So we’ve gone through a lot of the basics and popular talking points. I hope I’ve made the case that the rise in the deficit since the beginning of the recession is almost entirely due to decreased tax revenue and increased safety net spending for the massive number of people thrown out of work. This picture sums up what you need to know to understand the deficit growth.
Even with the stimulus, government spending has risen at about the same rate it did before the recession.
So what does that mean? It means that getting the deficit under control is fixing unemployment. Our short term deficit problems will return to a manageable level if we can get people back to work, and it won’t require extensive painful cuts. And all the painful austerity we can think of won’t repair that deficit if we don’t get people back to work. This isn’t speculation or opinion, it’s what the economy has told us over the last three years. It isn’t unreasonable to want to reduce government spending in general, but wanting to do it now is. We have a much more important problem, and we need to address it as it truly is: a revenue problem, not a spending problem.