Even the most jaundiced American will tell you our political parties are Tweedle-Dum and Tweedle-Dee, but that Democrats will give the little guy something; and Republicans will give them nothing.
After 30 years of trench warfare in Washington, that's what's left of the Democrats' New Deal sheen; they promise to respect you in the morning, and the Republicans just change the subject.
It's a revolting development for the party that gave America a middle class, sixty years of prosperity, and a framework for social justice, but there you are; the Democrat's posture of moral superiority is paper-thin. But it still stands -- more or less.
So it was disappointing, at best, to watch Democratic senators shred what political edge they've got.
They did that, of course, by fleeing Washington for Memorial Day picnics, without passing the recent House bill extending unemployment benefits -- by the minimum they could get away with--and in any event, without extending the benefits of those whose unemployment has run its course (the extension only applies to new applicants). This, after weeks of barely resisting demands to tell America's long-term unemployed that they're on their own.
The bill could have been a gift to Democrats -- an opportunity to paint Republicans as hard-hearted toadies of the uber-rich, perfectly willing to hide behind new-found anxieties about the government finances they'd wrecked, as long as their masters didn't have to pay for it. Meanwhile, they could show the world that Democrats look out for the little guy.
Instead, they accepted the GOP premise that spending is out of control -- ceding the debate to the opposition, and ignoring the lessons of 1937. That was the year the nation's climb out of the Great Depression was reversed, after Democrats allowed the GOP to raise taxes and cut spending. In fact, history shows that you spend -- not save -- your way out of recession.
World War II saved our bacon that time. And post-War rebuilding, worldwide, laid the foundation for that sixty years' prosperity. But this time around, I don't think hoping for a catastrophe is a good plan.
The Senate Democrat's skedaddle was especially stupid because signs abound that the economy will be, at best, stalled in November, and probably sinking.
The most worrisome events, of course, are in Europe, haunted by economic problems that began in Greece, but that now show unmistakable signs of spreading to the big boys. Over the weekend, for instance, Reuters reported that France -- France -- could lose its AAA bond rating.
The problems in Europe have been growing slowly. First Iceland defaulted, followed by serious problems in the PIGS -- Portugal, Ireland, Greece, and Spain. Spain lost its AAA rating over the Memorial Day weekend. If France is joining the list, the entire Euro framework is endangered.
As this slow-mo crisis grinds on -- there's no sign of anything else -- more than just the European banking system is at risk. Trillions of dollars of those pesky credit default swaps include a Euro-based counterparty, and a highly-leveraged loan. That threatens another round of defaults at America's major finance houses.
According to veteran banking analyst Richard Bove of Rochdale Securities, five companies alone -- led by CitiGroup, Morgan Stanley, and J.P. Morgan Chase -- have $2.5 trillion in exposure to Europe's problems.
The risk of what economists call contagion in this pass is high, and new wounds inflicted on America's big banks will mean even less lending, in an economy not marked by any eagerness at said banks to lend to Main Street. In fact, Reuters reported in February that the main TARP beneficiaries lent less that month than they had when they cashed their TARP checks.
Less lending, of course, means less hiring and more unemployment -- especially, more long-term unemployment, which the bill was intended to address.
And in fact, even without the problems now looming, the economic outlook is unpromising.. According to the St. Louis Fed, the economy as a whole is slowing and in any event, faces what it called "another jobless recovery."
In Washington, this means that the mid-term elections will be held in a declining economy with rising unemployment -- just the climate in which Democrats want to appear to be the friend of the little guy.
Instead, they've opened themselves up to another round of wrangling with Republicans, and their own Blue Dog Democrats, over the fate of the long-term unemployed -- reminding the country that they didn't squarely address the problem this time, while narrowing the differences between them and their opposition.
Hanging the long-term unemployed out to dry was dumb even without the mid-term elections; ours is still a consumer-based economy, and people without money are not shopping -- they're hunkered down.
Looked at that way, Congress is choosing to cripple what economic recovery we have -- and can look forward to.
Meanwhile, the outlook for the long-term unemployed is worse than many imagine. They comprise more of the total unemployed than most people think -- 51.8% of the 15 million Americans now out of work have been permanently laid off -- and the typical time people need to find jobs today is 31 weeks. This is the longest since the government started keeping such records in 1948. And the number of long-term unemployed is rising.
To give you an idea of how tone-deaf Washington politicians are on the subject: A friend of mine, who is only entitled to 79 weeks of benefits -- which were running out -- was referred to his Congressman, Michael Arcuri (D.-NY), to discover if he could somehow qualify for a full 99 weeks of benefits. He called his Utica, NY office and waited a week without a callback. So he called again. My friend spoke to a guy who said he hadn't gotten the first message, and promised to get back to him. After another week my friend called again and was told the man had just stepped into a meeting. My friend still hasn't heard from the man.
What do you think my friend's opinion is of Mike Arcuri?
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