Testimony | Budget, Taxes, and Public Investment

Deficit reduction should take a back seat to job creation

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“The economy remains fragile and is performing well below its potential,” EPI Research and Policy Director John Irons said during a June 30, 2010 testimony before the National Commission on Fiscal Responsibility and Reform.

Irons testified on behalf of Fiscal High Road, a partnership between Demos, EPI and The Century Foundation.

“Major deficit reduction should not be on the table until the recovery is firmly on track, that is, until unemployment has dropped significantly and is on a downward trajectory. To be concrete, unemployment should reach 6 percent or lower, and be trending downward, before any fiscal contraction should be seriously considered. In fact, with unemployment hovering near 10 percent and with projections putting unemployment at elevated levels for at least the next couple of years, further job creation is indeed necessary,” Irons said.

Irons stressed that “Deficit reduction and job creation are not competing priorities. Job creation is needed today to ensure a strong economy and a solid tax base tomorrow: you can’t reach reasonable budget targets without a strong and rapid recovery, and you won’t get a strong recovery if you pursue austerity too early.”