WASHINGTON (MarketWatch) – Let’s say you lost your job a few years ago.

You had a good lead on a new job, but it required a reliable pickup truck.

Your generous uncle offered to lend you the money for the truck — to be repaid once you got back on your feet. But you told him no thanks because you don’t want to go into debt. So you didn’t get the job.

Now, it’s four years later. You’re working again, but it’s not a good job. And you racked up some credit-card debts anyway when it took you longer than expected to find that lousy job.

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Money is tight, so you’re watching your spending carefully. Everyone else in town is doing the same. Everyone’s pulling back at the same time, so none of the businesses are growing very much, which means they’re hiring only as necessary and they’ve shelved their plans to expand. No one can get ahead.

Your friends tell you it’s not too late to invest in the truck, but you say you’ve got to pay off your debts, not take on more. Even though you’re only standing still, you’re afraid to take any risks to make your life better.

Sound familiar?

You’re acting a lot like the U.S. economy over the past few years. We’re just treading water, and everyone is afraid to take risks, afraid to spend or invest. Even if it means we’d be better off in the long run.

The whole country has been penny wise and pound foolish.

Even the federal government has been too risk-averse. The government has pulled back just when it should have stepped forward to fill the gaping hole in the economy that was left when others retrenched.

Everyone knows how devastating the recession has been. Gross domestic product fell by 4.2% from peak to trough. So far, we’ve lost $5.3 trillion in cumulative output, a figure that could grow to nearly $7 trillion by the time the economy is using its full potential again in 2018. That’s like furloughing the entire economy for half a year.

The wasted lives aren’t as easy to quantify, but I estimated a couple years ago that the recession would cost 50 million person-years of work and pay.

What isn’t so well understood is how much of this misery has been caused not by economic forces, but by politics, particularly the crisis-driven fiscal policy that raised deficit-reduction above all other national goals, including economic growth.

Our political system has been working overtime since 2011 to make our economy worse.

The 16-day government shutdown was only the most recent example — and not the worst. The shutdown probably reduced GDP by about 0.1 to 0.2 percentage points ($4 billion to $8 billion at a quarterly rate) in the fourth quarter, but we’ll probably get back half of that in the first quarter and later, economists say. The long-term cost of the shutdown could be as little as 0.1% of GDP, or $4 billion.

Other policies have been much more destructive, if only because they’ve been a permanent drag on growth.

According to a study that Macroeconomics Advisers LLC conducted for the deficit-worriers at the Peter G. Peterson Foundation, our crisis-driven fiscal policy has cost us as much as 1% of GDP per year for the past three years. The sequester and other cuts to discretionary spending have trimmed growth by an average of 0.7 percentage points per year, and uncertainty about taxes and spending has curbed growth by an additional 0.3 percentage points per year.

In other words, instead of limping along at 2% growth, we could have averaged 3% if we hadn’t been so preoccupied with trying to “fix the debt” so rapidly, and manufacturing an endless series of crises. Washington cut discretionary spending from 9.4% of GDP in 2010 to just 7.3% in 2014, and our politicians have created too much uncertainty by lurching from fiscal crisis to fiscal crisis.

The distinction between 2% growth and 3% growth may not seem like much, but it would have made all the difference in the world. Because we’ve adopted what these economists charitably call “insensible policies,” about 2.1 million fewer people are working today.

Instead, if we had adopted sensible policies, the unemployment rate would be at 6%, 2.1 million more people would be working, the economy would be stronger, tax receipts would be higher, and the federal deficits would be hundreds of billions of dollars lower.

We’ve known all along that slashing spending and raising taxes during an economic slump was absolutely the wrong thing to do, yet we did it anyway to please a loud minority.

Although we inflicted a lot of pain on the economy, we didn’t gain very much out of the deal. The long-term outlook for our deficits looks better — not because we cut so much discretionary spending, but because the growth path for health-care spending has improved.

If anything, the budget cutting of the past three years has made our long-term problems harder to handle, because the economy still isn’t as strong as it needs to be. Think how much easier it would be to “fix the debt” if 2.1 million more people were working, paying taxes and saving for the future.

Our latest brush with default shows we still haven’t learned that you can’t win the race if you shoot yourself in the foot.