Last month's drop in the unemployment rate and continued reduction of job losses is certainly good news. It indicates that the U.S. economy may have finally stopped shedding jobs. But without additional government action there is little likelihood that the economy will return to anything resembling full employment in the near future.
There are two reasons why it is critical that Congress pass a major new jobs initiative - one economic, and one political.
Job Creation and Deficits
The recent CBO report concluded that 600,000 to 1.6 million jobs have been created or saved to date by the effects of the first Obama stimulus package - and that's before a large percentage of total stimulus spending has even taken place.
That means that when the report was released, up to 1.6 million people would have been unemployed had Congress failed to pass the stimulus bill.
It is quite clear, as economist Paul Krugman wrote, that the stimulus bill was too little of a good thing.
In fact, at times of economic downturn, no entity other than the government can lead a recovery. And in the case of a recession as deep as the one President Obama inherited from George Bush, that is particularly true of job creation.
So if the first stimulus bill worked to create or save jobs, why not do it again? What stands in the way is the perception on Capitol Hill that the deficit is out of control.
Of course we've seen this movie before. During the Great Depression, the efforts of the Roosevelt Administration to use government fiscal stimulus - and direct Federal Jobs programs like the WPA - were interrupted by a similar concern for "controlling the deficit." Even before they were interrupted, these efforts were relatively modest, given the size of the economic problem. But when Roosevelt's stimulus programs were cut back out of fear of the growing federal deficit, the country saw a new increase in joblessness.
Recessions - or in the worst case, depressions - represent an imbalance in the capacity of the economy to produce goods and services on the one hand, and the demand for those goods and services on the other. There is too much supply and too little demand. There is a demand deficit. This deficit is ever so much more important than the federal budget deficit, because it means that we have more ability to produce wealth -the goods and services made by the economy - than consumers have the ability to buy. Since farms and companies can't sell as much product as they can produce, they cut back that production and lay off many of people who are employed to produce it.
When workers and plants lie idle, they represent wealth - and well-being - that is simply never created - that we lose forever. That means that we have to get by with less food, less clothing, less entertainment, less education - less of everything that determines the well-being of our society - and each and every individual within it.
The worst disaster for our economy is the waste of idle plants and idle workers, because for every day a worker is idle, we all lose wealth - and standard of living -- that we will never recoup.
This deficit between what we have the ability to produce on the one hand, and economic demand on the other, is the deficit we should really worry about.
During the 1930's Roosevelt was never able to convince Congress to pass a stimulus program large enough to enable America to recover fully from the depression and achieve full employment. It took Japanese Emperor Hirohito to do that. The attack on Pearl Harbor created a national emergency that justified deficits unlike anything anyone had ever seen. Those deficits financed a full employment economy and a massive explosion of the American Military that together finally ended the Great Depression once and for all. That economic mobilization provided the economic foundation for the longest period of widespread economic growth in our history - which, with a few minor interruptions - continued until the early 1970's.
Economically, this full employment mobilization did not require a war. World War II simply generated the will to make it politically possible.
Luckily, President Obama's first stimulus, and his actions that prevented a complete meltdown of the financial system, avoided another Depression. But three lessons stand out from the Depression experience:
From an economic point of view, Congress needs to pass a large scale jobs program that focuses on spending, that directly puts people to work. Given the massive neglect of the public infrastructure over the last eight years, there is an enormous amount of productive work to be done - either by directly paying contractors or by funding a federal public works program like the WPA.
In addition, the Federal Government should use its ability to "deficit spend" to fill in the massive holes in state and local budgets. One recent study showed that if it does not, up to 900,000 additional jobs may be lost - both from the direct unemployment within state and local governments, and the loss of jobs among government contractors.
To be effective, such a program should not mainly focus on incentives for job creation. Tax incentives and other inducements to create jobs simply are not as effective on a dollar-for-dollar basis and their impact is much more difficult to track. It should focus on programs that directly create jobs.
Congress must act as soon as possible, to build on the momentum of the first stimulus, and avoid a "double dip" recession. It must also take action soon, for important political reasons.
The Politics of Jobs
If the job picture has not begun to significantly improve by next November's elections, voters will be in a "throw the bums out" sort of mood. This will be especially true if Congress fails to pass portions of the Obama program - health care reform, financial reform, clean energy legislation and immigration reform. But even if we have passed the key elements of this critical domestic agenda, if we have not made progress creating jobs, we are likely to see many more Republicans in Congress starting in 2011.
That result would not only represent a setback for the overall Progressive agenda - it would also make it even less likely that we can get the votes to pass the measures we will need to sustain long-term economic growth. It will increase the ranks of the Party of "No" and the Party that has now raised fear of federal deficits to an article of religious faith.
Let us remember that the Republicans never hesitated to create deficits when they were in charge. They generated deficits to finance their wars and their tax breaks for the rich without blinking an eye. Unfortunately, they created deficits at exactly the time in the economic cycle when you should be building up surpluses and paying down debt.
Deficits are certainly not always a good thing. They are a good thing when you need to stimulate the economy, not when the economy is growing briskly.
Nor are federal deficits inevitable. Remember that President Clinton handed Bush and the Republicans a growing Federal surplus. With their wars and tax breaks for the rich, Bush turned those surpluses into long term structural deficits. And that's not all.
The Republicans inherited an economic expansion and turned it into the current economic disaster by siphoning all of the fruits of growth to the top 2% of the population. The effect was a stagnant and declining standard of living for ordinary people even as the economy expanded. In the absence of growing disposable consumer income - a massive explosion of consumer debt developed and kept the economic engine going until the house of cards came tumbling down when the huge speculative bubble at the very top of the economy finally burst.
