Government spending that puts people back to work and invests in the future productivity of the nation is exactly what the economy needs right now. Deficit numbers themselves have no significance. The pertinent issue is how much underutilized capacity exists in the economy. When there's lots of idle capacity, deficit spending is entirely appropriate, as John Maynard Keynes taught us. Moving the economy to fuller capacity will of itself shrink future deficits.If there is a larger target for Republicans to shoot at in the next two years, I have yet to find it. But Obama's got clear vision on the economy and is putting together the right team to help him solve the problem. If he manages public expectations in the right way, and clearly articulates why putting people back to work is more important than the budget deficit in the short term, then the public will stay with him. Trotting out stupid arguments about socialism will only hurt the Republicans now, as it didn't stick during the campaign and won't stick during the first Obama term.
Monday, November 10, 2008
Words From the Wise
Robert Reich, a professor of public policy at UC Berkeley, was Secretary of Commerce in the Clinton administration. He is a respected progressive voice on economic matters. He posted a thoughtful essay yesterday on TPM regarding what we need to do to get out of this "Mini-Depression." Money quote: