AFL-CIO President Richard Trumka will address a rare public meeting of the Bowles-Simpson fiscal commission today and tell them that the best deficit reduction strategy at this time of mass unemployment would be job growth. Over 15 million Americans are out of work, and therefore the huge opportunity loss of economic and tax revenue creates a deficit that could easily bring down the debt over the long term. Trumka will warn about withdrawing stimulus spending before the recovery has taken hold, which would be catastrophic. Here are some advance quotes:
“Without a significant reduction in the trade deficit, only economic stimulus in the form of deficit spending can make up for the remaining shortfall of aggregate demand until private sector demand regains its footing.
“But instead, we are heading in the opposite direction. We are prematurely withdrawing economic stimulus, allowing the Recovery Act to phase out and standing by passively as state and local governments plan to lay off 900,000 workers.
“By withdrawing economic stimulus, we run the risk not only of prolonging the jobs crisis for several more years, but also of bringing about a “double dip” recession—or even what Paul Krugman calls “a third Depression.”
In addition to Trumka’s remarks, House Democrats and the White House are taking direct aim at John Boehner’s comments yesterday. Press Secretary Robert Gibbs said yesterday that Boehner “open(ed) one’s mouth and remov(ed) most of the doubt that you’re completely out of touch with America.” And two House members, Ways and Means Committee Chairman Sander Levin and Social Security Subcommittee Chairman Earl Pomeroy, blasted Boehner as well:
“The American people should take note of the Republican Leader’s proposals to undermine Social Security,” said Chairman Levin. “Generations of Americans have worked long and hard to earn the benefits paid through Social Security and these funds should not be used to pay for anything else, as suggested by Mr. Boehner. This outrageous proposal pulls the cover from the Republicans’ misguided priorities to undermine the universal support Social Security has enjoyed for generations.”
“Republicans want to repeal the estate tax for billionaires and are holding up Wall Street reform, but now say they want to finance a war and reduce the deficit by cutting the benefits that seniors have paid for all their lives” Subcommittee on Social Security Chairman Earl Pomeroy (D-ND) said. “The Minority Leader’s comments today express a dangerous view of one of our country’s most important programs. Minority Leader Boehner wants to put the cost of the war on the backs of our seniors, including tens of thousands of veterans, even as he cries foul at the slightest suggestion that the wealthiest individuals in this country should forgo a tax cut.”
This is good for a few reasons. First, a few politicians have the residual understanding of the value of the New Deal to see political advantage in protecting the most successful government program in American history. Second, Trumka is leading the way in making the actually standard economic argument, only thought of as novel in Washington circles, that the only way to deficit reduction is job growth. This shouldn’t be a foreign concept, nor should defending Social Security. But in the current political environment, I’m glad to see some sanity emerge.