Earlier this month, Blog of the Century contributor Benjamin Byron suggested that it was time for Americans to postpone our debt obsession. Ben argued that “fears about the debt burden are misplaced” and went on to offer several reasons why. Last week Doug Elmendorf, the Director of the nonpartisan Congressional Budget Office, added still another reason.
In testimony before the House Budget Committee, Elmendorf warned that the massive spending cuts scheduled to take effect in March would cost the country 750,000 jobs in 2013 alone.
Elmendorf’s prediction shouldn’t come as a surprise; the CBO has been carefully contrasting the dangers of near-term austerity measures with the benefits of long-term debt reduction for years. In November, for example, CBO projected that:
the significant tax increases and spending cuts that are due to occur in January will probably cause the economy to fall back into a recession next year, but they will make the economy stronger later in the decade and beyond. In contrast, continuing current policies would lead to faster economic growth in the near term but a weaker economy in later years.
The December budget deal addressed the tax half of the equation, but merely delayed action on the spending cuts. Allowing those cuts to take place will be disastrous for American workers. As my colleage Andrew Fieldhouse argues, it’s time to stop all the handwringing about near-term debt reduction and adopt a sensible approach to the debt, one that prioritizes jobs and growth.