Deficit hawks appear to be winning the day. Last week, the Senate failed to pass a jobs bill that would have extended unemployment benefits and provided additional aid to states. Although the bill fell short on a mostly partisan vote (only one Democrat voted against it), both political parties have weak knees when it comes to added spending.
This latest jobs measure was pared down considerably to appease members in both parties queasy over the deficit. Prominent economists on the left such as Paul Krugman have argued for a second large stimulus bill, but that’s not going to happen.
One of the most forceful arguments parroted in favor of focusing on austerity now is that the large and looming debt is generational theft. Each excessive dollar spent now threatens the standard of living of future generations. Their cause just and claims righteous, those being deficit hawks, because it’s really about you and your interests.
The debt and profligate spending are legitimate concerns. But if Democrats in Congress succumb to deficit hawks who want the government to extricate itself entirely from the economy, it could have the effect of jeopardizing the livelihoods of future generations. With the unemployment rate high and expected to remain so for several years, it would be injuriously premature to focus exclusively on the deficit.
Talk of deficits, debt, and budgets can be numbing. Debating the budget is either deconstructed upon entirely partisan lines or esoterically. The truth is that the federal deficit and debt do pose serious problems. Those who deny such are not engaging the issue seriously. But we know what has to be done to fix this problem. A combination of reducing government spending and moderate tax increases could solve our debt problem. But it has been politically difficult — up to this point impossible — to broker the necessary compromises to reach a solution.
Yet those concerns are secondary to what should be our overarching goal — reviving a still fragile economy. Graduates entering the workforce in the mist of recession earn less than those who graduate during better economic times. The deleterious effects of this recession are exacerbated by wage stagnation and widening inequality. Long-term trends that might make young people the first generation to be worse off than their parents.
The unemployment rate for young people has consistently exceeded unemployment for all other age groups. Without a significant pickup in job creation, graduates and recent college grads will continue to have tough time. It’s in every young person’s interest for the government to take additional measures to stimulate the economy.
Deficits do matter, but additional spending to stimulate the economy will have only a marginal effect on debt and could go long a way to create jobs and putting the economy on sure footing.
Furthermore, the fiscal situation in many states all across the country is dire. If it wasn’t for actions taken by the federal government, states would have been forced to lay off more teachers and police. Without the American Recovery and Reinvestment Act (a.k.a. the stimulus package) U. Iowa students would have been subjected to further increases in costs.
Deficit hawks like to use young people as props in their arguments. Made on ethical grounds, many hawks argue that it is immoral to pass on debt from decades of profligate spending to their children.
It’s a powerful argument that is gaining a lot of traction currently. But this generation can’t afford the government to let up now. Young people have the most to gain or to lose in this economy. If Congress fails to act now, it will jeopardize the future economic prospects of young people.