ONE OF THE best things about growing up in the 1970s was Schoolhouse Rock! on Saturday morning TV. The day my high school history class began to study the preamble of the U.S. Constitution, we all broke into song: “We the People ... in Order to form a more perfect Union, establish Justice, insure domestic Tranquility, provide for the common defense, promote the general Welfare ...”
In the ’70s, Americans still believed those words; the general welfare was important to policymakers across the political spectrum. Today, we have a political discourse where the Republican presidential contender disparages the elderly and the unemployed for collecting benefits for which they’d paid into an insurance fund.
And now policymakers are allowing the looming “fiscal cliff” to threaten the U.S. economic recovery from the recent recession. At the end of this year (or a few months later if Congress kicks the can down the road), Congress and the administration must work out a compromise on spending cuts and revenue increases, or the economy will face deep, mandatory federal spending cuts and across-the-board tax hikes. Such deep spending cuts would devastate many programs that aid those most in need. And, in addition to hurting families, spending cuts at this point in the recovery threaten to derail economic growth and job creation.
In order to make sure fewer people need unemployment insurance benefits, Congress needs to run deficits for the next couple years. Economists are in general agreement that what the economy needs now is more fiscal expansion—that is, an agenda that will make investments that could create jobs and pave the way for long-term economic growth. Federal Reserve Chair Ben Bernanke pointed this out in a recent speech: “Fiscal policy, at both the federal and state and local levels, has become an important headwind for the pace of economic growth.”