To: President Donald Trump, The United States House of Representatives, and The United States Senate
Follow Robert Reich's analysis
In truth, the choice isn’t simply between budget-cutting austerity, on the one hand, and growth and jobs on the other.
It’s really a question of timing. And it’s the same issue as in Europe. If government slices spending too early, when unemployment is high and growth is slowing, it makes the debt situation far worse.
That’s because public spending is a critical component of total demand for goods and services. If demand is already lagging, government spending cuts further slows the economy – and thereby increases the size of the public debt relative to the size of the overall economy.
You end up with the worst of both worlds – a growing ratio of debt to the gross domestic product, coupled with high unemployment and a public that’s furious about losing safety nets when they’re most needed.
The proper sequence is for government to keep spending until jobs and growth are restored, and only then to take out the budget axe.
In the biggest depression, Roosevelt first tried austerity measures that failed, then he instituted government spending that worked.
Why is this important?
Loan money to States so that public employees, teachers, firemen, police can be rehired. This will help the economy to get rolling. We need more public employees not less as our population grows.