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Debt crisis? Spend more money now

Monday, June 24, 2013 - Updated: 4:08 AM

The International Monetary Fund is that elite group of pinched-nosed accountants who have been running around Europe for the last several years forcing countries such as Greece and Spain to cut their spending.

These are not the guys you want to invite to your party. They are the ones who snap on the lights at midnight and start telling everyone to gather up the beer cans and wine bottles for recycling.

So it is worth noting that the IMF is telling the United States to spend more now, while the economy is sputtering, and to solve the debt problem by cutting spending over the longer haul, with entitlement reforms.

The global lender believes the sequestration spending cuts that Republicans forced on Washington are slowing economic growth, and making it impossible to put the army of unemployed Americans back to work. It notes that the deficit is shrinking fast, and suggests that unemployment is a killer problem that deserves more attention. Slow growth today, in America and Europe, is making the job of cutting debt more difficult, because slumping economies yield less tax revenue.

Imagine that.

The IMF predicts the United States economy will grow at an anemic rate of 1.9 percent next year without new policies, nowhere near enough to seriously cut unemployment. If the two parties were sensible enough to strike a grand bargain that increased spending today in return for modest austerity tomorrow, the rate of growth would jump to 2.7 percent, creating millions of jobs.

Obama is ready for a deal like that, which is why he stepped up on Social Security. But no reasonable deal has traction.

So for now, millions of American families suffer long-term unemployment, the economy slumbers, and the treasury's long-term plan is to borrow more and more money from China. It's enough to make you want to hand control to the pinched-nose accountants.

-- The Star-Ledger, Newark, N.J.

     

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