Do you remember when the big political issue was whether we needed another stimulus package to boost job creation and keep the economy growing? Funny how that issue has seemingly dropped off the radar screen even though the need for a jobs program remains strong.
Business Week recently revisited the topic and concluded that “The economy is still weak and the risk of a stalled recovery remains very real.” Among the reasons: state and local governments have just begun to implement massive cuts in spending and employment, the first federal stimulus is close to running its course, and exports are threatened by global instabilities (think Greece).
So–if we need another stimulus, how should it be delivered? As the chart below makes clear tax cuts are not the way to go. Rather, we need continuing support for social programs and direct government spending on infrastructure. The former provides needed short term support while the latter helps to promote needed long term restructuring.
Unfortunately, political trends suggest that unless working people force this issue back onto the political agenda, we can expect slow growth, disappearing social programs, and high levels of unemployment for years to come.