In a speech on Monday Larry Summers, President Obama’s top economic adviser, made the case for increased spending to stimulate the economy, arguing that paying down the U.S. deficit in the near term could pose economic risks. In his speech Summers describes the U.S. economy’s sticky situation. The budget is ballooning, Summers said, but stimulus measures are the only way to get the economy growing again. If the economy does not grow then the federal budget can not decrease. Summers goes on to argue that federal budget deficits are crucial during economic downturns with the logic being that you have to spend government money to kick start demand.
While I would not like to see the federal deficit grow any larger than it currently is I can agree with Mr. Summers on many of his points. I do think it is necessary for the government to spend more money on various stimulus packages to help get our economy back on track. However, instead of focusing on bailouts and handouts to failing banks and Wall Street businesses the government should focus more of their spending on creating new jobs.
When new jobs are created this will not only lower the amount of money necessary for unemployment aide but will also allow some people who were recently jobless to spend their money on goods and services thus stimulating the economy further. Job creation is the quickest way to recovery for the U.S. economy. The sooner we get people off of unemployment the quicker we will see things rebound.
I do hope that President Obama listens to his top economic adviser Larry Summers and creates more stimulus spending packages, but I hope that the spending is geared towards creating more jobs and not bailing out more banks.