Economics Daily Digest: The pain means it's not working

By Tim Price, originally published on Next New Deal

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Government is hurting the economy'by spending too little (WaPo)

In light of the report that the economy contracted in the last quarter of 2012 due partly to cutbacks, Ezra Klein notes that one man's big government socialism is another man's premature and destructive fiscal retrenchment. But the first man is utterly delusional.

The Economy Just Shrank, But This Is the Best Negative GDP Report You Will Ever Read (The Atlantic)

Derek Thompson argues that the silver lining for this cloud is that important indicators like personal consumption and investment are still growing at a healthy clip despite the drag from fiscal policy. Imagine what we could do if the policymakers were on our side.

2013 Sequestration Likely to Happen Despite Ominous GDP Report (HuffPo)

Sam Stein, Arthur Delaney, and Sabrina Siddiqui ask whether the negative growth report has shocked Congress out of complacency, but there's still no sign they can cooperate long enough to stop the sequester they created to punish themselves for not cooperating.

Fed Holds Steady on Strategy; Cites 'Pause' in Growth (NYT)

Binyamin Appelbaum writes that the FOMC has announced that the Fed plans to continue the open-ended stimulus program it first introduced in December, particularly since the economic recovery seems to have settled in for a long winter's nap over the holidays.

Paul Krugman vs. Joseph Stiglitz (TNR)

Surveying the recent dispute between the progressive Nobel laureates about whether inequality has hurt the recovery, John Judis agrees with Stiglitz that it's holding back consumer spending. On to the next round of judging for the talent show portion of the competition.

The Hidden Prosperity of the Poor (NYT)

Thomas Edsall reviews the conservative case that America's poor are secretly doing just fine because the basics and even the luxuries are getting cheaper. So don't worry about those 42.6 million people living in poverty; they'll upgrade to Blu-ray one day.

Immigration, yes. Indentured serfdom, no. (Salon)

Michael Lind argues that while most components of the bipartisan immigration reform proposal are reasonable, the last thing we need is a guest worker program that comes as close as it legally can to slavery. America needs to learn how to treat its guests first.

5 Key Tasks for the New Secretary of Labor (In These Times)

Labor expert Kate Bronfenbrenner tells Roger Bybee that an effective replacement for Hilda Solis will have to be outspoken, creative, and ready for a fight. And that's just what it will take for the new Labor Secretary to get some attention within the Obama administration.

Obama's Jobs Council Fail (MoJo)

Erika Eichelberger notes that President Obama's jobs council, led by GE CEO Jeffrey Immelt, is set to dissolve this week, though it sort of dissolved itself by meeting all of four times in total and not at all in the last year. Way to stay on top of that, everyone.

Post-Lehman, the push for global financial protection stalls (WaPo)

Howard Schneider and Danielle Douglas write that five years after the last great meltdown, efforts to reform the financial sector have reached an impasse because a) regulating is hard and b) policymakers are distracted by other problems they're not solving.

Tim Price is Deputy Editor of Next New Deal. Follow him on Twitter @txprice.