One year into the Obama Administration, we are still living with the recession caused by Wall Street's reckless risk-taking. We are also living with deficits that were created by the Right -- quite intentionally -- to constrain the growth of the public sector. The Republicans created a "Catch 22" that both caused the recession and then limited our ability to end it. We can't allow ourselves to be caught in this Republican trap.
The polling - and actual voter behavior - makes it clear that voters don't vote against incumbent Members of Congress because of "deficits." Deficits have far too diffuse an effect on individual voters to have any real impact on voter decisions. To the extent "out of control deficits" becomes a real issue in a campaign, it is a proxy for a more general level of discontent about the economy - a sense that the economy itself - and the voter's individual economic circumstances - are out of control.
What drives voters are their perceptions about their own individual economic prospects and those of their children. The prices of health insurance premiums, wages, housing prices, mortgage rates, personal income growth - and the ability to get a job - drive these perceptions, not concern about "deficits."
The bottom line is this: the top priority for Democrats who want to make sure that our candidates do well in 2010 is to do everything we can to create jobs. The Federal deficit should not be allowed to stand in the way.
Robert Creamer is a long-time political organizer and strategist, and author of the recent book: "Stand Up Straight: How Progressives Can Win," available on amazon.com.
So I guess you and all Progressives think that ALL AMERICANS should pay more taxes to help the people who do not want to help themselves, they would rather have more kids for more welfare money and sell more drugs rather than get a real job. I have seen all of this first hand since I lived there for almost 20 years.
I left California for this exact reason, high taxes and out of control "Tax and spend" LIBS like (Pelosi, Feinstein and Boxer) are killing that state. The illegal immigrants are one of the main reasons that state is in debt, they are overwhelming emergency rooms (free health care for all), and somehow they can also receive welfare and even social security even though they are illegal.
I also feel that ALL immigrants who want to work and live in the United States legally should learn to read and write English. I personally think the printing DMV and school text books in any other language except English is wrong.
P.S.
I also listen to and watch Glenn Beck, Bill O'Reilly and Rush Limbaugh. I know you and other Progressives think FOX is the enemy, but they are able to backup any and all comments and claims they make with audio or video clips of the person they are talking about (even you).
KJ
www.itsyourcountrystupid.com
End the "Gravy Train" for elected officials.
Election Campaign Mandate for all who want to be voted into any office.
To get my vote... Potential elected persons & political parties will sign the following mandate:
"When elected into office. I promise to end the elitist programs that allow elected officials
any preferential treatment when it comes to health-care, retirement, and/or severance packages.
All citizens of our great country will have exactly the same protections and coverage under our constitution including; Social Security, Medicare, Medicaid, etc..
Elected officials retirement, severance, and disability coverage will be based on calculations obtained from taxpayer national averages."
We are the people. Elected representatives are no better than those who elect them.
"If ever time should come, when vain and aspiring men" [woman] "shall possess the highest seats in Government, our country will stand in need of its experienced patriots to prevent its ruin."
"..It does not require a majority to prevail, but rather an irate, tireless minority keen to set brush fires in people's minds.."
--Samuel Adams
Watch out though, the Republicans know that if the economy doesn't improve, they will make serious gains in Congress.
Republicans have a political stake in our country's FAILURE.
It's not bad enough that they screwed this country for 8 years, now they will fight to keep it the same or make it worse, all the while blaming Democrats.
Democrats, I have said it before, and I will say it again. The GOP used budget reconciliation to pass the tax cuts for the wealthy, and hurt the rest of us. What's good for the goose is good for the gander. USE YOUR MAJORITY TO GET THINGS DONE. Otherwise, you will be relegated again to minority status, and they will not hesitate to use all the tools at their disposal to continue to screw the country so Obama doesn't get re-elected.
It's as obvious as the nose on your face. Man-up and face these traitors.
Semper fi
Climate Deal Likely to Bear Big Price Tag
WASINGTON — If negotiators reach an accord at the climate talks in Copenhagen it will entail profound shifts in energy production, dislocations in how and where people live, sweeping changes in agriculture and forestry and the creation of complex new markets in global warming pollution credits.
So what is all this going to cost?
The short answer is trillions of dollars over the next few decades.
Stick a fork in us ... with China's currency tied to ur currency, the trade imbalance insurmountable, the debt owned by people who planned and executed a perfect plan to bury us ... were done.
All that remains is the balkanization the breaking apart of the currently united states.
I would note that the evil wall street brokers and financiers have moved to Conn (I think that's the state you're writing about) That's why you're #2 and those people play dishonest games with numbers to make their after taxes income look small when in fact that's not the case, (maybe you should be checking some Swiss banks accounts out) so I doubt you're really 42 in net income - I suspect its an accounting trick or outright fraud. And your number 2 is the result of the artificial economy that the bankers cooked up. It was never real, there was no "product" in your GNP, so you were/are doomed to fall anyway.
The government can influence where I make things by tax and other cost policies.
(I is figurative. I am not in manufacturing but I know a little about it.)
Your proposal for high tariffs reminds me of the Smoot-Hawley Tariff that was one of the major causes of the Great Depression.
You neglected all the foreign companies who manufacture products in the United States. That would include Mercedes, BMW, Honda, Toyota, Hundai, Subaru, Nissan, Bosch, and a whole lot of others. Do you think they shouod leave? Do you thinkt hat all people involved in international commerce should lose their jobs?
New jobs are only a small part of a real recovery. And be VERY wary of anyone telling You that is enough.
Right now we are just throwing money back at China and driving up our debt. We have no money. We are trillions in debt already. We need change.