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The six-for-six compromise

"Deficit reduction and short-term job creation are not competing priorities," writes John Irons in this memorandum (pdf) for the Economic Policy Institute. "Job creation is needed today to ensure a strong economy and a solid tax base tomorrow: you can't reach reasonable budget targets without a strong and rapid recovery, and you won’t get a strong recovery if you pursue austerity too early."

To that end, Irons suggests a very simple "6-for-6" trigger to help time deficit reduction: Austerity measures should begin when the unemployment rate falls beneath six percent and stays there for six months. That makes sense to me, and you could even decide those measures in advance and write the trigger into law. The sensible compromise has been, and remains, a combination of short-term stimulus and relief spending and longer-term deficit reduction. Using a trigger to make that compromise credible is a sensible way to structure it. And you could please Satan by finding $600 billion in deficit reduction and calling it the "triple-six compromise."

By Ezra Klein  |  August 2, 2010; 4:51 PM ET
Categories:  Budget  
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Comments

You sure know how to sell a budget proposal! :)

Posted by: zperez | August 2, 2010 5:08 PM | Report abuse

"Deficit reduction and short-term job creation are not competing priorities."

Why don't you couple this post with one in which you lambaste Republicans for believing that tax revenues will grow if we reduce tax rates?

"Austerity measures should begin when the unemployment rate falls beneath six percent and stays there for six months."

You have pointed out repeatedly that it is probable that the unemployment rate will stay high for quite some time. Do you really believe that having the federal government spend massively until that proposed austerity trigger is reached will foster economic growth?

Posted by: ostap666 | August 2, 2010 5:28 PM | Report abuse

Only problem is that we may go broke long before we get back to 6% unemployment.

Although if you change the term from "deficit reduction" to "debt reduction" (i.e. budget surplus' to pay off existing debt) that may be more politically viable.

Posted by: halbittinger | August 2, 2010 5:32 PM | Report abuse

Heh. Remember when Democrats flayed the Bush administration for allowing the unemployment rate to rise to 6%? Man, those were the days.

Good luck with that job creation, though.

Posted by: tomtildrum | August 2, 2010 6:45 PM | Report abuse

Do Social Democrat really want to "please Satan"?

The freedom to fail is important and transcends the social barriers created by its absence: if a rich man and a poor man can both fail miserably -- can both forfeit everything based on a single bad decision -- it seems like we achieve what has not yet been achieved by the Obama/Pelosi policies. Perhaps too simplistic, but when I as a child stuck my finger into a light socket, I learned that pain resulted and (implicitly) learned that I shouldn't stick my finger into light sockets. Conversely, there are those that claim the opposite is good policy -- that eliminating the pain of a natural lesson is a wonderfully utopian lesson. Perhaps my memory isn't all that good, but I seem to remember that it was Satan who stood on a mountaintop and showed limitless lands which could be conquered without trauma -- perhaps someone can recall the culmination of that parable.

Posted by: rmgregory | August 2, 2010 6:52 PM | Report abuse

At last, Mr. Klein is revealed as a disciple of Beelzebub! This post was no doubt coordinated on Cabal-List!

Posted by: wooliemonster | August 3, 2010 3:05 PM | Report abuse

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