This country is at a crossroads.
If we fail to understand the need to invest in people and our future—now and in the months, perhaps years, ahead—the already weak recovery will unravel. But with deficit hawks in both parties dominating the debate in Congress, abetted by a lazy media drumbeat, the chances that this country will become a stronger and healthier one don’t look very good. Do those playing strong-arm politics with the deficit understand the damage they are inflicting right now and on generations to come?
For lower-income people, unemployment numbers rival those of the Great Depression. And the average unemployed person has now been searching for work for over eight months—the highest average on record. Despite such widespread hardship, the Senate has failed to extend unemployment benefits. As a result, as many as 1.2 million workers will be cut off of unemployment benefits by the end of this week, and at least 140,000 workers will lose healthcare benefits. The Senate and House also failed to approve $24 billion in promised federal assistance to state Medicaid programs—even as states face $260 billion in budget shortfalls over the next two years. The Center on Budget and Policy Priorities estimates that without federal help state cuts could result in the loss of 900,000 jobs.
The stark fact is this: if the government doesn’t play an active and smart role in stimulating the economy right now—if it surrenders to those fixated on the deficit who seemingly have learned nothing from our economic history—then we will likely head into a double-dip recession. As New York Times columnist Paul Krugman recently observed about the deficit hawks blocking needed investments, "The odds of a prolonged slump are rising by the day.”
Indeed, when the private sector is unable to create the jobs needed for recovery, cuts in public spending will translate not only into more lost opportunities and suffering today but perhaps a generation lost to long-term joblessness which can scar lives and damage futures in ways we haven’t seen since the Great Depression.
Krugman honed in on this long-term damage, writing, "Every year that goes by with extremely high unemployment increases the chance that many of the long-term unemployed will never come back to the work force, and become a permanent underclass…. Hundreds of thousands of Americans graduating from school are denied the chance to get started on their working lives.”
We have faced this moment of truth before. In 1937, when FDR made the mistake of listening to his generation’s deficit hawks and retreated from New Deal spending, our country slipped back into a severe recession. We can’t afford to spread that kind of pain again now.
What makes the deficit fixation even more frustrating is that it isn’t even in sync with what’s on the minds of the vast majority of voters—despite what too many politicians and much of the mainstream media would have us believe. As Holly Yeager reports in The Columbia Journalism Review, “It’s true that politicians of many stripes appear to be increasingly concerned about the deficit. But the Times and others have been leaving the voting public out of the equation, and, on that front, the priorities are different.”
Yeager points to a poll by the National Employment Law Project that shows 75 percent of registered voters think preserving jobless benefits is more important than reducing the deficit. Even a Fox News poll found 47 percent of respondents concerned with the economy and jobs, while just 15 percent worried about the deficit and spending—not even Fox could manage to fudge those numbers.
Helping people make it through this Great Recession and recover isn’t just the humane and morally right thing to do, it’s smart politics and the right economic policy.