The first quarter growth figures—annual growth of 1.8% during the first three months of the year—are an ominous reminder of the reality that Washington has forgotten.
This economy is in trouble. For most Americans, the recession has not ended. Growth is painfully slow. Unemployment remains high. Home values are dropping; gas prices are rising; wages are not keeping up.
Despite this—and despite the warnings of economists—Washington, driven by the new House Republican majority, has turned prematurely to austerity. Contractionary policies cause contraction. They will impede any recovery, and slow an economy that is barely moving.
Washington offers no answer because it is fixated on the wrong question. The question is how do we get the economy going and put people back to work — not simply how do we balance our books. Every deficit reduction plan—from the president’s to the House Republicans’ to the Congressional Budget Office projections—assumes faster growth than we saw in the first quarter. But the most powerful deficit reduction measure is to put people to work, turning them into consumers and taxpayers.
If growth and unemployment stay at this level, deficits will rise, not fall. The White House and the Congress should turn to measures to put people to work and to stave off debilitating layoffs of teachers and police at the state and local level, instead of ignoring the reality that Americans are struggling with every day.