Conservative economic orthodoxy states that the way to revive the economy is to slash government spending, cut taxes and deregulate. Well, we've been implementing this formula. Deficit cutting has taken precedence over jobs, the debt ceiling agreement included not one penny of added revenue and the benefits of stimulus have been discounted. One recent, telling result? Zero job growth in August. Unemployment means less consumer demand–the ultimate cause for economic stagnation. Paul Krugman (left) comments on the failure of right-wing fiscal policies and calls upon Obama to make a bold proposal and shift the main focus from the deficit to jobs:
…the past year has actually been a pretty good test of the theory that slashing government spending actually creates jobs. The deficit obsession has blocked a much-needed second round of federal stimulus, and with stimulus spending, such as it was, fading out, we’re experiencing de facto fiscal austerity...
...somehow the private sector hasn’t responded to these layoffs by rejoicing at the sight of a shrinking government and embarking on a hiring spree.
…when McClatchy Newspapers recently canvassed a random selection of small-business owners to find out what was hurting them, not a single one complained about regulation of his or her industry, and few complained much about taxes…
So short-run deficits aren’t a problem; lack of demand is, and spending cuts are making things much worse. Maybe it’s time to change course?
…we should have a lot of job-creating spending on the part of the federal government, largely in the form of much-needed spending to repair and upgrade the nation’s infrastructure. Oh, and we need more aid to state and local governments, so that they can stop laying off schoolteachers.
… I’m personally prepared to cut Mr. Obama a lot of slack on the specifics of his [jobs] proposal, as long as it’s big and bold. For what he mostly needs to do now is to change the conversation — to get Washington talking again about jobs and how the government can help create them.