We Know How to Fix This

Paul Krugman wrote yesterday about what the economy has lost as a result of the recession - $1 trillion worth of growth. It is very stark on the presented graph. Krugman is rightly upset that Washington is pretending the crisis is over, and not doing anything to try and close the $1 trillion gap with more stimulus spending. Krugman closes with the sentence "It's tragic." but I wonder how many people and especially those that can do something about it understand exactly what a $1 trillion loss in GDP means out here on Main Street.

The thing is that this trillion dollar loss is going to translate into hard facts when the cows come home. It means that millions of people that just a year or two ago were earning an income aren't anymore. We aren't talking just low wage earners here either. We are talking about a whole range of lost incomes and many, many of them three figure incomes(like myself) that are no longer a part of the economy. Many of these who lost their livelihood were already living from paycheck to paycheck and probably in hock and with virtually no savings with which to ride out the storm. These folks are hurt. Their lives are ruined. They may have already or are about to lose their homes. For many of these it means their children will never get the chance to reach their highest potential for lack of a good education. Many are facing hunger. Many are facing illness with no health insurance which in America today is a death sentence in many cases. Marriages are going to fail. Many are going to turn to crime just to survive. The road ahead for many looks very bleak. It's tragic for sure.

These are the people the Democrats and Barack Obama are supposed to be fighting for and aren't. We learned how to fix these problems back in the 1930's. Then they were new ideas and untested but today we know they work and for the Democrats(and to a lesser extent the Republicans) to refuse to address them is a crime. Yeah, I know it will add to the deficit but the naysayers are making a whole lot more out of the deficit than is reasonable. IF we take the hard steps and address these problems now, put the trillion back into our output with more stimulus, then future revenue will more than make up for the spending and debt we embrace now with extra to spare.  We learned this lesson once from Keynes and the Great Depression but for some reason we are not acting on it. Krugman is right...it's tragic and it is immoral to boot.