Over the last three decades the U.S. economy has gotten fundamentally out of balance and increasingly dependent on private or public sector deficits to maintain demand. Since the start of the Great Recession in 2008 we have replaced (by bailing out – mostly financial) private deficits with public deficits. Cutting the public deficit (without fundamental restructuring) without restoring another unsustainable private deficit (as in the late 90’s) will simply cause the economy to further decline.
In fact, without fundamental economic restructuring, federal deficit cutting will hurt both in the short-run and the long run. Instead, this new CPEG policy brief focuses on how we restructure and revitalize our economy away from an increasingly unsustainable and debilitating “rentier” structure, to a more viable and sustainable advanced “unequal exchange” economy.