The debt ceiling "crisis" and the "fiscal cliff" serve to distract Americans from focusing on what is really needed for the recovery of the economy--jobs created by government and the private sector. Fiscal unsustainability is an imaginary crisis.
In any case, Goldman Sachs's chief U.S. equity strategist, David Kostin, wants investors to pay more attention to the fiscal cliff. Goldman, for instance, would be in favor of austerity that would reduce the deficit because of the opportunities that would give banks to become "rentiers"--living off fixed unearned amounts such as rent or bond interest and other investments.
We can say for sure that Goldman Sachs is not interested in increasing employment opportunities in this economy because they have recently fired a number of employees in order to keep their profits high!
Marshall Auerback talks about the fiscal cliff as so much baloney. What is really needed is jobs for workers:
So-Called Fiscal Cliff Is Baloney; Our Economy Can Recover if Obama Focuses on What We Really Need: Jobs!
Talk about deficits and tax cuts distracts us from the great New Deal lesson: An economy recovers when people go back to work.
By Marshall Auerback - AlterNet
. . . .
The reality is that the whole “debt crisis” is a manufactured issue designed to destroy entitlement spending once and for all. The truth is that for the 82-year period since 1930, the U.S. government’s budget has been in deficit of varying proportions of total economic output 67 of those years (that is, 84 percent of the time). Each time the government tried to push its budget into surplus, a major recession followed that forced the budget back into deficit because automatic stabilizers like social welfare payments, unemployment insurance, food stamps, etc. had to kick in.
These deficits have provided a floor for private domestic saving over most of this period. In times of past crisis – the Great Depression and World War II – the U.S. deficit grew relatively large and national debt followed it upward as a percentage of GDP. Then, as growth resumed and stability was re-established, the deficit fell back as a percentage of GDP to the level required to support private domestic saving and maintain reasonable levels of spending power to support relatively high employment levels.
. . . .
The government could serve as the “employer of last resort” under a job guarantee program modeled on the WPA and the CCC. The program would offer a job to any American who was ready and willing to work at the federal minimum wage, plus legislated benefits. No time limits. No means testing. No minimum education or skill requirements.
The program would operate like a buffer stock, absorbing and releasing workers during the economy’s natural boom-and-bust cycles. In a boom, employers would recruit workers out of the program; in a slump the safety net would allow those who had lost their jobs to continue to work to preserve good habits, making them easier to re-employ when activity picked up. The program would also take those whose education, training or job experience was initially inadequate to obtain work outside the program, enhancing their employability through on-the-job training. Work records would be maintained for all program participants and would be available for potential employers. Unemployment offices could be converted to employment offices, to match workers with jobs in the program, and to help private and public employers recruit workers.
Read the whole article here