Economist Joseph Stiglitz,

who wrote a great piece for Vanity Fair which was linked yesterday, gives an interview with Democracy Now! expanding on what he has written.

Snip:

JOSEPH STIGLITZ: That’s right. Why is it? I mentioned before that there are two ways of cutting the deficit. One is raising revenue; the other is cutting expenditures. Well, what’s the best way of getting tax revenue up? It’s to put America back to work. If America were growing, if we were back to our full potential, our output would be higher, and tax revenue would be substantially higher. So the best way to reduce the deficit, as I said, is to put America back to work.

Now, I thought that Bowles-Simpson is a recipe for making our economy weaker. If you start cutting budgets now, spending now, before the economy is back to health—you know, we already suffer from the deregulation, now this is going—we’re going to suffer again from the thoughtless deficit reduction. That means people are going to be out of jobs. That means revenues are going to be lower, and our economy is going to be weaker.

But the second point I raise is that it goes back to: look at where the revenues are going to be. When you have so much money going to the upper one percent, the only way of fixing the revenue problem is to raise taxes and have a more fair tax system. What they proposed was eliminating some of the deductions, say, for housing, mortgages. Well, if you do that now, house prices, which have continued to decline, would decline even more. But the more fundamental point is, even if from the long-term point of view you want to get rid of these mortgage deductions, you shouldn’t do that on the backs of the middle class. That should be viewed as a revenue-neutral. You lower the mortgage deduction, but you also lower the tax rates to offset it. That’s not a revenue—shouldn’t be a revenue enhancer. These are the people who have been doing very badly for the last 10, 15, 20 years.