320. Deficits and unemployment.
February 25, 2010 § Leave a comment
Not just obama but the country and its people are in a bad trap. Is there any – any – solution within the parameteres of the current structural arrangements of the american economy?
Address jobs now and deficits later, by Lawrence Mishel and David M. Walker: President Barack Obama is in a difficult position when it comes to deficits. Today's high deficits will have to go even higher to help address unemployment. At the same time, many Americans are increasingly concerned about escalating deficits and debt. What's a president to do?
The answer, from a policy perspective, is not that hard: A focus on jobs now is consistent with addressing our deficit problems ahead. …
via Economist’s View.
Mark Thoma responds there
I don’t have any problems with this in principle, my concern is the call for immediate action on the long-term problem. I’m not sure that the short-term and long-term budget issues can be kept separate in the political and public debates. Attempts to deal with structural deficit problems — even just plans for the future — at a time when the economy is in a recession and needs to increase, not decrease the deficit makes effective policy responses harder. The time will come for an open, public debate about the long-run budget issues, but a time when increases in the deficit are needed to create jobs may not be the best time to take on the long-term budget challenge.
This is the voice of sane accommodation to the facts, but will it be enough? I have concluded no, bigger changes or deeper decadence are in the future. I may be wrong. But it is what I think now.