A statement from Professors Paul Davidson, James Galbraith and Lord Skidelsky
and now co-signed by many of our friends, including Joseph Stiglitz, Robert
Reich, Laura Tyson, Derek Shearer, Alan Blinder and Richard Parker. We
support the central objective of the letter — a full employment policy
now, based on sharply expanded public effort. Yet we each, separately,
declined to sign it.
necessity of a program to cut the mid-and long-term federal deficit.. “
Since we do not agree with this statement, we could not sign the letter.
effects of unemployment itself the United States does not in fact face a
serious deficit problem over the next generation, and for this reason there
is no “necessity [for] a program to cut the mid-and long-term deficit.”
face will necessarily shrink This is the universal experience of rapid
economic growth: tax revenues rise, public welfare spending falls, and the
budget moves toward balance. There is indeed no other experience in modern
peacetime American history, most recently in the late 1990s when the budget
went into surplus as full employment was reached.
We agree that health care costs are an important issue. But health care is
a burden faced by both the public and private sectors, and cost control is
a job for health policy, not budget policy. Cutting the public element in
health care – Medicare, especially – in response to the health care cost
problem is just a way of invidiously targeting the elderly who are covered
by that program. We oppose this.
argue, very soon, for cuts in Social Security as though these were
necessary for economic reasons. In fact, Social Security is a highly
successful program which (along with Medicare) maintains our entire
elderly population out of poverty and helps to stabilize the macroeconomy.
It is a transfer program and indefinitely sustainable as it is.
concede to an unfounded hysteria over supposed long-term deficits, and to
concentrate instead on solving the vast problems we presently face. It
would be tragic if the Evans letter and similar efforts – whose basic
purpose we strongly support – led to acquiescence in Social Security and
Medicare cuts that impoverish America’s elderly just a few years from now.
Paul Davidson is the Editor of the Journal of Post Keynesian Economics and
author of “The Keynes Solution.”
James K. Galbraith is a Professor at The University of Texas at Austin and
author of “The Predator State.”
Lord Robert Skidelsky is the author, most recently, of “Keynes: The Return
of the Master.”