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Rex Nutting
Oct. 20, 2010, 12:00 a.m. EDT
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Recession is tragedy for young, almost-old
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Airline earnings: As good as they get?
By Rex Nutting, MarketWatch
WASHINGTON (MarketWatch) "” The Republicans are expected to take control of the House (and possibly the Senate) in next month's election, largely because the public is outraged that the economy still isn't growing fast enough to create any substantial number of jobs.
Their political victory isn't likely to translate into any noticeable improvement in the economy any time soon, however. No matter who wins in November, the economy is fated to a slow, agonizing, relatively jobless recovery.
It'll take years before the unemployment rate drops to an acceptable level, years before the banking system is fully functioning, and years before the crippled housing market returns to health.
Former Republican National Committee Chairman Ed Gillespie talks to Jerry Seib about the Republicans' strategy this campaign season as the party tries to take control of the House and Senate.
That's not to say that the right government policies couldn't make a big difference, it's just that nothing the Republicans have proposed would help much, even if they could enact their economic platform on their first day in office.
And that's not going to happen. President Obama still has the power of the veto. The more likely outcome of the election will be further gridlock, with neither party able to change public policy at will. That'll mean more uncertainty, not less.
Given their built-in advantages this year, Republican candidates have been understandably vague about their plans to change economic policy. Many Republican candidates have endorsed John Boehner's "Pledge to America," which is full of lofty principles but short on policy details. Read more about the pledge.
Inspired by the tea party, the Republicans are pledging to become fiscal conservatives again, to limit the size of government, and to reduce taxes and red tape. In the Republican view, there's nothing wrong with the economy that isn't the fault of big government.
However, many of the Republican proposals would actually hurt "” not help "” the economy if they could be enacted.
Slashing government spending right now would be crippling to an economy that doesn't have any other source of demand. Keeping taxes low for the richest Americans wouldn't create many jobs, and would keep the deficits growing. The Republicans' pledge to repeal the new health-care law and other government regulations would only add to the uncertainty that businesses say is keeping them on the sidelines.
The Republicans say they want to reduce government spending, but they are vague about exactly what should be cut, except to say that discretionary, non-defense spending should be rolled back to pre-recession levels. That category includes only about 15% of all federal spending, and isn't the part of the budget that's the problem.
If the deficit is an ocean-sized problem, the Republicans have proposed a solution that would fit in a thimble.
Being vague is probably good politics. A recent poll by Bloomberg News shows that 55% of likely voters agree that the deficit is out of control, but most voters are against specific measures to reduce it, especially the big changes that would be needed to bring the budget into balance.
It turns out that we like the things government does for us, and we also don't want to pay the taxes necessary to buy those things.
When asked repeatedly by Chris Wallace of Fox News what she'd like to cut from the government, California Republican Senate candidate Carly Fiorina wouldn't name a single program, or identify any entitlement program that should be scaled back. Instead, Fiorina leaned on that old standby of political hacks: "waste, fraud and inefficiency." Watch the interview on the Fox web site.
A stellar batch of quarterly profits sends the sector to a three-year high but could prove tough to duplicate, writes Jim Jelter.
2:43 p.m. Today2:43 p.m. Oct. 20, 2010
- mclute | 11:06 p.m. Oct. 19, 2010
"EBay earnings rise 23%; forecast tops Wall Street's estimates http://on.mktw.net/a2rvPW" 3:24 p.m. EDT, Oct. 20, 2010 from MarketWatch
"Dow finishes up 129 points, recouping part of yesterday's losses; Boeing leads gains http://on.mktw.net/9iOHq2" 3:06 p.m. EDT, Oct. 20, 2010 from MarketWatch
"Apple to launch Mac App Store, new operating system called Lion http://on.mktw.net/9VGMxk" 1:08 p.m. EDT, Oct. 20, 2010 from MarketWatch
"N.Y. changes foreclosure filing rules: report http://on.mktw.net/d4cf41" 10:54 a.m. EDT, Oct. 20, 2010 from MarketWatch
"G-20 to mull current-account deficits: U.S. aide http://on.mktw.net/asC5dQ" 10:20 a.m. EDT, Oct. 20, 2010 from MarketWatch
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