Monday, October 19, 2015

Austerity 101: Why Republican deficit reduction is bad economics

Robert Reich dons his academic garb and explains why the opposite, government spending, is a cure and not an affliction in his blog. The outline follows.

  • FIRST: Deficit and debt numbers are meaningless on their own. They have to be viewed as a percent of the national economy.
  • SECOND: America needs to run larger deficits when lots of people are unemployed or underemployed – as they still are today ... in every economic downturn and in every struggling recovery – more government spending helps create jobs – teachers, fire fighters, police officers, social workers, people to rebuild roads and bridges and parks. And the people in these jobs create far more jobs when they spend their paychecks.
  • THIRD AND FINALLY: Deficit spending on investments like education and infrastructure is different than other forms of spending, because this spending builds productivity and future economic growth.

Check out his blog for more of his reasoning.

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