The unemployment rate is too damn high, and all that America's politicians can talk about is the budget deficit. If only they knew that we can take care of both of them at once.
Friday's unemployment report, showing joblessness still stubbornly high, makes the absolute insanity of Washington's deficit obsession even plainer.
In fact, unemployment and deficits are very much related, or at least correlated, as you can see from this chart, which shows the budget deficit as a percentage of GDP (represented by the green line) vs. the unemployment rate (blue line), going back for the past 65 years. (h/t Joe Weisenthal at Business Insider)
Notice anything? Like, how every time unemployment rises, the budget deficit also rises? And how every time unemployment falls, the budget deficit also falls?
Why could this be? For one thing, the budget deficit is largely a function of the government's inability to collect enough tax revenue from unemployed people. If we can just get those people back to work, then the government will get more revenue, and the deficit will shrink.
Meantime, a lot of the evil government spending that makes the ghost of Calvin Coolidge cry is designed to help carry people through prolonged unemployment and also maybe find new jobs. You know, the social contract. As people find more jobs, some of that spending goes away, as if by magic.
In fact, you can see that has already started to happen -- despite Washington's state of near-panic over the deficit, it has actually been falling steadily since the recession. What else has been falling? You guessed it, the unemployment rate.
Both are still way too high. The unemployment rate was 7.8 percent in December, the Bureau of Labor Statistics reported on Friday. It was 7.8 percent in November. Job growth has averaged 153,000 per month for the past two years, just barely enough to keep up with regular growth in the labor force.
At this pace, it will take another eight years or more to get back to "full" employment, recovering the 4 million jobs we lost in the recession and adding another 5 million that we should have generated to match population growth, according to the left-leading Economic Policy Institute.
Meanwhile, 1.5 million people have been out of work 99 weeks or more, and 4.8 million have been unemployed 27 weeks or more. The longer these people stay unemployed, the more their skills deteriorate, and the less productive our economy is. Prolonged unemployment is going to make it even harder to grow the economy and shrink the deficit in the future.
But instead of doing anything at all to reduce unemployment, Washington has spent the past several months and all of its energy obsessed with the budget deficit. This has led to a series of increasingly self-created and self-destructive crises, including the recent self-created fiscal-cliff fiasco, the solution to which is going to hurt the economy and job growth this year, making our unemployment problem worse.
Up next is the self-created and self-destructive debate about whether America should pay its debts, or instead hold the global economy hostage to extract some spending cuts out of the government.
The deficit obsessives argue that the only prescription for America's economic woes is more austerity, ignoring the effects austerity has had on economies throughout Europe. As Weisenthal points out, stabs at austerity in Japan actually made that country's deficit problem worse. Maybe you just can't fix your deficits when your economy is a purple smear and millions are unemployed.
Washington should end its deficit fixation and turn its attention to fixing the easier problem -- unemployment, even if it means a little bit more deficit spending in the short run. It might find that it takes care of both problems that way. Otherwise, we'll get more austerity, and more unemployment, and a tougher deficit problem in the long run.
Our 2024 Coverage Needs You
It's Another Trump-Biden Showdown — And We Need Your Help
The Future Of Democracy Is At Stake
Our 2024 Coverage Needs You
Your Loyalty Means The World To Us
As Americans head to the polls in 2024, the very future of our country is at stake. At HuffPost, we believe that a free press is critical to creating well-informed voters. That's why our journalism is free for everyone, even though other newsrooms retreat behind expensive paywalls.
Our journalists will continue to cover the twists and turns during this historic presidential election. With your help, we'll bring you hard-hitting investigations, well-researched analysis and timely takes you can't find elsewhere. Reporting in this current political climate is a responsibility we do not take lightly, and we thank you for your support.
Contribute as little as $2 to keep our news free for all.
Can't afford to donate? Support HuffPost by creating a free account and log in while you read.
The 2024 election is heating up, and women's rights, health care, voting rights, and the very future of democracy are all at stake. Donald Trump will face Joe Biden in the most consequential vote of our time. And HuffPost will be there, covering every twist and turn. America's future hangs in the balance. Would you consider contributing to support our journalism and keep it free for all during this critical season?
HuffPost believes news should be accessible to everyone, regardless of their ability to pay for it. We rely on readers like you to help fund our work. Any contribution you can make — even as little as $2 — goes directly toward supporting the impactful journalism that we will continue to produce this year. Thank you for being part of our story.
Can't afford to donate? Support HuffPost by creating a free account and log in while you read.
It's official: Donald Trump will face Joe Biden this fall in the presidential election. As we face the most consequential presidential election of our time, HuffPost is committed to bringing you up-to-date, accurate news about the 2024 race. While other outlets have retreated behind paywalls, you can trust our news will stay free.
But we can't do it without your help. Reader funding is one of the key ways we support our newsroom. Would you consider making a donation to help fund our news during this critical time? Your contributions are vital to supporting a free press.
Contribute as little as $2 to keep our journalism free and accessible to all.
Can't afford to donate? Support HuffPost by creating a free account and log in while you read.
As Americans head to the polls in 2024, the very future of our country is at stake. At HuffPost, we believe that a free press is critical to creating well-informed voters. That's why our journalism is free for everyone, even though other newsrooms retreat behind expensive paywalls.
Our journalists will continue to cover the twists and turns during this historic presidential election. With your help, we'll bring you hard-hitting investigations, well-researched analysis and timely takes you can't find elsewhere. Reporting in this current political climate is a responsibility we do not take lightly, and we thank you for your support.
Contribute as little as $2 to keep our news free for all.
Can't afford to donate? Support HuffPost by creating a free account and log in while you read.
Dear HuffPost Reader
Thank you for your past contribution to HuffPost. We are sincerely grateful for readers like you who help us ensure that we can keep our journalism free for everyone.
The stakes are high this year, and our 2024 coverage could use continued support. Would you consider becoming a regular HuffPost contributor?
Dear HuffPost Reader
Thank you for your past contribution to HuffPost. We are sincerely grateful for readers like you who help us ensure that we can keep our journalism free for everyone.
The stakes are high this year, and our 2024 coverage could use continued support. If circumstances have changed since you last contributed, we hope you'll consider contributing to HuffPost once more.
Support HuffPostAlready contributed? Log in to hide these messages.