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.
About 75% of this unemployment is cyclical, not structural – meaning that it can be reduced through more stimulus.
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.
Oh boy, where to start….
Until you start advocating a waiver of Davis Bacon as pertains to infrastructure projects, you do not want to reduce unemployment, you want to be a shill for the unions while keeping unemployment high.
Until you start advocating waiver of Army Corps, EPA and State DEP reviews of replacement infrastructure projects (like replacing a bridge) you are a shill for the green brigade and not to be taken seriously.
You need to you spend more time understanding that you're wrong on unemployment – it's far more structural than cyclical. Serious economists (not shills) estimate NAIRU as high as 7.1 – 7.5%. Skills mismatches abound. Demand will not return to 2005 levels for a long time.
The bond market is not telling you a damn thing just focusing on the rate. That the level of analysis is what I'd expect from a 3rd grader. Focus on what's causing that – QE2, monetary policy, flight to safety, etc. Then forecast what happens as these items fall off. If you do it right (which means not following Krugman, he's a political hack, not an analyst) it'll scare the hell out of you.
Jon, suggestion – stop posting on 8 million different topics. Pick a couple and really delve into them. Greatly step up the analysis, the critical questioning, the challenging. Stop just taking stuff at face value because you find a post that supports what you believe to be. Stop the simplistic "one fact, here's my conclusion" approach that is beyond hope.
And most of all, if you want to be taken seriously, stop being a shill. Be Independent and be your own man.