What a silly person this John Larson is, thinking that Congress would create a jobs supercommittee. Why, what would that have to do with the deficit?
Rep. John Larson (Conn.), chairman of the Democratic Caucus, wants to amend the recently passed debt-limit package to establish a joint select committee on job creation to operate alongside the already mandated Joint Select Committee on Deficit Reduction.
In a “Dear Colleague” letter sent to House members earlier in the week, Larson argued that the nation’s jobs crisis is only exacerbating its long-term fiscal problems and therefore demands Congress’s immediate attention.
“This high unemployment poses a very real short-term fiscal crisis, because it drains the federal coffers through increased government spending and reduced tax revenues,” Larson wrote in the Aug. 8 letter.
“Families are being forced out of their homes, children are being forced to forgo higher education, the elderly are being forced to retire early without nearly enough saved to cover their long-term costs,” he said. “If not addressed, I believe the social costs of unemployment will dramatically damage the United States’ status in the world and prevent us from emerging from this recession.”
Wha-what?!? Where does this politician get off explaining that automatic stabilizers and decreased tax revenue from high unemployment actually increases the deficit, even if you cut spending?
Twenty-three Senators led by Jeff Merkley followed on with a letter to Mitch McConnell, calling on him to support job creation efforts in whatever comes from the SuperCongress:
“For families across the country, the biggest economic problem is high unemployment,” wrote the senators. “As you know, the lack of jobs and anemic growth rate of the economy are not only enormous problems in their own right, causing great pain for millions of Americans, they are a major component of our deficit. Indeed, the loss of revenue resulting from the recession accounts for nearly $4 trillion of the projected deficits over the next 10 years.”
“It is therefore appropriate and important that the JSC explicitly embrace job creation as a part of its mission,” they continued. “Targeted investments in economic growth and job creation can complement and even enhance long-term deficit reduction efforts and should be a priority that the JSC embraces.
“Let us be very clear: our fiscal challenge is directly linked to the jobs crisis and we cannot solve the former without tackling the latter.”
Yes, only 23 Senators signed this, but this just provides a template for activists to pester their Democratic representatives and ask them to sign on as well. There’s even a legislative vehicle: Jan Schakowsky introduced legislation based on the Contract for the American Dream, a $227 billion, two-year bill, financed by a surtax on millionaires (I’d rather see it unpaid for, actually, but if you’re going to pay for it, that would be the least disruptive way). Schakowsky thinks it can create 2.2 million jobs and lower the unemployment rate by 1.3%. That’s certainly something to organize around.
There’s also elite support for this – from the bond market, no less.
The debt crisis as it crests ultimately gives way to these growth-inhibiting, spending-contractionary secular forces. Having run up our credit card to keep on spending, we have reached market-enforced limits that force deleveraging. It is not the debt, however, but the lack of global aggregate demand that is at the heart of the crisis. As the entire world strives to put its own people to work before other nations do, policymakers constructively lower interest rates and delay sovereign, corporate and household defaults to provide breathing room. Fiscally, however, an anti-Keynesian, budget-balancing immediacy imparts a constrictive noose around whatever demand remains alive and kicking. Washington hassles over debt ceilings instead of job creation in the mistaken belief that a balanced budget will produce a balanced economy. It will not.
The president and Congress must recognize that an AA-plus country, to remain AA-plus, must focus on growth, not debt reduction, in the short term. We have a debt problem — but primarily a crisis of aggregate demand. A 21st-century Keynes would have recognized this and sounded the alarm, pointing out that policymakers from a fiscal perspective are pointing us toward recession and the destructive 1930s instead of a low-growth but still breathing U.S. economy of the 21st century.
Similarly, Ed Rendell and Scott Smith get specific on this front by focusing on transportation infrastructure. We’re literally at a moment when the government can make more money by borrowing than most of us can make by saving. They can borrow at a negative rate over a 7-year time horizon. The failure to take advantage of this opportunity borders on criminal.