The economy continues to grow at a remarkably slow pace as evidenced by last week’s Gross Domestic Product (GDP) report released by the Department of Commerce. GDP grew by an annualized rate of 1.8% in the first quarter of 2011, a decline from the previous quarter’s 3.1% rate.
“Growth this slow, if sustained for a year, would most definitely lead to a guaranteed rise in the unemployment rate – it’s time for politicians to put jobs back on the top of the issues menu,” said EPI economist Josh Bivens.
This rate of growth does little to lower the overall employment rate and shows more government intervention is necessary to make significant progress.
“All of the signs in the GDP report point to an economy that remains below potential because it lacks sufficient spending,” Bivens continued in an analysis of the new GDP data. “Given this data on slow spending growth and decelerating wage pressures, it is odd indeed that boosting economic growth is not a higher priority among Washington policymakers.”
People’s Budget achieves savings and protects the social safety net
Last week’s snapshot, The People’s Budget: A Responsible Budget Plan, by EPI Policy Analyst Rebecca Thiess, compared three major budget plans that seek to address federal budget issues: President Obama’s budget framework, House Budget Committee Chairman Paul Ryan’s plan, and the People’s Budget put forth by the Congressional Progressive Caucus and analyzed and scored by the Economic Policy Institute. Thiess noted that while Obama’s plan would reduce deficits from around 10% of gross domestic product (GDP) today to an estimated 2% by the end of the decade and Ryan’s plan claims to bring deficit levels to 1.6% of GDP by 2021, the People’s Budget would achieve small budget surpluses by 2021.
What makes this more profound is that the People’s Budget achieves these savings without dismantling the nation’s social safety net. Whereas both of the other plans rely on domestic discretionary spending cuts, and Ryan’s plan limits Medicaid funding and destroys Medicare as we know it, the People’s Budget actually makes room for increased domestic investment.
“The People’s Budget achieves deficit reduction mainly by shifting the tax burden more fairly to high-income individuals and corporations while also cutting defense spending, enacting a public option for health care coverage, and making room for $1.4 trillion in vital investments in infrastructure, education, and innovation over the next decade,” Thiess said.
“The People’s Budget makes it clear that putting our budget on a sustainable path does not require us to dismantle the social safety net and dangerously underinvest in our country’s physical, human, and knowledge capital,” she stressed.
Many noted economists and media outlets, including Paul Krugman, Dean Baker, Rachel Maddow, and the Washington Post, among others, have voiced their support for the People’s Budget.
SAVE THE DATE: November 1, 2011
This year marks the Economic Policy Institute’s 25th year of fighting for American workers and their families. On November 1, 2011 in Washington, DC, EPI will celebrate this milestone with a dinner honoring two individuals who have dedicated their lives to helping America’s workers: Ray Marshall, former U.S. Secretary of Labor and founder of EPI, and Arlene Holt-Baker, Executive Vice President of the AFL-CIO. More about the dinner will be posted on EPI’s website in the coming weeks.
EPI in the News
McClatchy and the National Journal referenced Economist Josh Bivens’ report on the latest GDP growth.
MarketWatch quoted EPI Vice President Ross Eisenbrey discussing the damaging effects state budget crises have had on public employee pensions. He pointed out that public employee pensions are the victims of the states’ budget crises, not the cause.
A New York Times op-ed quoted EPI research associate Richard Rothstein on the many reasons socioeconomic backgrounds and other circumstances do more to determine how much students learn than what occurs in school.
The Christian Science Monitor cited EPI Policy Analysts Andrew Fieldhouse and Ethan Pollack’s recent policy memo, All would suffer from Chairman Ryan’s budget cuts, to show how Chairman Ryan’s proposed budget cuts would result in a “significant loss of jobs in an economy already 11 million jobs short of reaching pre-recession unemployment rates.”