The Fiscal Cliff Mythology and the Full Employment Alternative

Abstract

This paper critiques the fiscal cliff mythology and the neoliberal push for economic austerity policies and sequestration of government programs. The purpose of the paper is to shift the debate to a social justice alternative that can sustain and enhance the social safety nets by implementing a full employment program that is both financially affordable and economically productive. First, the paper critically assesses the laissez-faire approach to job creation and lays out the mechanics of the job guarantee (JG) program as an alternative to the neoliberal model. Next, the paper critiques the deficit hawks’ and deficit doves’ “fiscal cliff” debate and demonstrates how the JG program can be financed according to modern money theory (MMT). Finally, the paper presents the cost estimation of the JG program for the United States to demonstrate its financial affordability and its productive capabilities. JEL Classification: B5, E5, E12, E24, J2, J3, H3, H6, O51