Economic recovery requires spending

We know how to get out of recession. To do that we need to create jobs. There is no other way. We have done it many, many times before, and it works every time.

To create jobs the federal government needs to spend money, thus financing the job market. What is Congress doing? Guided by the abortive tea party, Congress is cutting back on spending for creating jobs including laying off substantial numbers of government workers. Those government jobs are a major portion of the jobs formerly available.

The foreclosures and downturn in equity caused by the frauds committed by the banks has decimated the middle class by destroying their financial reserves, which were almost entirely contained in their homes. The result of this destruction of the middle class’s economic well-being means that they are not spending money, and no recovery can occur until that spending resumes. Spending will not resume without jobs.

The bank fraud in turn produced a massive increase in national debt. However, a study by Standard & Poor’s reports that debt service spending by the United States is 1.7 percent of GDP as compared to 2.5 percent by Germany and 2.6 percent by the United Kingdom. Our ratio of national deficit to gross domestic product in 1943 was over 28 percent. The predicted ratio for 2011 is under 11 percent. Standard & Poor’s has taken a political position, rather than economic, by reducing the U.S. debt rating. That will not keep anyone that matters from investing in U.S. debt.

Now is not the time to cut back in government spending if we ever want to get out of this quagmire. The time to do that is after economic recovery, ala the Clinton administration’s budget balancing.

Thomas C. Curtis

Rolling Meadows