Deficit fever has gripped Washington, and a number of special interest groups and right-wing lawmakers are demanding that Congress dramatically cut government investment in the economy, even if it harms job growth.
350 economists have signed an open letter saying that we should invest in our economy and grow our way out of the deficit — not enact austerity programs that would cost us jobs:
The government should invest in areas vital to our economy — to repair crumbling infrastructure, to build 21st-century smart-grid, public transportation and renewable energy systems, and to create public and private sector jobs. We should also help states prevent layoffs of teachers and other public servants, make early care and higher education more affordable, and create public service jobs throughout the nation. It can do so by borrowing at record low interest rates. We can also stimulate recovery without increasing deficits by increasing taxes on the wealthy and pumping the proceeds directly into the economy. [...] We need jobs first. With recovery, deficit reduction will come of its own accord thanks to increased revenues in an improving economy. That was the case in the three decades after World War II — when the debt to GDP ratio declined from over 120 percent of GDP in 1945 to under 30 percent by 1978.
For the full letter and the list of economists who signed it, click here.
We don’t have to guess what austerity would do to our economy — we have real-world experiment. Austerity in Europe has led to skyrocketing unemployment, and workers across the continent are on strike to reverse these policies.
We shouldn’t face the same fate.