Trimming Deficits and Creating Jobs
In the New York Times today, David Leonhardt looks at the problems associated with massive, looming federal deficits. He suggests that the best way to cut the deficit is to "make sure that any deficit-cutting plan does not also cut economic growth."
Leonhardt suggests two key efforts. The first is the need to continue federal spending: "we shouldn’t plunge ourselves back into another economic slump by raising taxes and cutting spending too quickly."
Leonhardt says the second part of a pro-growth strategy means a long term focus. What's needed is not just making across-the-board spending cuts "for years on end." Instead, it means cuts in "funding for programs that do not spur economic growth" combined with increases in "funding for those relatively few that do."
Essentially, Leonhardt is looking at the best possible ways to generate growth throughout the U.S.
One key point on growing an economy is to grow jobs. So another way to look at the problem would be "How might the U.S. create jobs and thus grow the economy."
What comes to mind is the ongoing toll that unbalanced trade with China has taken on the U.S. economy. Research by the Economic Policy Institute (EPI) shows that the U.S. trade deficit with China has cost 2.4 million jobs since 2001.
There's an old adage that says if you're in a hole, the first step in turning things around would be to stop digging. The U.S. can halt some of the hemorrhaging of jobs by taking steps to correct the massive, lopsided trade deficit with China.
A few weeks ago, the U.S. House of Repesentatives passed strong, bipartisan legislation on China's currency manipulation. Now, the U.S. Senate may be poised to vote on similar legislation. Yesterday, the Alliance for American Manufacturing (AAM) sent a letter to the U.S. Senate urging passage of legislation to stop China's currency manipulation.
Correcting unbalanced trade with China would be an important step toward creating jobs in the U.S.
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