Robert Reich says, in yesterday’s blog, “Why Economic Advisors Are Paid to Be Economic Advisors,” that President Obama needs to hear from economists that to avoid the enormous pain and suffering of a “double-dip recession or, at best, suffer anemic growth over the next five years,” he must move quickly to take aggressive measures.
Reich would like to see:
- a $300 billion jobs bill, including zero-interest loans to states and locales to prevent them from having to raise taxes and cut services,
- public-service jobs (cleaning up the Gulf), and
- a one-year payroll tax holiday on the first $100,000 of income.
Reich says that in the face of much bad news, it would be wrong for the president to bend to Republican pressure and, “tell the American public that we now have to move toward fiscal austerity,” and that any economist who could support such a notion shouldn’t be advising the president.
Reich makes a list of reasons why aggressive action is needed:
- The economy is still in a deep hole, the deepest since the Great Depression. The jobs report for May was dismal — a mere 41,000 new private sector jobs, when the economy needs at least 100,000 to keep up with population growth.
- The Fed projects gross domestic product, the broadest measure of economic activity, to rise about 3.5 percent this year — a pace barely above that needed to keep pace with the growth in the labor force.
- Consumers don’t have the buying power to get it out of the hole because they can no longer use their homes as collateral for loans, as they could before the crash of 2008, and they also have to get out from under huge debts.
- Businesses are reluctant to create new jobs if there are few customers for their goods or services.
- Export markets are drying up because of a high dollar that’s made our exports more expensive,
- Europe has embarked on austerity measures to shrink its deficits.
- State revenues are way down because of the deep economic hole, and they’re forced to raise taxes, cut services, and lay off large numbers of state workers, including teachers.
- All the boosters keeping the economy barely going now are coming to an end. The Fed can’t keep interest rates near zero for long because it’s starting to worry about inflation. It’s already stopped buying Treasury securities and mortgage bonds, and its own deficit hawks are squawking.
- The federal stimulus is 75 percent spent, and the money will be gone in a few months.
- Census workers will also be gone by the end of the summer.
