Economist Stephanie Kelton says neither cutting government spending nor raising taxes is the solution to improving the country's economy. Kelton, an associate professor at the University of Missouri-Kansas City, is visiting Luther College this week.
Kelton says the key to improving the economy is getting money into the hands of those who would spend it. That's why she supports a full payroll tax holiday for employees and employers alike. Such a move would help those with personal debt problems. A holiday from payroll taxes would give the average wage earner an additional $325 a month--$700 a month for the average couple.
Kelton's second recommendation is additional aid to states, which are almost all suffering financial crises and making large budget cuts. She says it doesn't make any sense to have federal stimuluses at the same time state governments are making big budget cuts.
Finally, Kelton envisions a WPA-like jobs program that would hire the unemployed. She says the private sector is just not doing enough to add back jobs, despite growing profits. That's because "we're worried--and until we stop worrying, the economy isn't coming back."
Kelton says she and other similar economists have been holding meetings with lawmakers in Washington, D.C., hoping to find a receptive audience for their suggestions. She's disappointed with the "finger-pointing" in the Capitol and hopes the New Economics Perspectives blog will help the economists "get into the debate in a new way."
You can read the blog at www.neweconomicperspectives.blogspot.com