The economy is still in the gravitational pull of the Great Recession and all the booster rockets for getting us beyond it are failing. The odds of a double-dip are increasing.
In June the nation added fewer jobs than necessary merely to keep up with population growth (private hiring rose by 83,000 after adding only 33,000 jobs in May). The typical workweek declined. Average earnings dropped. Home sales are down. Retail sales are down. Factory orders in May suffered their biggest tumble since March of last year.
So what are we doing about it? Less than nothing. The states are running an anti-stimulus program (raising taxes, cutting services, laying off teachers, firefighters, police and other employees) that's now bigger than the federal stimulus program. That federal stimulus is 75 percent gone anyway. And the House and Senate refuse to pass another one. (The Senate left Washington for the July 4th weekend without even extending unemployment benefits for millions of jobless Americans now running out.)
The second booster rocket - the Fed's rock-bottom short-term interest rates - are having almost no effect. That's because jobs and wages are so lousy that consumers don't have enough money to buy much of anything, making small businesses bad credit risks and causing big ones to sit on the huge pile of cash they've accumulated.
Wall Street and the other biggest global banks, meanwhile, are making piles of money betting against government debt all over the world. These were the same banks and financiers, remember, that were bailed out by government not long ago. But now they're demanding fiscal austerity, and politicians are once again doing their bidding - cutting deficits in every rich economy that should now be doing the reverse.
The people who are suffering the most from the failure of public officials and the greed of large bankers are the least able to endure it. Unemployment among people with four-year college degrees is barely over 5 percent; among high-school dropouts it's over 25 percent. Those who have been jobless the longest or who have left the labor force altogether are men over fifty who are least likely to get back in. Families most in need are losing the services - state-supported Medicaid, child dental care, after-school programs for the kids, public transit - they most depend on.
The irony is that had there been no bank bailout in 2008 and 2009, no large stimulus, and no extraordinary efforts by the Fed to pump trillions of dollars into the economy, we'd have had another Great Depression. And because it would have sucked almost everyone down with it, the nation would have demanded from politicians larger and more fundamental reforms that might well have lifted everyone, and set America and the world on a more sustainable path toward growth and shared prosperity: A stimulus that financed the rebuilding of the nation's infrastructure and alternative energies, single-payer health care, a cap on the size of big banks and resurrection of Glass-Steagall, earnings insurance, an Earned Income Tax Credit that extended into the middle class, and a truly progressive tax coupled with a price on carbon to pay for all of this over the long term.
No one in their right mind would have wished for another Great Depression, of course. But we seem to have got the worst of all worlds. The bank bailout, the stimulus, and the Fed brought us back from the brink just enough to dampen zeal for anything more. As a result, we are now slouching toward a tepid recovery that could just as well fall into a double-dip recession, while a large portion of our population suffers immensely.
This post originally appeared at RobertReich.org.
That which we feared most is coming to pass and we haven't even gotten to the worst part of the scenario which will be forced energy conservation.
This market rationing will keep our Libertarian friends happy as only the rich will be able to enjoy air travel, but will fuel the bitterness of the masses who are accustomed to their motor-topia lifestyles.
Anyway, we are in for trouble as our politics of resentment play catch-up to reality.
The second piece of propaganda is the suggestion that eliminating the Bush tax cuts will adversely affect the economy. If businesses were going to hire people, they would be doing it now. Since they aren't, why expect anything from them next year?
1) MASSIVELY overhaul the current income tax system to something like the Steve Forbes flat tax plan so compliance costs are dirt cheap and it will encourage Americans to keep their savings and capital investments in the USA since we no longer tax bank account interest, capital gains and dividend payments.
2) Audit every Federal, state and local government agency for bureaucratic overlap and agency bloat and use the audit data to cut the size of government by 30% or more.
I think the cut in cap gains is what created the bubble. had wages increased at the same rate profits had we wouldnt have had a housing bubble.
2) what do you want to cut? HHS, SS, Military. those are the biggies. wars arent free neither are drug benefits. both are unfunded mandates.
SS is still in surplus and despite the agency cashing its bonds we still have a 10 year treasury under 2.5%. another thing the fiscal cons got completely wrong.
Tax speculation at 100%. it was the greatest cause of inflation in oil prices.
and corp[orations already have the best way to cut their taxes. They call it wages. Tax dividends. Theres no corollation to dividend increases and real capital investment in prop, plat and equip.
obama anounces today that he is starting an energy and infrastructure task force now...today!
everyone without a job is hereby recruited. by next monday we begin work.
"you, over there. start digging a foundation for a wind turbine." "you over there. engineer the turbine." "hey you, start digging the trenches for the conduit for the power net work." and so on...
then obama says we will be energy independent this year, no matter what it takes.
there are millions of us waiting to hear this type bold idea. how to pay for such a thing? reduce the budget for the defense department. 700 billion is too much anyway. we are protecting "american interests" my eye! i've got no interest in afganistan. we are funding the protection of "corporate interests" and nothing more.
None other than Bill Clinton
We have tens of millions of superfluous citizens yearning to be given a chance to work and produce. Such citizens are an explosive danger to our nation's tranquility and welfare. We better wake up.
Of course, Republicans don't care. The more spending cutbacks, the more the economy worsens, the more people blame Obama.
Nada.
But I suppose the GOP plan was to increase highway glut so we could spend our time reading their policies that fit neatly on 7" of vinyl on the bumper in front of me.
%. We have an unacknowledged crisis of historical proportions. The fragility of a nation is in direct proportion to the number of truths it must disguise from itself.
not waving party flags