Let’s get one thing
straight: America is not facing a fiscal crisis. It is, however, still very
much experiencing a job crisis. It’s easy to get confused, since everyone’s
talking about the “fiscal cliff.” Indeed, one recent poll suggests that a large
plurality of the public believes that the budget deficit will go up if we go
off that cliff. In fact, of course, it’s just the opposite: The danger is that
the deficit will come down too much, too fast. And the reasons that might
happen are purely political; we may be about to slash spending and raise taxes
not because markets demand it, but because Republicans have been using
blackmail, and the president seems ready to call their bluff.
Moreover, despite
years of warnings from the usual suspects about the dangers of deficits and
debt, our government can borrow at incredibly low interest rates. And don’t tell me that markets may suddenly
turn on us. Remember, the U.S. government can’t run out of cash (it prints the
stuff), so the worst that could happen would be a fall in the dollar, which
wouldn’t be a terrible thing and might actually help the economy.
Let’s get one thing straight: America is not facing
a fiscal crisis. Yet lavishly funded
corporate groups keep hyping the danger of government debt and the urgency of
deficit reduction now— except that these same groups are suddenly warning
against too much deficit reduction. No wonder the public is confused.
Meanwhile, there is
almost no organized pressure to deal with the terrible thing that is actually
happening right now — namely, mass unemployment. Yes, we’ve made progress over
the past year. But long-term unemployment remains at levels not seen since the
Great Depression: as of October, 4.9 million Americans had been unemployed for
more than six months, and 3.6 million had been out of work for more than a
year. Worse yet, there are good reasons to believe that high unemployment is
undermining our future growth as well, as the long-term unemployed come to be
considered unemployable, as investment falters in the face of inadequate sales.
So what can be done?
The panic over the fiscal cliff has been revelatory. It shows that even the
deficit scolds are closet Keynesians. That is, they believe that right now
spending cuts and tax hikes would destroy jobs; it’s impossible to make that
claim while denying that temporary spending increases and tax cuts would create
jobs. Yes, our still-depressed economy needs more fiscal stimulus.
And, to his credit,
President Obama did include a modest amount of stimulus in his initial budget
offer; the White House, at least, hasn’t completely forgotten about the
unemployed. Unfortunately, almost nobody expects those stimulus plans to be
included in whatever deal is eventually reached.
So why aren’t we
helping the unemployed? It’s not because we can’t afford it. Given those
ultralow borrowing costs, plus the damage unemployment is doing to our economy
and hence to the tax base, you can make a pretty good case that spending more
to create jobs now would actually improve our long-run fiscal position.
Nor, I think, is it
really ideology. Even Republicans, when opposing cuts in defense spending,
immediately start talking about how such cuts would destroy jobs — and I’m
sorry, but weaponized Keynesianism, the assertion that government spending
creates jobs, but only if it goes to the military, doesn’t make sense.
No, in the end it’s
hard to avoid concluding that it’s about class. Influential people in
Washington aren’t worried about losing their jobs; by and large they don’t even
know anyone who’s unemployed. The plight of the unemployed simply doesn’t loom
large in their minds — and, of course, the unemployed don’t hire lobbyists or
make big campaign contributions. So the unemployment crisis goes on and on,
even though we have both the knowledge and the means to solve it. It’s a vast
tragedy — and it’s also an outrage. [Abridged]
Paul Krugman was the 2008 recipient of the
Nobel Prize in Economics. © 2012
The New York Times
http://www.commondreams.org/view/2012/12/07-9
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