Thursday, May 12, 2011
Refocus on Unemployment and Shared Risk
Everybody in Washington, DC is focussed on the wrong problem. And, I mean everyone from the President, to Congressional Democrats and Republicans alike, to the news media, to jabberwocky pundits. Did I leave out anyone? Oh yes, the President’s Deficit Reduction Commission. It’s as if they were all plugged into the same lame brain.
Apparently, there was never any doubt that the deficit must be reduced soon. Well, deficits have been an obsession since Nixon got crossways with Congress in 1974, which was only about three years after he took us off the gold standard.
Also, the notion of shared sacrifice has dominated all discussion as some badge of seriousness. No one is considered serious unless they give up argument and accept both the deficit reduction and shared sacrifice mandates.
Meanwhile their common brain is telling these people to be very fearful of what isn’t actually happening. The deficit is causing inflation; it’s not happening nor is it about to happen. It is causing interest rates to rise; it’s not only not happening, it can’t happen. It is causing dollar depreciation; it’s not happening.
We should be concerned about what is happening. Unemployment is still too high and is recovering too slowly. The financial, educational, and sociological consequences will be with us for a generation or more. There is a way out; it was demonstrated 76 years ago with the advent of the WPA (Works Progress Administration). It was a government “jobs” program that touched nearly every town in America. We are still benefitting from the infrastructure built under that project even though that infrastructure is deteriorating.
We should also rethink the shared sacrifice mandate. We have learned that shared sacrifice means cutting benefits for Social Security, Medicare, and Medicaid. Shared sacrifice translates to sacrifice by the elderly, disabled, and sick. Good grief, what kind of a people are we?
Let’s look instead at shared risk. None of us knew as we started out in life how things would turn out for us. Those who fared well can help out those for whom wealth or health did not turn out so well. Shared risk translates to maintaining social safety nets for the disadvantaged by those who have fared well.
Social Security and Medicare are insurance (shared risk) programs not annuities. If one doesn’t need the benefits they go to those who do. Funding for Social Security is a little soft, but can be fixed by raising the upper limit on pay roll taxes. Medicare, an efficient program, suffers not from its own defects but those of the larger health care system. We need to solve the larger problems not cut benefits.
Let’s overcome the deficit hysteria and the false rhetoric of shared sacrifice and turn to what is really important, unemployment and shared risk.