Tuesday, February 22, 2011

Evidence: Deficit Hawks Causing Unemployment,Increasing Deficit

Now we have proof.  The Republicans, Tea Party nut cases, Koch brothers and all the other deficit hawks are making unemployment and the deficit worse either intentionally or unintentionally.  That’s basically the conclusion to be derived from the results of a study of the true impact of the stimulus package on employment and the economy.  Professors James Feyrer and Bruce Sacerdote at Dartmouth just released a study in which they examined the impact of stimulus spending on employment across states, comparing the number of jobs created to the amount of spending.  The professors found that the stimulus had a multiplier effect ranging from 0.5 to 2.0 depending upon type of spending.  A 2.0 multiplier would mean that for every $1 billion of stimulus, GDP increased by $2 billion.  Additionally, there is reason to believe that the professors are being highly conservative in the multiplier effect they are reporting.  There is a good chance that the true multiplier effect on the country as a whole from the stimulus was much larger than the study found.  What does all of this mean?  This from the Center for Economic and Policy Research.

[I]t suggests that more stimulus would provide a further boost to the economy and reduction in unemployment. This means that the only reason that we are sitting here with 25 million people unemployed and underemployed is that the politicians in Washington are too intimidated by the Wall Street deficit hawks.

The deficit hawks have used their enormous political power and control over the media to shut down any further discussion of stimulus. They have managed to completely dominate public debate with their brand of flat-earth economics. They are using the crisis that was created through their greed and incompetence to reduce hugely valued public benefits, like Social Security and Medicare. And, now they are using the crisis that they have created for state and local governments to destroy public sector unions.

This looks really awful because it is. Our nations' leaders are deliberately inflicting enormous pain on tens of millions of people to advance their political agenda. This new study helps to prove this fact.

I’ve said this before but it is worth repeating.  Objective evidence from a wide variety of sources demonstrates nearly conclusively that the stimulus worked and would have worked a lot faster and better if it had been much larger.  Additionally, the obsessive focus on reducing the deficit through huge cuts in domestic programs and refusal to take any further steps toward more stimulus spending is slowing the return to full employment and risks sparking a new and much more severe recession than the one we just experienced.  The only conclusion one can draw is that Republicans and Tea Party nut cases financed by the Koch Brothers either don’t know or care about the evidence or are deliberately trying to destroy the U.S. economy in the hope of winning the 2012 election and advancing their conservative/libertarian political agenda.  It is more than awful.  It is sad.  It is almost criminal.  At long last, have they no shame.

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