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Fix the Jobs Deficit First (It Can Help Fix the Debt)

My latest post for U.S. News & World Report’s Economic Intelligence blog notes that private employment is still 1.3 million jobs short of where it was when the Great Recession began and that the share of the population with a job has barely risen since the recession.  Reducing this large jobs deficit should be our top priority and would help us address our longer-term budget challenges, I argue.

Fix the Debt, the bipartisan campaign led by fiscal commission co-chairs Erskine Bowles and Alan Simpson, emphasizes the importance of addressing our longer-term fiscal challenges.  My colleagues and I at the Center on Budget and Policy Priorities agree on the need to do so.  It’s problematic, however, if “fixing” the debt is portrayed as so important that it overpowers the need to fix the jobs deficit.  It’s dangerous if it feeds public misperceptions that deficits and debt are out of control today and deficit reduction is needed immediately.  As I wrote:

We don’t have an immediate deficit or debt problem.  The Congressional Budget Office projects that, “If current laws generally remained in place, federal debt held by the public would decline slightly relative to GDP over the next several years” before it starts rising again.  That means we have time to craft a sound longer-term budget deal while, in the meantime, we enact appropriate policies to boost the recovery and restore high levels of employment that entail temporarily higher budget deficits.

Too much deficit reduction, too soon, remains a threat to the recovery and job creation, and a weak economy is not conducive to forging a sustainable bipartisan deficit-reduction agreement.  One important thing that helped President Clinton and Congress achieve balanced budgets and declining debt for four straight years starting in 1998 was a very strong economy.