Wednesday, August 10, 2011

Best Way to Reduce Defecit: Put People Back to Work

The debt ceiling crisis was solved on August 2nd with the passage and signing of the Budget Control Act of 2011. And yet, the debt ceiling and deficit reduction were and are two completely different topics. The current emphasis on spending cuts is misguided. The focus should be on putting people back to work which will rebuild the economy.

Our nation continues to struggle as there is a real need to put people back to work. The first round of deficit reduction outlined in the act (to take effect on October 1, 2011) comes from nearly $1 trillion in spending cuts alone that will eliminate millions of jobs and weaken our anemic economic recovery further by jeopardizing increased revenue. The Commerce Department reported two weeks ago that the economy barely expanded in the second quarter of this year, growing at a 1.3 percent annual rate and last week it reported that consumer spending, which accounts for two-thirds of the nation’s economic activity, fell for the first time in two years. Both of these reports have added to concern among economists that the country could slip into a second recession.

Quite simply, this legislation does not create one single job. This is worrisome at a time when 13.9 million Americans are unemployed at a rate of 9.1% in July. Not only government jobs will be lost, but also private sector jobs supported with federal funds, such as people working in the defense industry, workers fixing our road and bridges, and researchers studying diseases. Economists agree that investments in worker productivity, physical and social improvements, and research and innovation are vital to getting people back to work in the short term and making sure that our economy grows in the long run. (August 4, 2011 Letter to Senate Majority Leader, Harry Reid and Minority Leader, Nancy Pelosi from the Leadership Conference on Civil and Human Rights)

What is even more frustrating is that our leaders in Washington, DC failed to include any measures to stimulate the economy during debt-ceiling negotiations. Senate Majority Leader, Harry Reid, had asked his colleagues in June to submit proposals to spur economic growth by focusing on measures that would “build bridges and dams and water systems and sewer systems” along with tax incentives to get businesses to hire new employees. Now, with the debt agreement in place, there is little room for funding to pay for economic stimulation measures. In fact, conservative members of Congress have “no appetite for extending unemployment insurance” when they return to work after their August recess.

In order to put people back to work, all facets of solving deficit reduction and stimulus for job growth should be on the table for consideration: additional revenues, entitlement reforms, as well as cuts to both defense and domestic programs.