November 23, 2014

Economic Growth and Deficit Reduction

  • The national debt has grown significantly in recent years due to rising annual deficits. A deficit occurs in any year the government spends more...

President Obama plans to speak to Congress Thursday night on ways to bolster the struggling economy while still trying to improve the nation’s long-term fiscal outlook.

In his request to address Congress, which returns this week from its August recess, Obama said he would lay out “bipartisan proposals” to create jobs, strengthen small business and put “more money in the paychecks of the middle class and working Americans” while still reducing projected deficits. Yesterday in Detroit, the President promised “a new way forward on jobs.”

A Labor Department report Friday said the unemployment rate had remained unchanged at  9.1 percent, intensifying concerns about the economic recovery.

Some news stories have talked about Washington shifting its focus from deficit reduction to job creation, as if the two goals were mutually exclusive. A new Concord Coalition video, however, emphasizes that there can be synergy between effective short-term measures to stimulate the economy and long-term fiscal reform.

“So, really, why are we stuck in this box?” says Joshua Gordon, Concord’s policy director. Instead, he says,  “we need to really be looking at this as all one thing.” He thinks the new congressional super committee has a critical opportunity to take this approach, in part because the American public “is clamoring for something to be done on both things.”

Diane Lim Rogers, Concord’s chief economist, recalls the “three Ts” of effective economic stimulus: measures that are timely, targeted and temporary. She argues against simplistic descriptions of fiscal policy, saying people should remember that “there’s good stimulus, there’s bad stimulus; there’s good deficit reduction, there’s bad deficit reduction.”