Remember the mean, lean years of 1982 and 1983? Unemployment hit 11% in November 1982 and remained at or above 10% for most of 1983.

In fiscal year 1983, the federal government budget deficit of 209 billion dollars was 6 per cent of GDP. The sky did not fall.

Today’s GDP is close to 14 trillion dollars, which means that a deficit of 6 per cent of GDP would be 840 billion dollars. The sky will not fall.

Of the 103 million people in the 1983 labor force 10 million were without work. Today’s labor force is far larger, roughly 144 million people. If unemployment rates hit the levels of 1982/1983—and most economists agree it will—the number of people out of work will exceed 14 million!

Think of it this way. Because today’s labor force is so much larger, the current unemployment rate of just under 7 per cent means the same number of people are out of work now as there were in 1982/1983 when the unemployment rate hit 10 per cent.

Economists know that federal budget deficits reduce unemployment. But faith-based economists want you to believe that helping people by creating jobs via spending programs violates sacrosanct principles. According to their cult, fighting unemployment through deficit spending is sure to call down the wrath of the Market. For market-worshipping true believers the suffering of 14 million unemployed people and their families is necessary to appease The Market. Maybe the next time there is a drought we should throw a couple hundred infants off a cliff.

Obama administration proposals for expanded federal spending will not bankrupt the nation, kick off inflation, or cause any other economic malady. In fact, the proposed spending programs are quite modest.

After 30 years of neglect, deficits exceeding 6 per cent of GDP are warranted. Many of our most important public goods are in life-threatening disrepair—closing schools and libraries, selling off parks and highways, letting bridges and levees collapse—does not improve national well being.

Deficit-hawks are freaking out about the trillions this will cost. Yes, we are talking about huge sums of money. Fortunately, fiscal policy research at the award-winning Levy Economics Institute put these numbers in historical perspective.

In FDR’s New Deal, the Resolution Finance Corporation injected $50 billion to rescue the nation’s banks. If we adjust the $50 billion spent in the 1930s (for the inflation which has occurred since then) we’d be looking at close to $800 billion in today’s dollars. If we further adjust New Deal spending to take account of GDP growth (our economy is much larger today, so the problem is much bigger in absolute terms), that figure rises to $12 trillion, or 85 per cent of GDP! (http://www.levy.org/vdoc.aspx?docid=1101 accessed December 6, 2008)

It’s time to send faith based economists packing. A1.4 trillion-dollar deficit—around 10 per of GDP—is puny in light of New Deal fiscal activism.

The Federal Government must immediately assure the states that revenue from federal sources will be available to enable the states to meet rising local needs. Environmental problems require huge investments in green technologies. As millions lose their jobs—and their health insurance—developing universal, single payer health care becomes even more urgent. Equally as important, programs financed by federal deficits must follow the best principles of affirmative action to combat work-force segregation and discrimination.

14 million unemployed Americans is too awful to contemplate. “Deficits be damned, full speed ahead!”