Jobs vs. debt

On the one hand, the national unemployment rate stands at 10 percent. On the other hand, Washington’s 2009 fiscal year ended on Sept. 30 with a record deficit of $1.4 trillion.

With the federal government approaching its debt limit of $12.1 trillion, the Senate had to vote on a small increase in the government’s debt ceiling — and all of those numbers are making most of our creditors, and some of our voters, very nervous.

So nervous, in fact, that the major question buzzing around Washington for the past several weeks has been whether our leaders should focus on creating jobs (which will take more spending) or reducing the deficit (before there’s nothing left to spend). Both factions have some powerful economic evidence on their side. But in the final analysis, what matters right now is getting Americans back to work.

When people aren’t making any money, they can’t pay any taxes.

This leaves us with a paradox: In order to create jobs so that taxpayers can start paying into the Treasury and reducing the federal budget deficit, the government is going to have to do some deficit spending. It matters enormously that the job creation programs are wise ones — more aid to cash-strapped states is good, for instance, along with programs to get credit flowing toward small businesses.

It also matters enormously that the government figures out a way to rein in this spending at the right moment. Deficits do matter — but the deficits that matter the most are the ones in our near-term future, not next year. Even after the economy begins to grow again, the U.S. population will still be aging, and we will still have the enormous Medicare and Social Security deficits that were projected long before the recession began. If we’re not careful, those are the deficits that will cripple our growth for years to come.

— San Francisco Chronicle