Rachel Maddow and her guest Professor Robert Frank make the case that it is GOP stupidity that is destroying the US economy.
Here is the video from MSNBC:
Professor Frank said,
We’ve known for over 60 years that in a situation where we’re in now where there is persistent shortfall of demand, government can invest in public works projects and other things that will get the economy back on its feet. It could be done.
It’s quite easy to do. The workers are there who know how to do the jobs. The market’s happy to lend us the money. As Ezra said, they’re eager to loan us more money at very low interest rates. The cost of debt compared to the cost of unemployment is incredibly low. A trillion dollar deficit costs us $25 billion a year to pay the interest on that. If we have an extra ten million people unemployed that’s $250 billion lost forever each year, so it’s a 10 to 1 tradeoff. We’re focusing on deficit reduction when we really out to be focused on job creation, and we know how to do it.
Maddow and Professor Frank pointed out that if the country wants to lower the deficit, it still should be focused on job creation, “Focusing on the deficit, cutting spending that’s going to make the deficit bigger. What we’re doing now is just unimaginably stupid.”
It is stupid, and it is also easy to remedy. Maddow and Professor Frank also talked about the political hurdles a.k.a. congressional Republicans that stand in the way of getting this economy moving. Professor Frank’s analysis agrees with other Keynesian economists like Paul Krugman who have been arguing for more spending for years.
America is mired in a debate among the Keynesians and supply siders, and even though history tells us that the Keynesian approach is what the country needs, the Republican devotion to supply side economics is not going to allow any additional government spending to happen. The supply siders failed under Reagan. They helped to cause our current crisis under George W. Bush, but still their blind devotion to an economic theory that is rooted in political ideology, not economic reality remains as strong as ever.
Cutting spending is only going to lead to more woe. If consumers aren’t spending, businesses aren’t spending, and the government is not spending, it all adds up to an economy that at best will stay mired in its current state. At worst, the economy will plunge yet again. Reality tells us that the cost of deficit is less than the cost of worsened unemployment, but right now the politics of Washington are not based in the real world.
The people who are paying the price for the GOP’s spending cuts folly aren’t the ideologues in Washington, DC. The people who have been weighed down by this unsolicited burden is the unemployed, the poor, the disabled, and the elderly.
$25 billion of debt payment versus $250 billion in economic generation is such an easy tradeoff that even a child can see it.
Americans might be better off electing a slate of common sense ten year olds than the reality detached Republican true believers who are currently in charge of the House of Representatives.