I just watched a great interview with Paul Krugman by Bill Moyers from a couple days ago (see below). Last summer I read Krugman’s book they mention, End This Depression Now, so this is all pretty familiar to me, but I still can’t help but feel furious that Republicans, and some centrist Democrats, are so intent on focusing on the issue of government debt while the suffering of actual human beings is given second tier status (and often negative status).
Point #1: Our economy is still in extremely rough shape with unemployment at 7.8% and the Federal Reserve predicts it will be down to between 7.4-7.7% by the end of 2013. Obviously good that it is going down, but the pace is pretty awful.
Point #2: College graduates are likely to be permanently impacted by their lack of job experience. This recession/depression means people who can’t get jobs now are going to earn less and have more difficulty getting good jobs even when the economy returns to full employment. (The Economic Policy Institute has a good report on this).
Point #3: The debt-to-GDP ratio for the US is likely to be relatively stable assuming there is economic recovery. The poor state of the economy is actually decreasing government revenue and increasing its deficits. Furthermore, Japan’s debt-to-GDP ratio is around 220% while the US is less than half that . Is anyone predicting Japan becoming the next Greece?
Point #4: Given the first three points, why are people so obsessed with threatening to cause the US to default on its debts, cutting the retirement age for Social Security and stopping “big government” rather than doing something that will get the economy going again? I think a passionate committment to dismantling the welfare state is a reasonable explanation, as is demonstrated by the State of Maine’s Republican governor’s bid for welfare reform.