It may be hard to imagine, but (we all hope, anyway) some day the recession and meager recovery period will come to an end. At that point, will the debates we’re having now about the economy become completely irrelevant? What will we have to fight about? Roosevelt Institute Fellow Mike Konczal and EPI’s Josh Bivens took this question on in the latest Fireside Chats episode on Bloggingheads:
As Mike points out, “Right now the debates seem very focused on things very specific to this recession,” such as what the Federal Reserve could do to make things better or whether we should reduce mortgage burdens to boost consumption. Those are “very technical and very important debates to be having,” he points out, “but they’re very narrow to the moment we’re in right now.” Once we one day leave these issues behind, what will liberals decide to promote? And will we all be able to get on board?
The first issue Josh sees rearing its head is what we consider the “natural” rate of unemployment to be. Right now it’s pretty obvious that unemployment is too high. At what point does it fall so much that some people, including the Fed, start to say it shouldn’t go any lower? This question will have larger implications as well. As Mike says, “You see policy experts running around trying to figure out how to boost the wages of the lower quintile, but we know what has done it in the past 30 years, and it’s when unemployment is below 5 percent for a sustainable period of time.” In fact, he says, a low unemployment rate “is the ultimate jobs program, it is the ultimate policy solution,” and boosts wages for everyone — not just those at the bottom.
What else will we squabble over when the economy once again booms? Bivens predicts social insurance programs — Social Security, Medicaid, and Medicare — will have to be on the agenda. And related to that will be just how high we can go with tax rates on the rich. “Obviously you can have a fairness argument and a just deserts argument, but the economic case is pretty clear that [tax] rates [on the wealthier] could go much higher,” Mike says. “But we’re seeing resistence to just getting to near 40 percent at this point.” Brace yourself, political battles are coming.
Watch the full episode below, in which Mike and Josh discuss how little we all take home and whether inequality and the social safety net have anything to do with it: