The stream of economic experts who are denouncing the budget slashing that the House of Representatives did last month has just turned into a flood.
Today the Economic Policy Institute and the Center for American Progress jointly released a statement signed by nearly 320 economists from around the country, including Nobel Prize winners Kenneth Arrow and Eric Maskin, former Vice Chairman of the Board of Governors of the Federal Reserve System Alan Blinder, and former Chair of the President’s Council of Economic Advisers and Director of the National Economic Council Laura Tyson.
That comes a day after Mark Zandi of Moody’s Analytics released a report that estimated the House budget cuts would result in a loss of 700,000 jobs by 2012. That finding evoked a “so what?” from House Majority Leader Eric Cantor that was remarkably in line with the dismissive “so be it” comment that House Speaker John Boehner made earlier in February in response to concerns that budget cuts would result in job losses.
“So what?” Here’s what more than 300 leading economists think of that attitude:
As economists, we believe it is short-sighted to make budget cuts that eliminate necessary investments in our human capital, our infrastructure, and the next generation of scientific and technological advances. These cuts threaten our economy’s long-term economic competitiveness and the strength of our current economic recovery.
Investment is the cornerstone of economic growth and the key to our long-run national prosperity. It creates jobs now and lays the foundation for long-term economic growth and a strong middle class. As Congress begins to debate the federal budget, it must be careful to sustain critical investments in the productive capacity of the United States.
Both the private sector and the government have critical roles to play in growing our economy: Business investment drives the economy, but public investments provide the foundations on which business investment depends. This winning combination paves the way for America’s economic success. Cutting necessary investments from the federal budget will only undermine the long-term competitiveness and productivity of the American economy.
We recognize that resources are scarce and that fiscal responsibility demands that federal budget policies tackle the long-term budget deficit. But responsible governance demands that we neither damage the recovery today nor forsake America’s economic future by cutting critical investments.
Progressive economist Dean Baker did not sign the letter, however, and in a column for The Guardian he explained why: “The argument in the letter is correct, but it is nonetheless painful to see this sort of thing being circulated right now,” he wrote.
What the economy needs is a bold plan to spend federal money to stimulate demand and get people hired, and “economists, who don’t have to run for office, can say such things, even when politicians can’t. But there is no mention of stimulus, just a plea not to cut public investment. This plea could even be taken as an implicit endorsement of cuts to other areas of spending like Medicare, Medicaid and Social Security.”
His bottom-line concern: “Serious progressives have to move beyond a situation where we are choosing between bad choices and worse ones.”
Updated 5:03 p.m. with comments from Dean Baker.