A few data points from today illustrate just how insane John Boehner’s premature call for austerity really is:
A new Urban Land Institute report says the United States needs $2 trillion in new infrastructure spending. Our infrastructure is falling apart, and PA in particular has the worst bridges in the nation.
The 10-year bond rate is now down to 3.11%, which means that bond markets are not worried about our debt levels. Indeed, this is an indication that they want us to borrow more.
We have an unemployment rate of 8.7%, which is a very conservative estimate of the real problem since it doesn’t count the people who are working part-time but want to be working full-time, or the people who are so detached from the labor market that they’ve given up looking for jobs.
Our capacity utilization actually declined last month:
We’re not seeing the kind of GDP numbers consistent with robust catch-up growth, so we’ve got a large output gap between what the economy could be producing, and what it is producing:
With inflation and inflation expectations very low (too low!) for the foreseeable future, all this adds up to a strong case for borrowing the $2 trillion we need to fix our infrastructure and connecting people who want to work with the unused slack capacity in the economy to increase our output.
Even if you take the Republicans at their word – a big mistake in my view – their opposition to doing this is rooted in a fear of what awful things might happen if we do too much to bring down unemployment. But there are no signs that the unintended consequences of fixing the unemployment crisis are worse than enduring the unemployment crisis. Doing nothing would be much worse than doing too much.