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
February 17, 2017
Friday - Sunday
David Price
Rogue Elephant Rising: The CIA as Kingslayer
Matthew Stevenson
Is Trump the Worst President Ever?
Jeffrey St. Clair
Roaming Charges: Tinker, Tailor, Soldier, Flynn?
John Wight
Brexit and Trump: Why Right is Not the New Left
Diana Johnstone
France: Another Ghastly Presidential Election Campaign; the Deep State Rises to the Surface
Neve Gordon
Trump’s One-State Option
Roger Harris
Emperor Trump Has No Clothes: Time to Organize!
Joan Roelofs
What Else is Wrong with Globalization
Andrew Levine
Why Trump’s Muslim Travel Ban?
Mike Whitney
Blood in the Water: the Trump Revolution Ends in a Whimper
Vijay Prashad
Trump, Turmoil and Resistance
Ron Jacobs
U.S. Imperial War Personified
David Swanson
Can the Climate Survive Adherence to War and Partisanship?
Andre Vltchek
Governor of Jakarta: Get Re-elected or Die!
Patrick Cockburn
The Coming Destruction of Mosul
Norman Pollack
Self-Devouring Reaction: Governmental Impasse
Steve Horn
What Do a Louisiana Pipeline Explosion and Dakota Access Pipeline Have in Common? Phillips 66
Brian Saady
Why Corporations are Too Big to Jail in the Drug War
Graham Peebles
Ethiopia: Peaceful Protest to Armed Uprising
Luke Meyer
The Case of Tony: Inside a Lifer Hearing
Binoy Kampmark
Adolf, The Donald and History
Robert Koehler
The Great American Awakening
Murray Dobbin
Canadians at Odds With Their Government on Israel
Fariborz Saremi
A Whole New World?
Joyce Nelson
Japan’s Abe, Trump & Illegal Leaks
Christopher Brauchli
Trump 1, Tillerson 0
Yves Engler
Is This Hate Speech?
Dan Bacher
Trump Administration Exempts Three CA Oil Fields From Water Protection Rule at Jerry Brown’s Request
Richard Klin
Solid Gold
Melissa Garriga
Anti-Abortion and Anti-Fascist Movements: More in Common Than Meets the Eye
Thomas Knapp
The Absurd Consequences of a “Right to Privacy”
W. T. Whitney
The Fate of Prisoner Simón Trinidad, as Seen by His U. S. Lawyer
Brian Platt
Don’t Just Oppose ICE Raids, Tear Down the Whole Racist Immigration Enforcement Regime
Paul Cantor
Refugee: the Compassionate Mind of Egon Schwartz
Norman Richmond
The Black Radical Tradition in Canada
Barton Kunstler
Rallying Against the Totalitarian Specter
Judith Deutsch
Militarism:  Revolutionary Mothering and Rosie the Riveter
Nyla Ali Khan
Kashmir Evoked a Lot More International Attention in the 1950s Than It Does Now
Adam Phillips
There Isn’t Any There There
Louis Proyect
Steinbeck’s Red Devils
Randy Shields
Left Coast Date: the Dating Site for the ORWACA Tribe
Charles R. Larson
Review: Bill Hayes’ “Insomniac City”
David Yearsley
White Supremacy and Music Theory
February 16, 2017
Peter Gaffney
The Rage of Caliban: Identity Politics, the Travel Ban, and the Shifting Ideological Framework of the Resistance
Ramzy Baroud
Farewell to Doublespeak: Israel’s Terrifying Vision for the Future
FacebookTwitterGoogle+RedditEmail