James Galbraith has a very interesting idea for how we can help the economy and create jobs without spending money (though he does think spending money is the right course). Galbraith says we need to shrink the labor force by lowering the Medicare eligibility age to 55, as well as temporarily removing the early retirement age, which will allow people to retire earlier. Add in more funding for college, and you’ve reduced the work force and lowered unemployment, while providing substantial benefits through programs that we all know work well. Getting on to why the government needs to still actually spend money, Galbraith writes:

But with work to do and people to do it, the government should spend more. States and localities could hire teachers, teachers’ aides, doctors and nurses, fire and police, librarians and park attendants and street cleaners. If they do not have the cash, the easy way to create jobs is for Washington to write checks. This is called “revenue sharing” and it was invented by President Richard Nixon.

Galbraith’s ideas represent three major prongs of progressive policy that has been pushed through legislation recently or is expected to be done soon. Health care reform briefly looked at, but did not include, lowering the age people were eligible for Medicare. While most expect Social Security “reform” will inevitably lead to a shrinking of the program, the best course would actually be to expand it in ways that help more people. And jobs bills before Congress – including one rejected yesterday by the Senate – have the opportunity to provide states with major funding to support the important work of fire fighters, teachers, police, and medical professionals. That is, the pieces of Galbraith’s plan aren’t outside the range of conversations going on in Washington. The problem is that these are not Serious ideas held by Serious people, only by dirty hippies and accomplished economists with an honest understanding of the crisis our country is in. Conventional Wisdom says these are Unserious ideas and so I don’t have any hope that we’ll get this sort of smart, progressive, policy making out of decision-makers in Washington.

The austerity measures unveiled by the David Cameron’s conservative government in the UK are really brutal and certain to put a huge hurt on working families in Britain. But at least conservatives across the pond have the honesty to recognize that if deficit concerns are to be addressed, you can’t simply cut spending and not raise taxes. I don’t know enough about how the tax hikes are distributed, though it’s clear they will disproportionately hurt lower income Britons based on the hike in the VAT and the capital gains tax is still relatively low.

Nonetheless, deficits are not the problem when the economy is in freefall and unemployment is rising. I don’t think the conservative plan in UK will help solve their economic problems. But at least, and this really isn’t much but for the fact that conservatives in the US are so fundamentally dishonest and craven, they are willing to tax the rich more as well.

Paul Krugman does a mitzvah and donates yet another column to fighting back against the deficit hype while defending the need for continued stimulating expenditures and job creation.

Penny-pinching at a time like this isn’t just cruel; it endangers the nation’s future. And it doesn’t even do much to reduce our future debt burden, because stinting on spending now threatens the economic recovery, and with it the hope for rising revenues.

The sudden switch from attention to job creation to attention to the deficit is truly bizarre. But it’s coming in fast and furious from conservatives of both parties. Without major education efforts as to the idiocy of these ideas, as Krugman is doing with regularity, I’d expect timid Democrats to buy the deficit bullshit and start helping Republicans inflict real pain on working Americans.

I rarely buy into the “whose side are you on?” messaging common with some progressive groups, but I really believe Democrats are approaching an inflection point where they will have to genuinely start representing the interests of working Americans or fully concede that they are full-blown corporatists in the Republican model. Leadership needs to recognize this taking place and be prepared to excise corporatists in the Party. They must prioritize clear ideological contrast from the GOP over marginal differences in the size of our majorities in the Senate and House. Failure to do so will actually only result in larger electoral losses, both in the near term and the long term. I hope the leaders of the Democratic Party have the sense to see what is unfolding before their eyes.

Busy day, but just want to highlight this passage by Paul Krugman.

In America, many self-described deficit hawks are hypocrites, pure and simple: They’re eager to slash benefits for those in need, but their concerns about red ink vanish when it comes to tax breaks for the wealthy. Thus, Senator Ben Nelson, who sanctimoniously declared that we can’t afford $77 billion in aid to the unemployed, was instrumental in passing the first Bush tax cut, which cost a cool $1.3 trillion.

Creating jobs is too costly, but funding unlimited wars with unlimited budgets will never be questioned.