Nake M. Kamrany_ A New Approach to U.S. Economic Policy

Nake M. Kamrany_ A New Approach to U.S. Economic Policy -...

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EDITION: U.S. CA Canada US United States UK United Kingdom September 10, 2011 Like 77K CONNECT Search the Hu f ngton Post Nake M. Kamrany and Michael D. Intriligator GET UPDATES FROM Nake M. Kamrany Like 14 GET UPDATES FROM Michael D. Intriligator Like 1 A New Approach to U.S. Economic Policy Posted: 9/9/11 12:22 PM ET React The recent news that no jobs were added to the U.S. economy in August indicates the depth of the current recession. Meanwhile, the U.S. stock market and economy have been sustaining major gyrations and uncertainty due to an uninformed and misguided battle over the budget de±cit and national debt among ideologues in the House of Representatives. The problem was further exacerbated by the rating agency Standard and Poor's when it erroneously downgraded U.S. credit standing from AAA to AA+ for the ±rst time in history despite the U.S. impeccable record of meeting its debt obligations. We believe that there was some confusion among the ideologues concerning our economic problem. They should have addressed the Great Recession that began in 2007 and the ensuing unemployment rate of over 9 percent that has lasted for four years. In fact, while there is much current debate as to whether there would be a "double dip," in our view we are still in the frst economic dip and we should be taking aggressive actions to counter it. The policy focus should have zeroed in on reducing the unemployment rate that would ultimately reduce the budget de±cit and address the issue of the national debt. The policy sequence should have been to ±rst reduce the unemployment rate and then reduce budget de±cit. Instead, the ideological battle was over de±cit reduction. By focusing on budget de±cit reduction ±rst, as demanded by the ideologues on the right, the unemployment rate will, in our judgment, rise to double-digit levels, which would clearly be disastrous for the economy. Likewise, the ideologues on the left demanded a rise in taxes paid by the rich. That policy is also counterproductive because at times of recession income taxes
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Nake M. Kamrany_ A New Approach to U.S. Economic Policy -...

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