Saturday, Aug. 27, 2011 | 2:01 a.m.
It’s time for some straight talk on the economy. The consumer is broke. The consumer has been broke for a long time, but he didn’t know it because of easy credit. Now, though, he knows it, so he’s not spending, and aggregate demand is low. The businessman knows that his friend the consumer is broke, and the businessman also knows that the consumer knows he’s broke, so few businesses are starting or expanding.
So, what’s the Republican/Tea Party solution to this problem? To cut government spending, the only spending that’s going on right now! However, we have 500,000 fewer state and local government jobs than we did just a year ago.
What will be the effect of further cuts? Obviously to savagely knee the consumer in what’s left of his economic private parts and make the problem even worse.
This brilliant approach has been tried before. President Herbert Hoover tried it at the start of the Great Depression, thereby becoming the most hated president in American history. President Franklin Roosevelt ameliorated the Depression with optimism and a lot of government spending, becoming one of the most beloved American presidents.
I would have thought that this experience would have taught us a lesson. I guess we’ve just forgotten it because of the passage of time, ignorance of history and the deluge of right-wing propaganda during the past 30 years or so. We had better relearn it quickly.