Ryan Streeter
Becker and Posner write on their blog that:
- the latest unemployment numbers show just how stuck the economy is
- we are exhibiting traits of a depression
- recovery most likely depends on (1) short term stimulus that can get people to work in needed jobs and (2) long-term fiscal and regulatory reform that chops down deficits and increases growth
- (1) and (2) in the previous point are highly unlikely because the Obama administration and Congress botched the stimulus last year and there won't be political support for a new stimulus; and (2) it's too hard to get political support for the long-term deficit reduction we need
Here is what they say:
Real (inflation-adjusted) GDP is roughly the same today that it was three years ago; it “should” be 9 percent higher—which would make GDP almost $1.5 trillion greater today than it is. The economy cannot rejoin the trend line with unemployment as high as it is.
They say that we should be honest with ourselves and recognize that our conditions match those of a depression, not a recession:
It is now three years since the depression—and it is a depression, not a “recession” or even a “Great Recession”—those are euphemisms—began, and it did not end last summer when GDP stopped falling (by that measure, the Great Depression ended in 1933).
And then, they strike an especially gloomy tone when it comes to getting out of the mess:
What is to be done, if anything? The ideal solution—which is unattainable—would be to combine a short-term stimulus with long-term fiscal and regulatory reform aimed at reducing governmental deficits and increasing economic growth. With interest rates very low and much savings in inert forms (such as the $1 trillion in excess reserves held by the banks), there is an argument for the government’s borrowing those savings and putting them to work on projects that would require labor, and thus reduce unemployment. But not only is a further stimulus politically impossible (in part because of the poor design, execution, and explanation of the large stimulus program enacted in February 2009); it would take too long to put into effect to avoid a risk of its crowding out private investment when the private economy begins to grow more rapidly.
For the sake of growth, America needs a concerted effort to tackle deficit reduction. We need more Paul Ryans out there making the case for getting our fiscal house in order. He can't do it on his own. We are already behind schedule for getting our fiscal house in order by changing the real deficit drivers: our entitlement programs.
ConservativeHome will be making the case in the coming months that all of us - not just policymakers - need to get engaged in the solution.
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