“Deficit Fears Irrational, Cuts Will Impede Recovery”

For Immediate Release

“Deficit Fears Irrational, Cuts Will Impede Recovery”

WASHINGTON - JAMES K. GALBRAITH, THEA HARVEY
Chair of Economists for Peace and Security, Galbraith (available for a limited number of interviews) is Lloyd M. Bentsen Jr. chair in government/business relations at the Lyndon B. Johnson School of Public Affairs at the University of Texas at Austin. His latest book is The Predator State: How Conservatives Abandoned the Free Market and Why Liberals Should Too. Harvey is executive director of Economists for Peace and Security.

MICHAEL INTRILIGATOR
Intriligator is a professor of economics, political science and public policy at UCLA. He is also a senior fellow of the Milken Institute in Santa Monica and at the Gorbachev Foundation of North America in Boston. (He is unavailable Wednesday morning.) He is one of the signatories to a statement distributed by Economists for Peace and Security, which states in part:”The budget cuts being proposed will impede and may end the recovery. If the recovery fails, unemployment will increase and the financial crisis could re-emerge. The premise that the U.S. government is broke is false. The U.S. government has never defaulted and will not default on any of its financial obligations. Deficit spending is normal for a great industrial nation with a managed currency, and it has been our normal economic condition throughout the past century. History proves, and sensible economic theory confirms, that in recessions, increased federal spending — not balancing the budget — is the tried and true way to return to a path of sustained growth and high employment.

“Eliminating waste in government spending is desirable. But that is not what the House proposes; indeed the House budget failed to address the largest waste in federal government, namely in the military, and the House failed to remove our most egregious subsidies, such as to oil companies. To adopt a policy of deep budget cuts at this stage of recovery is to surrender to irrational fears in the service of a political, not an economic, agenda.” PDF of full statement with list of signatories

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