Editorial: Budget Battles
When we at the Worcester Business Journal ask economists, academics, employers, politicians and others what it will take to trigger any kind of real, sustained recovery in just about any sector of the economy, they tell us, “jobs.”
For example, the real estate market is dead in the water despite reasonable prices because a substantial portion of the population is unemployed, or in fear of becoming unemployed, and are therefore reticent to buy homes.
The same is true for the rest of the economy. Each sector is dependent upon the other and weakness in one has ripple effects throughout the marketplace.
The Wrong Fight?
It was particularly striking when Republicans in the U.S. Senate, including U.S. Sen. Scott Brown, attempted to block the extension of federal unemployment insurance benefits.
The $34 billion price tag, they argued, was simply too much to add to the federal deficit and shouldn’t be approved without being offset in other areas of the budget. But of all the wasteful and undisciplined spending that has contributed to a budget deficit projected to reach nearly $20 trillion and 100 percent of GDP by 2020, Republicans chose a showdown over a fund that helps unemployed Americans avoid abject poverty, or at least meet their monthly rent/mortgage.
To bring the issue home to Massachusetts, the expiration of unemployment insurance benefits on June 2 affected 70,000 of the state’s more-than 300,000 unemployed residents.
That’s a big chunk of our neighbors feeling the pain and the panic of not knowing when their next check would arrive.
No doubt Sen. Brown, who campaigned his way into the Senate as a common-sense, independent everyman, is also beholden to play many issues along party lines if he’s to have any friends in the nation’s capital on his side of the aisle.
In this case however, we feel that the threat of 70,000 Massachusetts residents losing their unemployment payments outweighs the need for partisan alignment.
Achieving Balance
In recent months a debate has been ignited between two high-profile economists, Paul Krugman and Niall Ferguson. Krugman argues that federal deficit spending is necessary to revive the economy and can be paid back in better times, while Ferguson, of Harvard University, says sovereign debt that accounts for too great a portion of GDP puts the country at grave risk for total economic failure.
We’ve even seen the issue play out on the world stage in the different approach the United States is taking to the economic crisis from its European allies, who are largely undergoing extreme austerity.
The truth is that both economists are right — but it’s the balance and timing of each solution that is really at stake here.
The effort to delay, for almost two months, the extension of unemployment benefits, demonstrates just how bitter the partisan atmosphere is, and how out of touch Congress has become with the people it represents.
There is no question that wasteful government spending and massive increases to our national debt are unsustainable.
However, rather than picking on the unemployed, Congress would do better to look at the big picture and tackle the country’s tax structure, the bloated federal budget, and health-care cost contain- ment.
We don’t believe in unbridled deficit spending, but we do believe that those unemployment dollars get spent immediately back into the economy, and keep people in their homes and apartments.
Further fuel on the real estate fire — meaning more mortgage defaults, will only set the eventual recovery back even further.
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