Obama must resist 'deficit fetish'
By JOSEPH E. STIGLITZ | 2/10/10
POLITICO 44
The economy seems caught between a rock and a hard place: ever mounting deficits and ever mounting job losses - leading to a soaring jobs deficit. The economy should have created some 3 million jobs for new entrants into the labor force over the past two years, instead it has lost roughly 8.5 million.
If spending is cut back, to tame the deficit, this jobs problem could only get worse. If spending is not cut back, long-term interest rates may rise as inflationary expectations grow. And the jobs problem may still grow worse.
These problems were not created by President Obama. They are the result of years of economic mismanagement under President George W. Bush, and misguided deregulation under Bush and his predecessors. But now, Obama must deal with them.
It will be difficult for him to deal with long-term pressing problems - like reforming health care or addressing climate change - until or unless the economy is restored to health. It is little solace that others, like George Papandreou in Greece, inherited worse problems, and face less pleasant choices.
Read more: http://www.politico.com/news/stories/0210/32748.html
POLITICO 44
The economy seems caught between a rock and a hard place: ever mounting deficits and ever mounting job losses - leading to a soaring jobs deficit. The economy should have created some 3 million jobs for new entrants into the labor force over the past two years, instead it has lost roughly 8.5 million.
If spending is cut back, to tame the deficit, this jobs problem could only get worse. If spending is not cut back, long-term interest rates may rise as inflationary expectations grow. And the jobs problem may still grow worse.
These problems were not created by President Obama. They are the result of years of economic mismanagement under President George W. Bush, and misguided deregulation under Bush and his predecessors. But now, Obama must deal with them.
It will be difficult for him to deal with long-term pressing problems - like reforming health care or addressing climate change - until or unless the economy is restored to health. It is little solace that others, like George Papandreou in Greece, inherited worse problems, and face less pleasant choices.
Read more: http://www.politico.com/news/stories/0210/32748.html
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