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Why the Fiscal Commission Does Not Serve the American People

The Huffington Post

Wednesday, June 30, 2010

By James K. Galbraith

Cross-posted from New Deal 2.0.

President Obama and his economic team face a daunting challenge: how to deliver economic growth they know can only come from deficit spending, while deferring into the future the "fiscal consolidation" which is being pressed on them by practically everyone, from Peter G. Peterson to Angela Merkel.

Clearly the "bipartisan deficit commission" -- like practically all bipartisan commissions -- was a device to deflect this pressure. The President created the Commission while pressing for a stronger growth strategy, and has sent every discreet signal (notably in the commission's minuscule operating budget) that the exercise should not be taken seriously.

Nevertheless, there is a danger that the Commission will take a path -- "stimulate now but austerity later" -- that will lead to unnecessary, economically-damaging and socially destructive cuts in Social Security and Medicare. And there is a danger that such cuts will be stampeded through Congress in the months immediately following the 2010 elections.

In a statement made on behalf of Americans for Democratic Action to the Commission, I make the case against cutting Social Security and Medicare as a "deficit strategy" -- on the grounds that it's not necessary and it won't work. Instead, we need an economic policy built on realistic assumptions and focused on our actual economic problems: jobs, the state-local budget crisis, public investment, energy and climate change. In my statement to the Commission, I have tried to explore these issues a bit further:

My Statement to the Commission on Deficit Reduction

Mr. Chairmen, members of the commission, thank you for inviting this statement.

I am a professional economist, but I have served in a political role, as Executive Director of the Joint Economic Committee of the United States Congress. I am offering this statement on behalf of Americans for Democratic Action, an organization co-founded in 1949 by (among others) Eleanor Roosevelt, John Kenneth Galbraith, Arthur M. Schlesinger, jr., and Ronald Reagan. Accordingly I would like to begin with a political comment.

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