Thursday, July 16, 2009

Dina Titus Concerned About Deficit... And Hopefully Economic Recovery?

(Also at OC Progressive)

Honestly, I can understand why she'd say this.

Freshman Democrats, worried that the ballooning budget deficit is stoking voter anxiety, are urging House leaders to put forward a “credible” plan this year to cut it.

They say the need is urgent and a serious deficit-reduction measure must be added by Speaker Nancy Pelosi (D-Calif.) and other leaders to an already jam-packed legislative agenda.

“My constituents are very concerned about the deficit,” said freshman Rep. Dina Titus (D-Nev.), elected with 47 percent of the vote in a swing district last year. “This is really starting to resonate.”

The corporate media are relentlessly pushing this story about "big government spending". And of course, the Republicans are trying to make "The Obama Recession Debt Deficit Enslavement" into some political boon in 2010 and 2012.

If we were to believe them, then all this "big government spending" is really scary business. But in reality, it's not. In fact, we need this government investment in our economy to offset all the money that the private sector's been pulling out and stimulate economic activity. While I've had my own critiques of President Obama's stimulus package (mainly that it wasn't big enough and overloaded with too many corporate tax cuts), I just can't overlook that we will have been far worse off by the end of this year without it.

So maybe, just maybe, this may be the one time I'll criticize Dina Titus. I know she needs to "talk tough on deficit spending" to sound "moderate" enough to keep winning over voters next year. And yes, I do think reducing deficit spending should be an important priority once our economic house was back in order. If President Clinton could do it 15 years ago, we can do it again! However, the last thing our economy needs right now is any further loss of investment.

If anything, we need more investment to stimulate our economy, not less!

Policymakers in Washington should thus not be fooled by the slowed increase in unemployment numbers; they have to keep doing things that will get people back to work. The most important trigger for economic recovery over the last century has been the growth of aggregate demand for consumer goods--which comes primarily from employed workers. If the number of employed workers declines, then there is a corresponding decline in income and demand. In a recession, that kind of decline can degenerate into a vicious spiral, as those who are still employed, seeing the threat of unemployment looming, choose to save rather than spend. As a result, demand is further reduced, more people are laid off, and the downward spiral continues.

So employment numbers aren't just a good sign of whether we are headed upwards or downwards; increasing employment through government spending is the most important way that the White House and Congress can get us out of this slump. That's worth remembering as Republicans and renegade Democrats call for budget cuts. This is not a time for cuts--it's time to begin thinking about whether a second stimulus program will be necessary.

As long as people keep losing their homes and their jobs, we shouldn't be talking about counteracting the good benefits we're just starting to see from increased government investment by pulling back some of that very needed investment. Again, we can talk about deficit reduction when unemployment's back below 5%, the foreclosure crisis has become a thing of the past, and most working families are no longer worrying over whether they have enough money to pay the bills. But until then, we need more stimulus, not less, (along with many more needed reforms, like universal health care and re-regulation of the financial industry) to get this nation out of this horrid Great Recession.

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