03 June 2010

Stop digging!

The Economist: Free Exchange | R.A. | Labour markets: Can you feel the recovery?

I was prepared to take issue with the meat of David Leonhardt's argument in this piece, on the fate of the latest federal jobs package:
When Congressional leaders announced plans for a new $200 billion jobs bill recently, Mr. Cooper and other centrist House Democrats saw a chance to do something tangible. Only about a third of the bill’s cost would have been paid, by closing tax loopholes for investment managers and overseas businesses. The remaining $134 billion would have been added to the deficit. [...]
This is no dilemma. The $134 billion in borrowing the first iteration of the bill would have added is worth roughly 1% of the current national debt. It's practically a rounding error.
I'm a big believer that if we're going to fix this mess, we need to tackle big chunks of the deficit. As in eliminating entire cabinet departments.  And that's just to get us started.  $134B is fiddling around the margins and it's never going to make a huge dent either way.

But we're never going to make any progress at all if we can say "oh, hell, it's only 1% — keep spending!" One percents add up quick.

We need programs that are in the black. Even "deficit neutral" is bullshit. If anything that is only a percent or two in the red gets a free pass we're never going to get back on firm footing.  We're never going to amass the political will to get out of the hole we're in if we can't even summon the will to stop digging.

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