to frighten people.

In the long run, there is a budget problem – but this is entirely due to health care spending.  If you pick any country with as high a life expectancy as ours, and plug their health care costs per person into our budget, our long-term budget deficit will disappear.  So we just need to have normal health care costs – not budget cuts.

If this sounds different from what you have been hearing from the media, that is a problem of public education.  The airwaves and cyberspace are filled with junk promoted by people who would like to cut spending on Social Security, for people receiving an average of just $1100 a month. Most of these senior citizens are relying on this modest payment for most of their income.

There are plenty of things that the federal government can spend money on that will make this a better country, like funding for state and local governments so they don’t have to lay off teachers, or public transportation and renewable energy.  The government can also save millions of jobs, as Germany has successfully done, by subsidizing employers to keep workers on the job at shorter hours, rather than laying them off.  The problem is not a lack of solutions, but a lack of political will.

Mark Weisbrot is an economist and co-director of the Center for Economic and Policy Research. He is co-author, with Dean Baker, of Social Security: the Phony Crisis.

This article originally appeared in The Sacramento Bee. 

 

Mark Weisbrot is co-director of the Center for Economic and Policy Research, in Washington, D.C. and president of Just Foreign Policy. He is also the author of  Failed: What the “Experts” Got Wrong About the Global Economy (Oxford University Press, 2015).

More articles by:

CounterPunch Magazine

minimag-edit

bernie-the-sandernistas-cover-344x550

zen economics

Weekend Edition
May 26, 2017
Friday - Sunday
Anthony DiMaggio
Swamp Politics, Trump Style: “Russiagate” Diverts From the Real White House Scandals
Paul Street
It’s Not Gonna Be Okay: the Nauseating Nothingness of Neoliberal Capitalist and Professional Class Politics
Jeffrey St. Clair
The ICEmen Cometh
Ron Jacobs
The Deep State is the State
Pete Dolack
Why Pence Might be Even Worse Than Trump
Patrick Cockburn
We Know What Inspired the Manchester Attack, We Just Won’t Admit It
Thomas Powell
The Dirty Secret of the Korean War
Mark Ashwill
The Fat Lady Finally Sings: Bob Kerrey Quietly Resigns from Fulbright University Vietnam Leadership Position
John Davis
Beyond Hope
Uri Avnery
The Visitation: Trump in Israel
Ralph Nader
The Left/Right Challenge to the Failed “War on Drugs”
Traci Yoder
Free Speech on Campus: a Critical Analysis
Dave Lindorff
Beware the Supporter Scorned: Upstate New York Trump Voters Hit Hard in President’s Proposed 2018 Budget
Daniel Read
“Sickening Cowardice”: Now More Than Ever, Britain’s Theresa May Must be Held to Account on the Plight of Yemen’s Children
Ana Portnoy
Before the Gates: Puerto Rico’s First Bankruptcy Trial
M. Reza Behnam
Rethinking Iran’s Terrorism Designation
Brian Cloughley
Ukraine and the NATO Military Alliance
Josh Hoxie
Pain as a Policy Choice
David Macaray
Stephen Hawking Needs to Keep His Mouth Shut
Ramzy Baroud
Fear as an Obstacle to Peace: Why Are Israelis So Afraid?
Kathleen Wallace
The Bilious Incongruity of Trump’s Toilet
Seth Sandronsky
Temping Now
Alan Barber – Dean Baker
Blue Collar Blues: Manufacturing Falls in Indiana, Ohio and Pennsylvania in April
Jill Richardson
Saving America’s Great Places
Richard Lawless
Are Credit Rating Agencies America’s Secret Fifth Column?
Louis Proyect
Venezuela Reconsidered
Murray Dobbin
The NDP’s Singh and Ashton: Flash Versus Vision
Ron Leighton
Endarkenment: Postmodernism, Identity Politics, and the Attack on Free Speech
Anthony Papa
Drug War Victim: Oklahoma’s Larry Yarbrough to be Freed after 23 Years in Prison
Rev. John Dear
A Call to Mobilize the Nation Over the Next 18 Months
Yves Engler
Why Anti-Zionism and Anti-Jewish Prejudice Have to Do With Each Other
Ish Mishra
Political Underworld and Adventure Journalism
Binoy Kampmark
Roger Moore in Bondage
Rob Seimetz
Measuring Manhoods
Edward Curtin
Sorry, You’re Not Invited
Vern Loomis
Winning the Lottery is a State of Mind
Charles R. Larson
Review: Mary V. Dearborn’s “Ernest Hemingway”
David Yearsley
The Ethos of Mayfest
May 25, 2017
Jennifer Matsui
The Rise of the Alt-Center
Michael Hudson
Another Housing Bubble?
Robert Fisk
Trump Meets the New Leader of the Secular World, Pope Francis
John Laforge
Draft Treaty Banning Nuclear Weapons Unveiled
Benjamin Dangl
Trump’s Budget Expands War on the Backs of America’s Poor
Alice Donovan
US-Led Air Strikes Killed Record Number of Civilians in Syria
Andrew Moss
The Meaning of Trump’s Wall
FacebookTwitterGoogle+RedditEmail