The economy needs more fiscal and monetary stimulus to avoid falling back into recession, says economist Robert Reich.
“We’re not in a double-dip recession yet. We’re in a one-and-a-half-dip recession,” he wrote in a column on Business Insider.
Retail sales, home sales, housing starts and consumer confidence are dropping, Reich says. Only inventories and loan defaults are rising.
“The 1.5-dip recession should be causing alarm bells to ring all over official Washington,” wrote Reich, who served in three national administrations and was a secretary of labor under President Bill Clinton.
“It should cause deficit hawks to stop squawking about future debt, blue-dog Democrats to stop acting like Republicans, and mainstream Democrats to get some backbone,” wrote Reich, now a professor of public policy at the University of California at Berkeley.
President Barack Obama should demand a massive national jobs program for millions of people, even if government has to pay their wages directly, Reich argues.
“But none of this is happening,” he said.
“The hawks and blue dogs are still commanding the attention. Herbert Hoover’s ghost seems to have captured the nation’s capital.”
Reich is also disappointed with the Federal Reserve. It should be buying mortgage bonds, Treasuries or “anything that will get more money into circulation,” Reich wrote.
“But the Fed chair (Ben Bernanke) continues to talk about pulling money out of the system.”
Not everyone sees the need for more stimulus.
“There is no question that huge uncertainty hangs over the global economy, but is the case against commonsense fiscal conservatism so compelling?” Harvard economist Ken Rogoff wrote in the Financial Times.
“I don’t see it.”
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