Confronting Old Problem May Require a New Deal, by Eduardo Porter, NY Times: ...As he delivered his fifth State of the Union address, President Obama, not unlike President Franklin D. Roosevelt early in his second term, seemed to have given up far too early in the game on trying to stimulate the recovery. ...
The Obama administration’s boldest propositions are sensible, from raising the minimum wage to $10.10 to extending emergency unemployment insurance. But they are not quite on the scale of a trillion dollars’ worth of lost gross domestic product.
This is not just the president’s doing. The bipartisan cooperation that would be needed to start a jobs program of the scale of what was tried during the New Deal — not to mention the World War II production explosion that finally ended the Depression — is out of the question today.
Perhaps more important, however, is that even among Democrats there remains little appetite for the kind of aggressive government action that was popular in F.D.R.’s day.
The fear, however, seems overdone. ...
There are potentially great benefits to government investments in public works at a time like this. ... And it would not even be very expensive. With the borrowing costs of the federal government below the rate of inflation, investments would actually help reduce the nation’s debt burden. Lenders are, in effect, paying the government to borrow money. ...
[T]he path favored by many Republicans in the House..., slash government spending and let the economy run its bedraggled course..., would probably transform our economic emergency from a painful though temporary setback into a permanent feature called stagnation.
And yet this is essentially the policy the nation is following.
I am not fully sold on the secular stagnation argument (see the article for more, Keynes worried about the same thing), but there's no excuse for turning our backs on the unemployed. We could have, and should have done more. Even now, it's not too late.