I’m on the road in an undisclosed location (ok, Colorado Springs, where nature is breathtakingly beautiful and I say that as someone who is decidedly not partaking in locally legal substances).
So I’m coming in from the airport as is my wont, I ask the driver about the local economy. As is often the case, he gave what sounded to me like an accurate and thoughtful analysis, with special focus on sectoral developments in the military and tourist sectors.
And then, in explaining how things were better but still not that good, he said, “You know, that national debt thing is a problem here too, of course.” And to be clear, he was by no means saying that we’ve paid too much untimely attention to lowering the debt when we should be investing in growth projects to lift labor demand and close remaining output gaps. To the contrary, he was repeating the oft-heard line that national debt is restricting hiring.
In fact, the deficit has fallen sharply. The debt is growing more slowly as is expected to stabilize, though at an historically high level. And in a town that partly depends on government spending, when the private economy is still weak, premature deficit reduction is ill-advised.
It’s discouraging if not surprising that so many people don’t get these dynamics as they’ve been fed so much of the austerity line and so little of the full employment line. But someday, maybe I’ll be on the road and ask the driver about the economy and she’ll tell me, “Well, we’re not quite at full employment, so we could use more supportive fiscal and monetary policy.”
At that point, I’ll hang up my calculator and call it a day.