Sen. Patty Murray (D-WA) chaired her first hearing as head of the Senate Budget Committee today. In her opening statement, she had strong words for the sort of short-term austerity in which Republicans (and too many Democrats) want to engage:
Experts and economists across the political spectrum agree it makes sense to invest in job-creation in the short term, while putting ourselves on a strong path to responsible and sustainable deficit and debt reduction over the medium and long-term. And poll after poll shows that’s what the American people support too.
Federal Reserve Chairman Ben Bernanke put this idea well in a speech he gave in August of 2011. He said: ‘Although the issue of fiscal sustainability must urgently be addressed, fiscal policymakers should not, as a consequence, disregard the fragility of the current economic recovery.’ […] I think that’s exactly right. I will work with anyone to tackle our debt and deficit responsibly, but as I’ve told Senator Sessions and others — I feel very strongly that it just doesn’t make sense to replace our budget deficit with deficits in education, infrastructure and research and development.
With the deficit shrinking and the national debt stabilizing while unemployment stays stubbornly high, focusing on deficit reduction instead of jobs and economic growth is utter folly. Federal Reserve Vice Chair Janet Yellen yesterday rightly blasted Congress for allowing fiscal policy to be a “headwind for the recovery.”
Despite the experience of Europe, where austerity has ushered in recession, joblessness, and more debt, lawmakers on both sides of the aisle want to bring those same policies here. But spending is not the problem in the U.S.: the problem is a consistent output gap that has left the country a long way from full employment.