[Cross-posted at Crooks and Liars.]
It was kind of a shock to see Robert Borosage of the Campaign for America's Future actually make it onto Fox News yesterday to talk about that statement from 300 progressive economists urging Congress to proceed apace with President Obama's infrastructure-investment stimulus proposal, because such views so rarely get aired on Fox.
Of course, they brought on right-wing economist Peter Schiff -- an Austrian-school economist long associated with Ron Paul -- to argue that the reason George W. Bush's economic approach failed was that he was too much of a socialist. Right.
Moreover, Schiff's solution to everything is "free markets" and ending all government intervention. Which, in reality, is exactly what got us into this mess in the first place: The GOP's "small government" mantra, after all, led to the massive deregulation and breakdown of economic firewalls that produced this ongoing recession. If anyone listened to Schiff, we'd essentially be taking a big dose of PCBs to cure our cancer.
Here's the economists' statement:
Today there is a grave danger that the still-fragile economic recovery will be undercut by austerity economics. A turn by major governments away from the promotion of growth and jobs and to premature focus on deficit reduction could slow growth and increase unemployment – and could push us back into recession.Be sure to read the whole thing [PDF file].
History suggests that a tenuous recovery is no time to practice austerity. In the Great Depression, Franklin Roosevelt’s New Deal generated growth and reduced the unemployment rate from 25 percent in 1932 to less than 10 percent in 1937. However, the deficit hawks of that era persuaded President Roosevelt to reverse course prematurely and move toward budget balance. The result was a severe recession that caused the economy to contract sharply and sent the unemployment rate soaring. Only the much larger wartime spending of the early 1940s produced a full recovery.
Today, the economy is growing only weakly. 7.8 million jobs have been lost in the recession. Consumers, having suffered losses in home values and retirement savings, are tightening their belts. The business sector, uncertain about consumer spending, is reluctant to invest in expansion or job creation, leaving the economy trapped on a path of slow growth or stagnation. Over 20 million American workers are now unemployed, underemployed or simply have given up looking for a job.
The President and Congress should redouble efforts to create jobs and send aid to the states whose budget crises threaten recovery by forcing them to lay off school teachers, public safety workers, and other essential workers. It also makes sense to invest in public service jobs – and in infrastructure projects for transportation, water, and energy conservation that will make our economy more productive for years to come.
Borosage also wrote a piece outlining the statement and the reasoning behind it:
None of this is radical. Even the market fundamentalists at the International Monetary Fund are warning the U.S. against a premature turn to deficit reduction. Any honest investor would agree that this is a great opportunity to rebuild America. No one with any familiarity with the federal budget would disagree that it is health care costs that drive long-term deficits and terrifying debt projections.We can't expect Republicans to listen: They're too intent on proving their broken and misshapen ideology right even after its gross failures have been manifested. But Democrats better listen up.
And America's watchword is optimism, a belief that we can forge our own future. Have we become so timid or confused that we will now lower our sights, concentrate on balancing our books, and forgo making the reforms vital to creating an economy the works? I don't think so. It is a measure of how distorted our political debate has become that common sense is so rare. But what's the alternative? "Hell no, you can't," taunted Republican House minority leader John Boehner in the health care debate. Good theater—but it won't take us where we need to go.