Ezra Klein (via C&L):
The Congressional Budget Office just released the latest edition of its long-term budget outlook (pdf), and it shows the same thing as always: If Congress lets the Bush tax cuts expire or offsets their extension, implements the Affordable Care Act as scheduled and makes or offset the Medicare cuts prescribed by the 1997 Balanced Budget Act — which CBO calls the “extended baseline scenario” — the national debt will be totally manageable. If Congress passes laws extending the Bush tax cuts without offsetting the cost, repealing the Affordable Care Act and its cost controls and protecting doctors from Medicare cuts without making up the savings elsewhere — the “alternative fiscal scenario” — the national debt will be totally out of control
[I]n an unusual mid-month note to his investors, Gross hammered the “anti-Keynesians” in both parties who believe “that fiscal conservatism equates to job growth.” The truth, he says, is just the opposite. “Fiscal balance alone will not likely produce 20 million jobs over the next decade. The move towards it, in fact, if implemented too quickly, could stultify economic growth.” [...]
So what should we do? “Government must temporarily assume a bigger, not a smaller, role in this economy, if only because other countries are dominating job creation with kick-start policies that eventually dominate global markets.” But what about the deficit? “Deficits are important, but their immediate reduction can wait for a stronger economy and lower unemployment. Jobs are today’s and tomorrow’s immediate problem.”…
OK, maybe Ben Bernanke isn’t willing to do much more to help out our anemic economy, but at least he did say this today:
I don’t think that sharp, immediate cuts in the deficit would create more jobs. I think in the short run that we’re seeing already a certain amount of fiscal drag coming from state and local governments from the withdrawal of previous federal stimulus, so I think in the short run, you know, the fiscal tightening is at best neutral and probably somewhat negative for job creation.
Of course, this is something that Paul Krugman has been saying for, oh, I don’t know, 3 years? But its news now, except, of course, if there’s another weiner on the lose. On the other hand, there’s always weiner on the lose so maybe this isn’t all that important.
Unemployment will be taken care of when the structural imbalance works itself out and uncertainty is removed. Also, regulations, too.
BTW, has SarahPalinUSA tweeted an opinion on this?
