Sunday, January 31, 2010

A Spending Freeze Could Worsen Jobs/Economic Crisis, and Follows the Path of Herbert Hoover rather than Roosevelt

Will President Obama follow the path of Herbert Hoover or Franklin D. Roosevelt in his attempt to lead the nation to economic recovery? That is the question that still remains to be answered, after his State of the Union Address.

Lawrence Mishel, president of the Economic Policy Institute, had the following to say about the Obama administration’s proposal to ‘freeze’ overall non-defense discretionary spending for three years starting with fiscal year 2011:

In all likelihood the unemployment rate will be higher in October than it is now, yet somehow the White House thinks it’s appropriate to begin reducing domestic discretionary spending at that time. Reducing overall spending when tens of millions of Americans remain out of work would be a disaster. It will condemn millions of families to years of avoidable economic hardships.

President Obama's . . . proposed ‘freeze’ is bad economic policy. It ignores the basic facts that deficit reduction must begin with job creation and economic recovery, offers little more than window-dressing on long-term deficit reduction, and inappropriately vilifies domestic spending.

Shifting federal spending from less effective to more effective programs is certainly welcome, but it doesn’t justify an overall spending reduction — especially not at a time when we need the federal government to inject demand into a severely weakened economy in order to create jobs. What President Obama should offer . . . is a bold plan to put millions of Americans back to work. To do anything less is to turn a cold shoulder to the needless suffering of millions of Americans and make any focus on ‘jobs’ simply rhetorical.

For more of Lawrence Mishel's statement, click here.

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