January 14, 2013

Another View: Unemployment, not the deficit, is the biggest drag on the economy

The government should be boosting demand with stimulus, not dampening it with cuts.


Sen. Angus King appeared on NBC's "Meet the Press" program Jan. 6 and said, with regard to the perceived deficit issue, "we're not gonna grow our way out of it." This view is completely wrong. The recession, the lack of demand and the high rate of unemployment are the primary causes of our current budget deficit. Our first priority must be to complete our recovery from the recession.

For example, reducing unemployment to 6 percent would put an additional 5 million people to work, and that would in turn reduce spending on programs like unemployment benefits, food stamps and Medicaid while increasing tax revenues from the new wage earners.

The senator's call on the program for "painful" and "significant" spending cuts is misguided. Europe's failed experiment with austerity over the past few years has set an absolutely clear example that "painful" cuts are simply counterproductive. Furthermore, the Budget Control Act of 2011 already cut hundreds of billions in spending, and the looming sequester, if not averted, will cut hundreds of billions more. No more pain is needed. Further significant spending cuts will just prolong the recession.

The senator made a perceptive recommendation regarding the Bush tax cuts that was neglected in the national discourse: tying the tax cuts' expiration to the performance of the economy. That recommendation demonstrates recognition that the economy's performance is paramount. As a parallel to the tax proposal, the senator should endorse stimulus measures whose expiration is tied to improvement in the economy.

The senator also remarked on the program that he is uniquely positioned to communicate with both parties. He should use that position to advance proven policy solutions that will actually promote economic growth while reducing future deficits.

William Winger is a resident of Portland. Lawrence Winger lives in Falmouth.


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