On June 12, 2013, Michael Hiltzik writes in the Los Angeles Times:
The U.S. economy is improving, yet Congress seems still to be in the grip of the delirium that shrinking the deficit in the near term is still a matter of paramount urgency.
That’s what’s prevented lawmakers from dealing with their real task, which is to jolt the miserable jobs recovery into a higher gear and lift the budget sequester, one of the outstanding examples of mass insanity the country has ever seen.
The federal deficit is down, spending is down, revenues are up, and the balance sheets of Social Security and Medicare are stable or improving. As a share of gross domestic product, the national debt is down too. In a rational world, this would be seen as providing breathing room to create job-creating programs of real value to the overall economy.
“This is the time to embark on a major boost in infrastructure investing,” observes Rep. Chris Van Hollen (D-Md.), the ranking Democrat on the House Budget Committee — programs that could be funded with cheap debt, given that interest rates are near a historic low.
Austerity’s drag on the economy is visible in the jobs numbers. Since employment bottomed out in February 2010, just over a year into Obama’s first term, the private sector has added an average of 214,000 nonfarm jobs per month. But that’s been offset by consistent job losses in the public sector, which have totaled 854,000 jobs since the peaks at the three levels of government (March 2011 for the federal government and the summer of 2008 at the state and local levels). That’s the harvest of the inadequacy of federal stimulus and of the sequester.
Millions of Americans and their political representatives still talk as though the federal budget and the deficit are both still exploding. The numbers, as compiled by the Congressional Budget Office last month, disagree.
The federal budget deficit will shrink this year to $642 billion, its lowest level since 2008 and $200 billion smaller than what the CBO projected as recently as February. That deficit will be 4 percent of gross domestic product, less than half its ratio in 2009. Revenues will increase 15% this year, a third higher than the CBO expected in February. Spending is expected to be stable as a share of the economy at least through 2021, keeping in the range of 13.1 percent to 13.5 percent of GDP.
These figures indicate not merely that deficit fever has lasted too long in Washington, but that it may have been based on a misdiagnosis to begin with. The speed at which the CBO’s projections have changed over just a few months is a reminder that the major cause of deficit growth from 2008 through 2012 was the economic slump, which simultaneously reduced government revenues and necessitated a surge in government spending for unemployment relief and other stimulative programs. Recovery reversed both those trends naturally.
Indeed, as Michael Linden, managing director for economic policy at the Center for American Progress, observes, the latest projections on the deficit reduction are lower than they were in 2011 even without the sequester.
“Those reductions the sequester was supposed to achieve we would have achieved even without it,” he says. “In a rational world, we would just get rid of it.”
No one at either end of the political spectrum is suggesting that we shouldn’t be concerned about the deficit in the long term. The error was in elevating deficit reduction to a near-term imperative. One reason for the ebbing of deficit fever may be that the dire consequences of austerity have become inescapable. That’s especially true in Europe, which hasn’t learned the lesson that cutting government spending during an economic contraction is a good way to turn a slump into a Slump with a capital “S.”
No where in this op-ed does Michael Hilitzik address the impact that continued national debt has on the furtherance of concentrated ownership of continued productive capital asset investment and formation. Nor does Hilitzik acknowledge that jobs are continually being destroyed and labor worth devalued as a result of tectonic shifts in the technologies of production. Hiltizik’s focus is on stimulus to create jobs, not as well broadened individual ownership of the FUTURE wealth-creating, income-generating productive capital assets created.
The question that requires an answer is now timely before us. It was first posed by binary economist Louis Kelso in the 1950s but has never been thoroughly discussed on the national stage. Nor has there been the proper education of our citizenry that addresses what economic justice is and what ownership is. Therefore, by ignoring such issues of economic justice and ownership, our leaders are ignoring the concentration of power through ownership of productive capital, with the result of denying the 99 percenters equal opportunity to become capital owners. The question, as posed by Kelso is: “how are all individuals to be adequately productive when a tiny minority (capital owners) produce a major share and the vast majority (labor workers), a minor share of total goods and service,” and thus, “how do we get from a world in which the most productive factor—physical capital—is owned by a handful of people, to a world where the same factor is owned by a majority—and ultimately 100 percent—of the consumers, while respecting all the constitutional rights of present capital owners?”
http://www.latimes.com/business/la-fi-hiltzik-20130612,0,1687632.column
