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November 2012, Week 2

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Wed, 14 Nov 2012 22:09:42 -0500
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Economists Say Jobs First; Reject The Grand Swindle

By Isaiah J. Poole
Campaign for America's Future
November 14, 2012

http://blog.ourfuture.org/economists-say-jobs-first-reject-the-grand-swindle/

The fight to head off a so-called "grand bargain" that
would end up being a grand swindle of economic
recovery and opportunity for working-class
Americans gets kicked up another notch today when
a group of 350 prominent economists and experts
release a statement [http://jobsnotausterity.org/]
warning President Obama and Congress to turn
away from the "obsessive concern with cutting
deficits" and focus on "jobs first." (Click here for
audio of the news conference:
http://tinyurl.com/b8zbltb

These economic experts join a growing chorus of
politicians, labor officials and community leaders
who have been sending the same basic message to
political leaders: Cutting programs that provide
economic support to ordinary Americans to make
room for more tax cuts for the wealthiest will rob
America of a broad-based economic recovery. In
fact, the statement says, drastic spending cuts of the
kind that conservatives in both parties have been
arguing for could plunge the country back into the
very recession they claim they want to avoid.

Several of these leaders were able to take this
message directly to President Obama on Tuesday in
a White House meeting. According to one news
report, the meeting that included representatives
from labor and progressive organizations was "more
pep rally than negotiating session." And while
attendees reported they were pleased with Obama's
commitment to keep his promise to end the Bush
tax cuts for the wealthiest Americans, they did not
get the same iron-clad commitment to fight budget
cuts that will harm economic growth.

Hence the need to keep the pressure on, especially
in the face of a well-funded "Fix the Debt"
propaganda campaign, supported by corporate
executives who stand to gain billions from an
economic policy that favors top-end tax cuts over
spending on jobs for the middle class.

Among the people who have signed today's
statement are Robert Pollin of the University of
Massachusetts,  who is the head of the Political
Economy Research Institute, Teresa Ghilarducci,
director of the Schwartz Center for Economic Policy
Analysis at the The New School, and Robert Kuttner,
founder of The American Prospect, who helped write
and circulate the statement.

Ghilarducci said that a government economic
stimulus program is needed to "unleash the cash
horde" of as much as $1.6 trillion being held by
corporations and banks. That money is not being
invested in the economy, she said, because
investors do not see sufficient demand. The steps
she recommends include continuing extended
unemployment benefits, particularly for workers
nearing retirement who should be kept in the work
force so they can build up their retirement sayings;
aid to state and local governments to forestall public
sector worker layoffs; a school building
modernization program; and continuing the payroll
tax cut until it can be phased out and replaced with
an enhanced earned income tax credit.

Those steps, combined with private sector
investment of the cash hat is now being hoarded,
could lower the unemployment rate to 5 percent in
three years, she said.

Pollin has recently released a new book, "Back to
Full Employment," and launched a full employment
blog, where in one post he directly takes on one of
the leading apostles of the deficit-cutting brigade,
John Taylor of Stanford University. Taylor endorsed
Republican presidential candidate Mitt Romney's
economic plan to cut federal spending from more
than 24 percent of the nation's gross  domestic
product today to 20 percent by 2016, arguing such a
drastic shift in federal spending is needed to erase
an "exploding debt" that "portends America's
ending."

Such apocalyptic talk is fundamentally false, Pollin
explains. "Today, as we debate whether the
government has the financial wherewithal to do
something about the jobs crisis-the federal
government is facing no fiscal crisis whatsoever," he
wrote recently. The federal government can still
borrow money at record low interest rates, and the
large amount of slack in the labor market is a major
factor in keeping inflation low. There is no reason
not to actually borrow more low-cost money now to
put people back to work laying the foundations for a
new period of broad-based and sustainable
economic growth that will provide a much better
climate for reducing the nation's long-term debt.

In 2010, the Institute for America's Future released
a similar statement endorsed by more than 300
economic experts that warned of "a grave danger
that the still-fragile economic recovery will be
undercut by austerity economics." The stalemate in
Congress that came after that statement helped
buttress that warning: When conservatives in
Congress blocked Democratic efforts to pass a series
of jobs and infrastructure spending bills, the result
was job growth that barely kept pace with the
growth of the labor market.  That obstruction cost
the economy more than 2 million jobs. But, if House
conservatives had their way, it would have been
worse.

Today's statement, which will be available later
today on OurFuture.org, could prove to be even
more important, as Washington politicians decide in
the next few weeks whether to follow the wisdom of
the voters and push for jobs first or chase the folly
of the deficit hawks into a new economic abyss.

___________________________________________

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