The economy seems caught between a rock and a hard place: ever mounting deficits and ever mounting job losses - leading to a soaring jobs deficit. The economy should have created some 3 million jobs for new entrants into the labor force over the past two years, instead it has lost roughly 8.5 million.
If spending is cut back, to tame the deficit, this jobs problem could only get worse. If spending is not cut back, long-term interest rates may rise as inflationary expectations grow. And the jobs problem may still grow worse.
These problems were not created by President Obama. They are the result of years of economic mismanagement under President George W. Bush, and misguided deregulation under Bush and his predecessors. But now, Obama must deal with them.
It will be difficult for him to deal with long-term pressing problems - like reforming health care or addressing climate change - until or unless the economy is restored to health. It is little solace that others, like George Papandreou in Greece, inherited worse problems, and face less pleasant choices.
There are two basic principles to resolving this dilemma. The first is: Don’t give into deficit fetishism.
Financial markets demonstrated their lack of competence in making economic judgments with their reckless behavior over the past decade or more. The public has repeatedly had to bail them out from bad lending decisions. The rating agencies, too, repeatedly demonstrated their incompetence in evaluating risks. The real risk for America right now is a prolonged weak economy - something that a mindless focus on deficits can help ensure.
The deficit hawks from the banking system went on vacation from the fall of 2008 through the spring of 2009, while they demanded money be doled out freely - to themselves. But now that the public clearly won’t stand for another free lunch at its expense, the deficit hawks are back at work, more vocal than ever about the need to cut government spending.
They say it was necessary to the health of the economy to dole out money to the banks; but not necessary to the health of our society to make sure everyone has access to health care. It was not acceptable to alter the contracts of the AIG personnel, even those “key” and irreplaceable personnel who made the mistakes that led to a $180 billion bailout, but acceptable to break the social contract between America’s elderly and the rest of society, by cutting back on Social Security.
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The commentator is right of course. Another pointed and specific round of stimulus is needed. Rhetoricaly speaking, how much do we really know about the DNA of pacific incumbant wail snail poo? Surely, lives and professions and family hang in the balance. And what of recently pasted Congressman Mutha's newest runway? The one at his frequently used (twice a day?) county airport in PA. After all the snow is gone surely the top layer will need a new top layer. $1.6 billion ought to do it.
These examples and the huge pork waste from each of our elected offficials are a right. Let's do it!
Ah, yes, spend and borrow your way to prosperity. Keynes, the famous economist, would agree with some fiscal stimulus, but he would disagree with running a deficit. And this President is running deficits beyond imagination. What if, instead, we followed the successful historic examples of JFK, Reagan, Clinton and Bush, passing tax cuts which resulted in huge economic growth? What if we repaid the TARP funds to the Treasury, de-obligated all remaining uncommitted Stimulus funds, and cut government spending back to 2009 levels, while freezing all Federal salaries including those of the President and Congress, and their staffs? What if we all agreed to keep the Bush tax cuts in place, providing confidence to businesses, investors and the 50% of the citizens who really pay taxes? What if we stopped extending unemployment benefits to provide incentives to get people back to work? What if we lowered the minimum wage for those under 25 to encourage employment of unskilled teens and young workers? What if we decide we want prosperity instead of big government? What miracles might result from these what-ifs?
I've had the unique pleasure of working with four organizations that resisted "the deficit tetish." They have one thing in common...they no longer exist. Eventually the unbalanced equation of income versus expenditure does the trick when income perpetually lags, and the enterprise becomes unviable.
Nothing is too big to fail.
The ONLY way OUT of this mess is for tax CUTS across the board for everyone.
Congress has to step away from spending.
You need to look no further than the States in trouble with their spending.
With tax cuts business will breath a sigh of relief and plow on with work, investment, not waiting for the "other" shoe to drop from Congress.
Waiting to know about Energy costs.
Waiting to know what punishment will come.
Waiting to know about Union card check costs.
Waiting to know what "new" regulation is around the corner.
Business NEEDS a stable government NOT one that can't get their act together.
Big Government needs to get out of the way and business will flourish, hiring, small business will in turn hire,creating a domino effect with other jobs needed in support systems.
Taxes "paid" will increase.
The one thing needed is firm decisions from Congress about tax cuts and NO more cash for jobs type of mentality.
Let go......Just oversee.
Ah, yes, spend and borrow your way to prosperity. Keynes, the famous economist
What if, instead, we followed the successful historic examples of JFK, Reagan, Clinton and Bush, passing tax cuts which resulted in huge economic growth?
clinton raised taxes
spirit of dumaz
Good article. Thanks.
MARIST POLL:
OBAMA HITS NEW LOW: ... ONLY 44% APPROVE ...
Independent voters see Pres. Obama in a negative light by a nearly 2-1 margin ... while almost half of voters say he has failed to meet their expectations.
White House reporters stop laughing at Gibbs' jokes...
RASMUSSEN POLL SAYS:
"¢Generic Ballot: Republicans 44%, Democrats 36% ...
"¢63% Say Better for Country If Most of Congress Not Reelected ...
"¢Forty percent (40%) Strongly Disapprove of Obama's job performance --- only 27% Approve ...!
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