Government budget deficit | Be a Seed for Change

It’s Time to Focus on Jobs & Growth

For the better part of three years Washington has been gripped by an obsession with the deficit, but a new paper out from the Center for American Progress today argues that it’s time to abandon austerity, ditch deficit hysteria, and instead focus on jobs and economic growth.

What’s changed since Washington caught deficit fever in 2010? A lot, as it turns out.

The deficit has been significantly reduced and stabilized.

We have already enacted significant deficit reduction: $2.5 TRILLION worth, three-quarters of which has come from spending cuts.
Health care spending has grown much more slowly than expected, due in part to Obamacare.

The intellectual argument in favor of austerity collapsed in a somewhat spectacular fashion.
The implementation of austerity in Europe has been nothing short of disastrous. Unemployment in the Eurozone is at a record high and the UK’s austerity almost resulted in triple-dip recession and has actually resulted in more, not less debt.

What hasn’t changed? We continue to have tepid growth and the economy is not creating nearly as many jobs as it could or should be.

In fact, we don’t even need the painful and ill-conceived sequester cuts to achieve the level of deficit reduction that we originally set out to, hence the report calls for replacing it for the next three years.

So instead of painful austerity and needless hysteria about the deficit and debt, we ought to be making investments in order to grow the middle class and the economy along with it. The report identifies $82 BILLION worth of pro-growth investments:

$50 BILLION to fix our crumbling infrastructure.
$20 BILLION for early childhood education.
$12 BILLION for the “Pathways Back to Work Fund,” which would help provide opportunities for the long-term unemployed, young people, and low-income people.

Now is the perfect time to make these kinds of investments as interest rates on government bonds are unusually low right now.

In addition to all of these key facts, it’s also time to recognize some political realities. Since Republicans refuse to negotiate in good faith toward a so-called “grand bargain” there is no point in continuing to pursue one. Instead, we ought reset the debate, replace the sequester for three years with an achievable package of cuts and revenue increases, and turn our attention toward making the investments we need to fuel jobs and growth.You can read the entire report in all of its wonky goodness HERE.

BOTTOM LINE: Austerity is dead — or at least it should be.

Economic Effects of Reducing the Fiscal Restraint That Is Scheduled to Occur in 2013

Policymakers are facing difficult trade-offs in formulating the nation’s fiscal policies. On the one hand, if the fiscal policies currently in place are continued in coming years, the revenues collected by the federal government will fall far short of federal spending, putting the budget on an unsustainable path. On the other hand, immediate spending cuts or tax increases would represent an added drag on the weak economic expansion.

CBO Analyzes Effects of Fiscal Restraint Scheduled Under Current Law

Policymakers face difficult trade-offs in deciding how quickly to implement policies to reduce budget deficits. On the one hand, cutting spending or increasing taxes slowly would lead to a greater accumulation of government debt; on the other hand, immediate spending cuts or tax increases would represent an added drag on the weak economic expansion.

Senate Amendment 2122 in the Nature of a Substitute to S. 3187, the Food and Drug Administration Safety and Innovation Act

CBO Estimate of the Statutory Pay-As-You-Go Effects for Senate Amendment 2122 in the Nature of a Substitute to S. 3187, the Food and Drug Administration Safety and Innovation Act