The answer, from an economic point of view, is no. But don’t let that stand in the way of political grandstanding and ideology in Washington.
The June jobs report is filled with very bad news. Only 18,000 jobs created, and an uptick in the unemployment rate to 9.2 percent. Of course, the data doesn’t tell the complete story of the economy, and the survey that produced it was taken in the first two weeks of June. But still, it’s unambiguously bad news for an economy that’s growing, but still weak.
So why are we talking about trillions of dollars in spending cuts again?
From an economic perspective, it’s a terrible idea to slash spending — particularly in a dramatic fashion — when the economy is weak, and hiring is weak. Corporations that are sitting on mountains of cash, but not hiring, don’t need tax breaks, they need customers, to give them an incentive to add staff. (And they need incentives to stop hoarding capital, like making it more attractive from a tax perspective for them to invest.)
And social programs that are propping up those who are suffering the most in this economy arguably need more money right now, not less. Lastly, wouldn’t it be smarter for the federal government to make up the deficit in demand, rather than exacerbating it by firing federal workers, sucking more cash out of the economy through tax cuts, and eliminating yet another potential consumer — namely itself? States are already cutting budgets and firing people (the 18,000 increase includes 57,000 private sector jobs created, plus a LOSS of 39,000 government jobs, including 14,000 federal jobs. And those new unemployed people are going to need benefits and services. So will Republicans change course, in the light of this new, bad data?
Even the administration’s call for more “help for the private sector” seems off key, since the private sector is the only sector that’s adding jobs right now, even if slowly. More payroll tax cuts for business won’t spur hiring, it seems to me (granted, I’m not an economist, nor am I as smart as Austan Goolsbee.) And clearly, the administration is operating in a world where payroll tax cuts and expensing are the only stimulus they can get through this wacked out Congress. But what the economy needs is more people with more money to spend, and more confidence to spend it. And that means more jobs — private sector or not, and higher wages, which the current jobs report shows are going in the wrong direction.
In normal times, if we had two normal political parties, now would be the time for the federal government to take bold action, and go for direct employment: infrastructure, on a massive scale, leading to massive public works employment. But these are not normal times, and we are not dealing with a normal Republican Party. Even in the face of today’s news, expect them to continue their almost religious zeal for further tax cuts, and further spending cuts, both of which will only make the economy worse.
Then again, maybe that’s what they want.
Meanwhile, a new poll suggests Republican voters might not be as keen to cut entitlements as their elected officials think:
The survey found more internal division among Republican and Republican-leaning voters than among Democrat voters when it came to entitlement reform. The majority of Democrats prioritized maintaining benefits over deficit reduction, according to the survey.
At a little over 50 percent, independents tend to side with Democrats, 72 percent of whom prioritize preserving programs such as Social Security and Medicare.
The higher the income bracket of Republican respondents, the more likely they were to say that the budget deficit should be a priority over keeping benefits.
A majority of Republicans said Medicare and Social Security have “been good for the country.” Republicans were somewhat less approving of Medicaid, with 68 percent calling it “very good/good for the country” as opposed to Democrats (91 percent) or independents (75 percent).
The results echo other recent polling that has indicated a lack of support among Americans for cutting Medicare or Social Security. Respondents to the survey mostly considered these programs to work “pretty well,” with Social Security approval at 41 percent, Medicare at 38 percent and Medicaid at 39 percent.
And Ezra Klein explains how Washington is making a bad situation worse.