By William Spriggs
Chief Economist to the AFL-CIO
The U.S. Department of Treasury has announced that the deficit for 2013 was $680 billion (which is about $200 billion less than projected back in February). It has been falling since 2009 at the fastest rate on record since the demobilization of World War II.
But, somehow, tea party Republicans have succeeded in getting the Washington media elite and the president to continue focusing on the deficit. What continues to be overlooked is that the Congressional Budget Office (CBO) also produced an estimate that the gap between current GDP (the value of all goods and services in the country) and where CBO estimates GDP would be if the unemployment rate was 6 percent instead of around 7 percent was $439 billion.
The Washington elite, who have been absorbed by discussions of long-term budget projections since the mid-1990s, cannot come to grips with the current crisis’ impact on the economy. So, when The Washington Post reported last week that the congressional districts represented by tea party Republicans have worse unemployment and lower income than the rest of the nation, there is little wonder there is a disconnect between voters in those districts and understanding the impact of tea party economic policies.
The big excuse is supposed to be that those voters are only watching Fox News. But, TV viewers in Washington also hear constant chatter suggesting that Congress needs to focus on the federal deficit because presumably it is stifling the recovery of the economy.
Millions, mostly women and children, will lose from huge cuts in the Supplemental Nutrition Assistance Program (SNAP) slated to begin Nov. 1. The long-term unemployed face cuts in their benefits beginning in January. Yet tea party representatives see government spending on unemployment benefits and SNAP as part of the “out-of-control” federal budget they claim is hurting America’s economy.
Of course, that logic would probably escape grocery stores that like to see customers and remember the drop in food purchases back in 2009 and how it affected their bottom lines. But, the absence of logic is the cognitive dissonance that is crippling Washington.
The rest of the nation lives with the 11.2 million people out looking for jobs, and the hidden millions of young people living in too many of their parents’ basements unable to find work. To most of America’s workers, it appears quite logical that if we could put millions of people to work then the GDP would be bigger; and so the $439 billion (and growing) figure sounds quite real. And, to most people it would make sense that if those unemployed workers were getting paid, government spending on SNAP and extended unemployment benefits would fall and tax receipts rise and the deficit would be smaller.
So, the same voters who need jobs are busy rooting for their tea party representatives because the consensus is the deficits caused by federal spending are the problem. Those same voters don’t see any irony in those same representatives who wasted $25 billion on shutting down the government voting to “save” $40 billion in SNAP that would benefit children in those congressional districts; because it is all about the bigger fight to defeat President Barack Obama’s “wasteful spending.”
To end this cognitive dissonance, President Obama needs to speak directly to the unemployed workers in those tea party districts. He needs to explain that since he took office in January 2009, government spending is down, federal employment is lower, the deficit as a share of the economy did shrink in half, the level of business investment in buildings and equipment are higher and the stock market and corporate profits are at record levels.
This is what the tea party set out to achieve: grow the economy by making the rich richer and the government smaller. Ask those voters why 13 Republican House members who get government farm subsidies voted to keep their government subsidies but cut food to America’s children? The result of the tea party policies is their voters are still unemployed; if we keep doing what we are doing and expect a different outcome, that isn’t just cognitive dissonance, it’s the definition of insanity.
The way to restore America’s economic health is to focus on getting America back to work and raising America’s wages. The focus has to be closing the gap in potential GDP. We need to focus on the loss of teachers and our crumbling bridges and roads that will keep our investments down and lower potential economic growth. You can’t starve your way to growing the economy and creating jobs. The president needs more faith in America’s common wisdom than in the pundits.