Lawrence Mishel, president of the Economic Policy Institute, made the following statement this afternoon on the National Commission on Fiscal Responsibility and Reform, established by President Obama, which is holding its first meeting tomorrow:
As the President’s commission begins its work tomorrow, it should bear in mind that jobs – not deficits – must remain the near-term policy priority for the country. The large deficits of the last couple years are largely a result of the recession, which has dramatically reduced tax receipts and increased the need for many government services. The first step towards reducing the deficit, therefore, is getting Americans back to work. It is shameful to permit concerns about the deficit to stop much-needed investments in job creation at a time when so many Americans want and need a job.
Over the longer term – once a robust recovery has firmly taken hold – there are budget challenges that must be addressed, and it is essential that the commission consider these challenges in the proper way. Simply adopting a budget target, like a fixed debt-to-GDP ratio, and then formulating the revenues and spending that achieve such a target is the wrong way to proceed. As a country, we need a much fuller, deeper conversation about our priorities, what it will cost to achieve them, and what we’re willing to spend. For example, taking an axe to Social Security without recognizing the U.S.’s growing retirement insecurity would represent the triumph of arbitrary budget mechanics over a serious examination of the nation’s needs.
Lastly, the commission would be irresponsible to recommend ways to address the nation’s budget challenges without considering the decades-long increase in income inequality that has produced the most unequal U.S. economy since the 1920’s. Between 1989 and 2007, before the recession began, just 16% of all income growth went to the bottom 90% of U.S. households. More than half of the income growth during that period went to the top 1% of households; more than one-third of all income growth went to the top one-tenth of the top 1%. With low- and middle-income families losing ground, it would be morally and economically indefensible to attempt to solve the nation’s long-term budget problems on the backs of American workers and their families.