350 Economists Warn President And Congress: Bad Grand Bargain On Deficits Could Kill Recovery

WASHINGTON – November 14 – 350 prominent economists issued a statement on Wednesday warning that “the fragile recovery is threatened by obsessive concern with cutting deficits that has infected both parties.” The economists from universities and research groups across the U.S. and the world reminded politicians that the U.S. economy in the post-election period is still “marked by mass unemployment, rising poverty, and declining wages.” And they warned that big spending cuts aimed at reducing deficits could throw the economy back into recession.

Their statement, called Jobs and Growth, Not Austerity, was written by Robert Borosage and Roger Hickey, co-directors of the Institute for America’s Futureand by Robert Kuttner, founder of The American Prospect.

The statement and signers can be found at jobsnotausterity.org

In their statement, the economists hold up the cautionary example of European countries that have in plunged themselves into recession as a result of misguided policies aimed at reducing deficits: The economists declare, “As Great Britain, Ireland, Spain and Greece have shown, inflicting austerity on a weak economy leads to deeper recession, rising unemployment and increasing misery.”

Conservative and corporate leaders, having gotten Congress to legislate the threat of draconian spending cuts and tax increases known as “sequestration,” are now insisting that the only way to avoid this so-called “fiscal cliff” is to institute a “grand bargain” of unpopular spending cuts, benefit cuts in Social Security, Medicare and Medicaid — and tax cuts for the rich — that conservatives have been trying to win for decades. But the economists releasing today’s statement caution that the elements of a bad “grand bargain” could have such a contractionary impact on the still-fragile economy that the US could sink like the European nations into another serious recession and a decade of high unemployment.

At a press conference today introduced by Borosage, the Jobs, Not Austerity statement was released with remarks by two of the signers, Robert Pollin,University of Massachusetts Economist and co-director of Political Economy Research Institute (PERI) and Teresa Ghilarducci, Director of the Schwartz Center for Economic Policy Analysis at the The New School.

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