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After showing some signs of recovery last year, the economy appears to be slipping backward at a dramatic pace. Consider the latest statistics: In order to restore the jobs lost during the recession, we need to create about eleven million new jobs. But, according to recent government figures, we created just 18,000 jobs in June. This number is even worse than it sounds: It means that, by failing to keep up with the pace of population growth, we are actually losing jobs. To make matters bleaker still, wages fell in June as well.

This is a human tragedy. More people out of work means more people falling behind on their bills, watching their employment skills atrophy, and, in the worst cases, going without the fundamental necessities of life. Unfortunately, the situation is only likely to deteriorate further—because, when it comes to economics, the political debate in Washington is absurdly, insanely, tragically backward. For that, not surprisingly, we blame the Republicans. But, increasingly, we also blame President Obama.

To start with the basics: The underlying reason for our current jobs problem is that households aren’t spending money. Partly that’s a hangover of the financial crisis, which reduced family and business assets, and partly that’s an anxiety over whether today’s jobs will still be around tomorrow. With households so unable or unwilling to spend money, businesses don’t feel confident purchasing new equipment and, more important, hiring new workers.

The classic response to such a situation, put forth by John Maynard Keynes in the 1930s, is for the government to spend money. During the Great Depression and then World War II, the Roosevelt administration and its allies did this in part by employing people directly, an idea that still makes sense even if it’s utterly unfashionable. But there are other ways to prime the pump. Government can invest in public works, whether it’s building roads or fixing up schools. It can put money in the hands of those who will spend it, by increasing public assistance or by targeting temporary tax relief to the poor and middle class. It can also supply money to state and local governments, which because of balanced-budget requirements are busy laying off first-responders, teachers, and other employees—making the unemployment problem worse.

In June, the private sector created only 57,000 jobs. That’s awful, and it suggests the private economy—like the private economy of the ’30s—is not yet capable of generating a recovery on its own. To keep people at work while firms and households continue to pay down debts, the government has to act.

Yet, if the need for government spending is self-evident, it is barely acknowledged in Washington, where the conversation is entirely about debt and deficits. Republicans now portray deficits as anathema to economic growth and argue that the way to create jobs is to cut government spending. Georgia Representative Paul Broun typifies the Tea Party conservatives who seem to be dictating the GOP’s views on the subject. He recommends that the Obama administration follow the example of Hoschston, a small Georgia town, which, according to Broun, “cut sixty-seven percent of their budget to deal with their insurmountable fiscal crisis.” But there is no national fiscal crisis, at least not unless we create one by defaulting on our debt: Currently, our bonds to finance government sell quickly at low rates on the world market. In the long run, we do need to address the deficit; but were we to act on radical prescriptions like Broun’s at a moment when our economy is struggling badly, we would very quickly transform the Great Recession into another Great Depression.

This is where Obama comes in. Unlike Tea Partiers, the president clearly understands Keynes. Yet he rarely invokes Keynesian logic. In early July, he even parroted the conservative bromide that “government has to start living within its means”—a sentiment that, in the context of responding to a recession, could not possibly be more wrongheaded. While Obama has occasionally touted short-term measures to create jobs, his negotiations on the debt ceiling—epitomized in the “grand bargain” he proposed to Republican Speaker John Boehner—have reinforced the current preoccupation with government deficits and have marginalized jobs as a political issue. It is true that Obama faces a GOP Congress determined to exploit the debt ceiling to enact austerity measures. But, if the president doesn’t use last month’s disastrous statistics to refocus the national conversation on jobs and to find some way of increasing government spending rather than reducing it, there are soon going to be many more Americans out of work. And he could be one of them.

This article originally ran in the August 4, 2011, issue of the magazine.