We have a problem on both fronts right now, as stand right now.
Our economy improves, but at the rate it's progressing, the economy will not be below 6% until well into the 2020s.
Our debt situation saw a minute bit of improvement over the fiscal cliff bargain, but again, it was only minute. We stand with a trillion-dollar deficit and a national debt of 16T.
Both of these things cannot be addressed at the same time in any reasonable way. Policies that create jobs cost money, and likely increase the deficit. Fighting the deficit means you have to raise revenue and cut spending, both of which contract demand and hurt jobs.
So a determination needs to be made -- which of both of these should we embrace?
We could go the GOP path, which means no job stimulation in our policy and total deficit contraction, the austerity path Europe has embraced and most of the folks here on the board would prefer. It's also what the fiscal cliff would have done, and it's unanimous that would have plunged us into a second recession.
We could go with the current DNP/GOP compromise, which is a little, but not very much deficit reduction, and a little, but not very much stimulus. I can't see this being useful in anyway other than a second consecutive lost decade after the 00s.
The way I'd prefer is to grow now, and cut deficits later
. I base this on a simple philosophy: that our unemployment situation is worse than the debt situation.
Right now, the United States can earnestly borrow money for less than nothing
when you factor in inflation. Most of the world is struggling economically, and one of the very few places they believe is the most reliable to invest is in American bonds, which is why we can get them for next to nothing.
That allows us to invest in policies that will create jobs now, and cut deficits later. Provided that we're already on pace for what should be a pretty strong recovery in 2014, pairing that promise with Obama's American Jobs Act now would likely get us under 6% unemployment and surviving with an economy far healthier than virtually every Western ally, at which point we could embrace some strong deficit reduction like Simpson Bowles or something in between Boehner and Obama's final cliff offers.
The point is, a choice needs to be made, and the easiest option is also the one that would minimize suffering the most while pumping up the economy the most.