Rep. Jerry Nadler (D-NY) recently gained some attention by strongly advocating that the Obama administration defuse the coming debt ceiling standoff by minting a $1 trillion platinum coin. “It would normally not be proper to consider such a thing, except when you’re faced with blackmail to destroy the country’s economy, you have to consider things,” he said.
The platinum coin may have been ruled out as an option, but that doesn’t mean Nadler is stepping back from economic policy. In an interview with the Business Insider, Nadler had some choice words for Washington’s obsession with deficit reduction, even as unemployment is well over 7 percent. “I think the deficit is not our immediate problem, our immediate problem is unemployment,” he said. He also correctly noted that austerity is killing Europe’s economy:
I think the deficit is not our immediate problem, our immediate problem is unemployment and frankly, I think right now, we should be running a higher deficit, temporarily, to get the economy into high gear.
We’re in a very slow recovery, unnecessarily so. The deficit has come down from 10.1% percentage in 2009, to 7.1% now, without doing anything. I mean if we could have unemployment down to 5%, which it was in 2005, that would reduce the deficit by 40% by itself. I think this austerity policy of chasing this whole grand bargain thing, I don’t agree with. I don’t think we should be cutting spending at all, except the spending that is really unnecessary, like the military. [...]
I think trying to reduce the deficit right now is wrong, because this position is going to keep the economy in the doldrums and keep the depression going longer and it’s self-defeating.
You look at Europe. I often say in my speeches, I say, it’s rare in life that you get a controlled scientific experiment. Cause you can’t do controlled scientific experiments with real people, normally. But you have it, and if you grasp the economics of the economic recoveries from 2007 in Europe and the United States, they matched, until 2010, when they start to collapse. And then it diverges, and we keep going up, slowly.
Many economists agree with Nadler’s take. “The chorus of people advocating for a long-term deficit plan NOW, NOW, NOW, drowns out the more urgent need for job creation,” said Economic Policy Institute President Lawrence Mishel. “We are having the wrong conversation. Let’s focus on jobs and restoring wage growth.”
Nobel Prize winning economist Paul Krugman added, “the whole deficit panic is fundamentally misplaced.” Former Secretary of Labor Robert Reich, meanwhile, wrote “we’re a very long way from the job growth we need to get out of the gravitational pull of the Great Recession. That would be at least 300,000 new jobs per month. All of which means job growth and wage growth should be the central focus of economic policy, not deficit reduction.”