washington, dc

The Democratic Strategist

Political Strategy for a Permanent Democratic Majority

Private Contraction, Public Expansion

For those who never took or don’t remember Economics 101, two headlines from the front page of today’s Washington Post tell you pretty much everything you need to know about the basic quandry facing economic policymakers in Washington right now:
“US Spending Continued Decline in October.”
“Food Stamp Use Nears Record.”
A contracting economy kills jobs and income and reduces public revenues, even as it boosts demand for public services. A rapidly contracting economy like the one we are facing now does so at a dramatic pace. That’s why virtually no one is talking much about “fiscal discipline” right now. But it’s also why state and local governments, who face this same dynamic without the ability to run large budget deficits, and who actually administer and in some cases help finance the big public-sector programs accessed by people suffering from the recession, need to be a central part of the big stimulus package just ahead.

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