The White House has been full-court pressing on the fifth anniversary of the financial crisis, making the case for all it's done to ameliorate the after-effects of the economic collapse. Most of this is vintage 2012-era stump speeches: the country was pulled back from the brink of a second Great Depression, the automobile industry is alive, banks are lending again, laws have been passed to prevent future crises, but more work needs to be done because too many people are still out of work, et cetera.
There's plenty to nitpick there, but the biggest and most tenacious nit is the Obama administration's weird insistence on bragging about the wrong thing. Here's Treasury Secretary Jack Lew, speaking to the Economic Club of Washington on Tuesday:
Because of the policies we have put in place, our deficit has fallen faster than at any point since the demobilization after World War II, and should continue to decline relative to GDP over the 10-year budget forecast. And because of the resiliency of our people, our businesses, and our economy, we are in a much stronger position today than many imagined just a few years ago.
But we are not where we want to be yet. Too many Americans cannot find work. Growth is not fast enough. And the very definition of what it means to be middle class is being undercut by trends in our economy that must be addressed.
And here's President Barack Obama, speaking Monday:
And that’s what we’ve got to focus on: All the remaining work that needs to be done to strengthen this economy. We need to grow faster. We need more good-paying jobs. We need more broad-based prosperity. We need more ladders of opportunity for people who are currently poor, but want to get into the middle class.
Until now, Republicans have argued that these cuts are necessary in the name of fiscal responsibility, but our deficits are now falling at the fastest rate since the end of World War II. I want to repeat that. Our deficits are going down faster than any time since before I was born.
By the end of this year, we will have cut our deficits by more than half since I took office. That doesn’t mean that we don’t still have some long-term fiscal challenges, primarily because the population’s getting older, and they’re using more health care services. And so we’ve still got some changes that we’ve got to make. And there’s not a government agency or program out there that still can’t be streamlined, become more customer-friendly, more efficient.
The simple disconnect here is that the rapidly falling deficit is precisely what's holding back a return to full employment.
There's never a bad time to return to Joe Weisenthal's explainer on the interrelation of employment and the deficit, so let's do so again. "For 60 years (!) the pattern has held," he writes. "When unemployment drops, the deficit as a percentage of GDP drops. When unemployment rises, the deficit rises."
And here is a key piece of advice he offers (emphasis mine):
In the debate over fiscal policy, you frequently hear liberals argue: "It's not time to deal with the deficit, we need to fix the economy first and then fix the deficit when the economy is stronger." While this has merit as a political concept, it's actually giving into a false frame that dealing with the deficit and dealing with unemployment are two separate things that you do at different times. Steps you take to improve unemployment are deficit reduction measures.
The Obama administration's decision, then, to tout all this deficit reduction, and then lament that more needs to be done to solve the unemployment crisis, is just straight up otherworldly. Full employment is the horse that pulls the deficit-reduction cart. Right now, the cart has been parked on top of the horse. The horse isn't moving. "But hey!" exclaims the administration, "What a sweet cart!"
So, let's get this straight. We've extracted a ton of money from the economy while people and businesses have less to spend than ever, and employment hasn't improved as much as you'd liked?
Well. Fancy that!
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