Former Treasury Secretary Larry Summers, who served during President Obama's first term and more recently withdrew from consideration as Chairman of the Federal Reserve, wrote last week in a Washington Post article that "an increase in just 0.2 percent in annual growth would entirely eliminate the projected long-term budget gap."
To translate: expanding expanding the economy just two-tenths of one percent, the nation could pay all of its bills. And that includes Obamacare.
Right now, unemployment remains above 7% and that's not counting all of those Americans who have left the workforce and/or aren't looking for jobs. The September jobs report was dismal:Only 148k new jobs were created and most of those were part-time jobs (translation: no benefits).
For all of the talking heads' prognostications about a potential "Grand Bargain" concerning the nation's economy that will reduce the deficit by some admixture of tax increases and/or entitlement cuts, all of that political-speaque misses the mark. How so? The government doesn't create jobs; the private sector creates jobs. The taxes collected from the citizens who are working those jobs is what keeps the federal government in operation. The key to improving the economy, then, is to create new jobs.
The equation is isn't the stuff of rocket science or brain surgery: New jobs bring additional income to the federal trough, income that can pay current bills and begin paying down the $17T debt (which, by the way, excludes what may very well be nearly another $17T in debt in the form of entitlement money that has been collected and spent to pay for other programs).
And that's the nexus of the problem politicians in both sides of the aisle in Washington, DC must solve: How best to create new jobs.
The Motley Monk doesn't oftentimes find himself agreeing with the PoliticsDaily.com columnist, Walter Shapiro. That said, The Motley Monk thinks Shapiro strikes the right note when Shapiro recently opined in a Yahoo! News column:
What America needs is a grand bargain over jobs, not the deficit.
If only Obama and the Republican leaders of Congress could negotiate
over questions like, "If I gave you these regulatory changes to spur
hiring by business, would you accept a stimulus plan to repair highways
and bridges?" If only both sides could put aside their stale talking points
about taxing the rich and defunding Obamacare—and instead ask,
"What could we agree on to create jobs?"
For crying out loud, listen to Larry Summers: Legislate policies that will unshackle the private sector to create new jobs that will expand the economy more than 0.20%! It's as simple as that.
Then, once the tax $$$s start filling the federal trough, slug it out over how best to pay for entitlements and cut the deficit simultaneously.
Let the discussion begin...
To read Larry Summer's column in the Washington Post, click on the following link:
To read Walter Shapiro's column, click on the following link: