By ROBERT B. REICH
Alright class, here's your assignment: Look at President Obama's budget proposal, spending freeze, jobs bill, stimulus, tax hikes on upper-income individuals, and proposed deficit commission. Also take a look at the fees he wants to impose on the biggest banks, and his proposed regulations of Wall Street. Look at his stalled trade agenda. Now, explain the big picture.
To see the big picture you need to keep your eye on three big things. The first is the extent of government spending needed to offset the continued reluctance of consumers and businesses to spend.
You don't have to be an orthodox Keynesian to understand that as long as the private sector is deleveraging the public sector has to borrow and spend in order to keep the economy moving forward. Spending on the original stimulus will peak soon; spending for additional unemployment insurance and the jobs bill will add about $90 billion.
But even this sum is not likely to be enough to make up for the shortfall in private spending. Consider also that state and local governments are slashing jobs and services—while raising taxes by about $350 billion over this year and next—so the feds probably need to spend even more.
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3 comments:
Talk about never having made a payroll!
Let's look at the profound stupidity of the following:
You don't have to be an orthodox Keynesian to understand that as long as the private sector is deleveraging the public sector has to borrow and spend in order to keep the economy moving forward.
No it does not! The private sector is paralyzed by threatened new taxes and regulations.
You are consistent, Doc. You contradict atmospheric scientists on the topic of climate change and you disparage Robert Reich on the subject of economics. If I took your same approach, I would lecture you on the finer points of cardiology.
Jim G: Forget about Reich. He's not in charge of anything. Tell us what you think about Paul Volcker's plan to ban proprietary trading at U.S. banks.
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