Fix Economy, Then Balance Budget

I spoke with a friend of mine today, a friend I haven’t talked to in a long time. After the pleasantries, the Right Wing nonsense started. Obama is spending too much. Okay, I asked, how much is too much when you have an economy that is capable of generating massive amounts of money? There was no answer. So, for my friends who are budget hawks, I would like to re-post this from several months ago. Enjoy.

The harping of conservatives has become louder and louder over the last couple of weeks over the budget deficit.  They have wrongly stated that Barack Obama spending us into poverty.  There are many analogies that could be used, but the one that I’ll use right now is that our house is on fire.  First, we need to put out the fire.  Secondly, we rebuild the house.

I’ll avoid mentioning the obvious, that these deficit hawks were silent in 2001, 2003 and again in 2004 as President Bush passed massive tax cuts that were not offset by massive spending cuts.  So, these hawks are somewhat hypocritical.  Many of these hawks have looked at some promising economic numbers, and the unemployment rate from last month, and point to an improving economy.  I’m not sure that the unemployment numbers are quite as rosy as we think.  It appears that there is evidence that many of these Americans that are unemployed are now running out of unemployment benefits.  Therefore they cannot seek further jobless benefits.

By the way, where are these jobs coming from? For the past 20 years industry has been cutting jobs and streamlining.  As business returns, why wouldn’t they simply work with a streamlined workforce?  Why wouldn’t they outsource the job, if possible, to somebody in Singapore or Dubai?  With the auto industry shrinking and the economy not expanding, where are these jobs going to come from?  Well, some of the jobs should come from infrastructure rebuilding that we funded through the stimulus package.  Other jobs have to come from this legislation that President Obama spoke about today (See Video).  Green Energy. Congress needs to move on this legislation.  This is critical. We need this industry to produce millions of new jobs.

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I also want to mention that Americans made the same mistake that many conservatives are making now back in 1935-1937.  This was right in the middle of the New Deal.  GDP was increasing.  Unemployment was decreasing.  Deficit hawks began to worry about budget woes.  A poll at the time revealed that a majority of Americans wanted the administration to balance the budget.  Therefore, Roosevelt began to balance the budget.  Predictably, as taxes were increased and government spending decreased, GDP fell and unemployment rose.  It was the exact opposite that budget hawks wanted to happen. President Barack Obama needs to walk the fine line.  He needs to get the economy going but, as the economy begins to heat up, he does need to slow spending.  He does need to balance the budget — after the economy began showing solid signs of recovery.  Our economy has shown an incredible capacity to make money.  We can pay off his debt, but first we need to put out the fire.