Top Priority: Jobs, Not Deficit

It's a mystery to me how, during the greatest sustained employment crisis since the Great Depression, our national political class remains focused on the deficit instead of putting people back to work. Robert Reich, former Secretary of Labor in the Clinton administration, takes a stab at explaining why the obsession should be with jobs.

Read Reich's article. Here's my take on it.

The deficit is caused by unemployment. When people are unemployed, all manner of safety net expenses go up. Unemployment insurance payments increase. Medicaid takes over more of the cost of medical care. Food stamp use increases. Revenue goes down as fewer people earn income. At the state level, people buy less and pay less sales tax.

All of these add to the deficit. With respect to the safety net, the deficit isn't a bug - it's a feature.

The safety net isn't just to help individual citizens. It helps businesses, by making it possible for the citizens to keep buying food, shelter and clothing. Wal-Mart thrives on the safety net.

The safety net also helps regions. Concealed by the fact that safety net programs are paid to individuals is the reality that these are enormous transfers from the more prosperous to less prosperous regions of the country. Without these transfers, Mississippi would be like Greece.

To get out of this fix, the federal government needs to spend more, not less.

Right now, the focus needs to be on putting people back to work.

The safety net is not a form of charity to individuals, though it does help keep people alive. More importantly, in a cold-hearted way, it keeps the economy alive. It keeps businesses going in bad times by sending customers through the door.

Without safety net programs, a major downturn would feed on itself and the economy would have no natural bottom to it.

Right now, only the federal government has the power to put people back to work. And there is clearly work that needs to be done. Fix our crumbling roads and bridges, for one. Bury our electrical distribution system, for another (to at least mitigate damage from future Sandys). Put teachers, firemen and policemen back to work. All of these measures would put money back in people's pockets and put people back in stores, increase orders to factories, reduce safety net expenditures, increase tax revenue and reduce the deficit.

Jobs first. The deficit will follow.