The jobs crisis is a national emergency

Former Council of Economic Advisors chair Christina Romer points to the real crisis we're in. It's lack of jobs, not "too much government spending."  Put simply, we're not spending nearly enough to attack unemployment. Further, "structural unemployment" arguments to explain the current crisis are rationalizations to do nothing.  Romer looks back to World War II and explains why - if we're serious about economic recovery - we need measures that will, yes, add to the deficit to fight unemployment.  Why? Because it's worked before:

(F)iscal stimulus can help a depressed economy recover — an idea supported by new studies of the 2009 stimulus package. Additional short-run tax cuts or increases in government investment would help deal with our unemployment crisis.


What of the idea that monetary and fiscal policy can do little if unemployment is caused by structural factors, like a mismatch between workers’ skills and available jobs?    ...

But World War II has something to tell us here...  Because nearly 10 million men of prime working age were drafted into the military, there was a huge skills gap between the jobs that needed to be done on the home front and the remaining work force. Yet businesses and workers found a way to get the job done. Factories simplified production methods and housewives learned to rivet.

Here the lesson is that demand is crucial — and that jobs don’t go unfilled for long. If jobs were widely available today, unemployed workers would quickly find a way to acquire needed skills or move to where the jobs were located.

Finally, what about the national debt? Given the recent debt downgrade, it might seem impossible for the United States to embark on fiscal stimulus that would increase its ratio of debt to G.D.P.

Well, at the end of World War II, that ratio hit 109 percent — one and a half times as high as it is now. Yet this had no obvious adverse consequences for growth or our ability to borrow.

This isn’t hard to explain. Everyone understood then why the nation was racking up so much debt: we were fighting for survival, and for the survival of our allies. No one doubted that we would repay our debts. We had done it after every other war, and raising taxes even before the attack on Pearl Harbor showed our leaders’ fiscal resolve.

Today, we can do much more to aid recovery, including a near-term increase in our debt. But we need to make the reasons clear and make concrete our commitment to deal with the debt over time...

Equally important, someone needs to explain to the nation and to world markets just why we must increase the debt in the short run. Unemployment of roughly 9 percent for 28 months and counting is a national emergency. We must fight it with the same passion and commitment we have brought to military emergencies in our past.