Kai Ryssdal: We know a little more today about how the next round of the budget fight is going to shape up. The GOP named its members of the super committee that’s supposed to agree on $1 trillion-plus in federal budget cuts.
Commentator Robert Reich says the problem isn’t just a failure to compromise. It’s that it takes our eye way off the ball.
Robert Reich: We’re slouching toward a double dip because we’re getting the problem wrong. We’re not in a debt crisis. Our current crisis is jobs, wages and growth.
The economy is almost at a standstill, with almost no growth in the first half of the year. Although Friday’s job report showed 117,000 new jobs in July, that’s not enough to keep up with population growth, which means even more people have stopped looking for work.
A smaller percent of adult Americans is now working full time than in almost three decades.
The Fed cannot boost the economy by itself. Its near-zero interest rates haven’t worked to date and there’s no reason to suppose they’ll work any better in the future.
We also need an expansive fiscal policy. Yet last week’s budget deal makes it politically harder to enact the stimulus we need. There’s a huge gap between what increasingly scared consumers are willing to spend and what the economy could produce at or near full employment.
Republicans continue to claim the original stimulus didn’t work, but revised data show the drop in 2008 far greater than assumed. The economy plunged 8.9 percent in the fourth quarter of 2008 — the steepest quarterly decline in more than half a century. And in 2009 household buying contracted more than it has in almost 60 years.
So, the original stimulus was way too small to offset this. With cash-starved state and local governments simultaneously scaling back their own spending, the stimulus needed to be even bigger.
The only hope now is voters will tell their members of Congress, who are on recess back home, to enact a bold jobs plan to jumpstart the economy. The government can now borrow money more cheaply than ever and use it for our roads, bridges, ports, parks, schools and everything else that’s being neglected — including more than 20 million Americans who want and need work.
Ryssdal: Robert Reich was secretary of labor for President Clinton. His most recent book is called Aftershock: The Next Economy and America’s Future. Next week, David Frum. Send us your comments — click on this contact link.
Stories You Might Like
There’s a lot happening in the world. Through it all, Marketplace is here for you.
You rely on Marketplace to break down the world’s events and tell you how it affects you in a fact-based, approachable way. We rely on your financial support to keep making that possible.
Your donation today powers the independent journalism that you rely on. For just $5/month, you can help sustain Marketplace so we can keep reporting on the things that matter to you.
