Six Things You Can't Say in Washington
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Whom the gods would destroy, the old saying says, they first make mad. And there’s no quicker way to become completely untethered than to read economic reports, including the latest one from the Congressional Budget Office, and then watch the political debate go on as if reality didn’t even exist.
The short version of the CBO’s report is: Spending’s going down, but we desperately need jobs. So how did the president and Congress respond? They kept arguing about who’s got the better plan for making spending go down some more.
If you want to be taken seriously in Washington, you’re going to have to learn: There are some things you just don’t talk about.
1. Don’t Talk About Jobs
The CBO report predicts that the Federal deficit this year will be under $1 trillion, if the “sequester” or other cuts of similar magnitude go into effect, for the first time in five years.
But unemployment won’t be reduced to an acceptable level until 2018, according to the CBO – and Washington’s not talking about how to create jobs. Those spending cuts will make the unemployment situation worse. Apparently that’s now Washington’s official plan: Cut spending, and keep more people out of work.
If things happen according to our leaders’ plans – which are the basis for the CBO’s projection – it will have taken 10 years for the job market to recover from Wall Street’s misdeeds.
Corporate profits recovered in 18 months, and today they’re higher than ever.
2. Don’t talk about growth.
The CBO doesn’t expect the Gross Domestic Product to fully recover from the Wall Street recession for another four years, until 2017. The problem is the “output gap” between the goods and services we could and should be producing, and what we’re actually producing. That, too, is the result of the 2008 crisis. This gap results in lost prosperity for the great majority of Americans, excluding only the wealthiest among us.
If our GDP were large, the Federal debt would be less of a problem, because it would be a smaller piece of our economic “pie.” That’s one reason why economists L. Josh Bivens and Andrew Fieldhouse recently warned that “nearly all demands for specific, ambitious 10-year deficit reduction targets are likely to be terribly counterproductive in the current debate.”
And the problem’s getting worse. As Neil Irwin points out, the CBO report now estimates our annual “output gap” at more than $1 trillion this year. That means it’s going up, not down.
3. Don’t talk about stimulus spending.
Washington’s not talking about that. Instead the President has engaged in the debate on the Republicans’ terms. In his recent remarks on the sequester he said he and the Republicans had gone “more than halfway towards the $4 trillion in deficit reduction that economists and elected officials from both parties believe is required to stabilize our debt.”
The $4 trillion figure is not accepted by “most economists.” Many, if not most, would argue for increased spending in the form of additional stimulus programs as Bivens and Fieldhouse proposed – and for the same reasons. As Bivens and Fieldhouse wrote, arbitrary targets “can easily lead policymakers to embrace measures that will surely hamper economic recovery (which) should be the primary focus.” Ethan Pollock showed how debt stabilization can be achieved more effectively through short-term stimulus spending.
But Washington’s not talking about that, either. Instead, the president’s reinforcing a counterproductive and right-wing economic viewpoint by talking about deficit reduction targets in hard-dollar amounts.
4. Don’t talk about inequality in wages.