Marshall Auerback on BNN: More and Better Fiscal Policy, Please
Last Sunday, Roosevelt Institute Senior Fellow Marshall Auerback offered his take on Ben Bernanke’s speech at Jackson Hole and concluded that the Fed chairman was still underestimating the need for active fiscal policy. In an interview with BNN’s Andrew Bell, Marshall elaborates on that argument and explains what needs to be done to get the economic recovery back on track.
Marshall says that Bernanke’s speech contained “a few rare glimpses of honesty” about the limited power of central banks and monetary policy, but he is frustrated by Bernanke’s continued attempts to downplay fiscal policy options. He notes that countries like Australia and Canada, which spent “most aggressively and most proactively” on job and income growth rather than bailouts, have experienced the most robust recovery in the wake of the recession.
As for concerns about excessive spending, Marshall argues that “private sector debt is the most destabilizing thing that’s out there right now,” and that, given the current state of the economy, the government can only facilitate private savings by running huge deficits. He also dismisses the notion that “the alternative of not spending the money and having 20 or 25 percent unemployment would constitute a more efficient deployment of government resources.” He explains that decreased tax revenues and steep deficits are the natural result of a recession and that the key to reducing those deficits is to stimulate strong economic growth.
To that end, Marshall supports a Job Guarantee Program, which would ensure that the federal government “stands ready to fund anybody prepared to work for a basic wage level with a series of benefits tied to it.” The government is going to spend the money anyway, he says, so why not have it “pay people to engage in productive labor that’s actually a huge benefit to society both economically and socially?”
Click here to watch the full interview and let us know what you think of Marshall’s proposals.