Waiting For Washington


After a couple consecutive jobs reports filled with not-so-great news, May’s jobs report only worsened that trend. 69,000 jobs were created (way less than expected) and unemployment ticked up to 8.2 % from 8.1%.  A pattern is developing. In both 2010 and 2011 the beginning of the year was marked with the hope of economic recovery; however, come April and May those hopes were stunted by a slumping economy – exactly what we are seeing now.  So the question I’m asking is how long is Washington going to continue to do nothing?

The Republican’s fix to our economic woes is to reduce the national debt by decreasing government spending and cutting taxes – somehow this will get the economy back on track. It seems the right forgot Europe already tried spurring on economic growth through spending cuts and it only made their economies worse off.  Also, counter to their goal, the austerity measures implemented have increased the debt of many of the Euro countries.

Phase 2 of the Republican plan is tax cuts, which have proven to be incredibly ineffective especially when compared to actual government consumption. Not to mention tax cuts only add to the national debt.  Republicans need to stop laboring under the delusion that tax cuts pay for themselves – (cough) the Bush tax cuts (cough).

So if we follow the Republican plan, not only will the national debt increase, but it simply will not help with economic growth.  What we need for a robust recovery is an increase in actual government consumption. Government needs to invest in things like  public works projects and infrastructure rebuilding. The key to recovery right now is not to drastically cut spending but to increase spending where it can make a difference. (I will admit; I’m upset few Democrats are willing to take this stance, but it is due in large part to an uncompromising right who views any government spending as a socialist policy)

I know Republicans reading this will be fuming at the thought of more government spending. I can hear their arguments now; ‘we’ve already spent trillions of dollars and what do we have to show for it – unemployment above 8%.’   The flaw in their argument though is government consumption is relatively low given the magnitude of the recession. The explosion in government expenditures came mostly from increased safety net expenditures (unemployment benefits, food stamps etc.), ever-increasing health care costs, and tax cuts, not from government consumption and investment.  We need government spending that works toward putting people back to work, only then can we expect our economy to return to normal.

One last note: I’m not asking for extreme left-wing policies.  All I’m asking for is government consumption and investment to be at the same levels as when President Reagan faced a recession.

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3 thoughts on “Waiting For Washington

  1. And don’t lose sight of the two un-funded wars and the trillions of dollars there that contributed to the debt.

  2. The situation that the US economy (and the world economy), is incredibly complex at the moment.

    Regardless of who gets voted in, the debt will soar up over 24T just with government spending momentum we have going now.

    Because government spending is basically keeping the economy afloat while small business tries to recover in a hostile lending environment.

    The single biggest issue why the stimulus failed is because the fractional reserve system was broken. So our government hand picked the winners of the stimulus dollars while small to medium sized business’ suffered and continue to suffer from lack of lending.

    The crisis we face is that there is a huge shortfall of tax revenue due to the unemployment situation. Also students graduating from our public school systems are unemployable for the most part or will become the working poor.

    Short of some technological breakthrough that will pump up our economy the US stands a good chance of winding up like Greece in a relatively short period of time.

    Many good economists theorize that additional stimulus spending is necessary but with a chosen single direction that the entire economy can get behind. We saw this with the moon missions of with the establishment if the interstate highway system.

    Unfortunately many of our current leaders including our President have a vision of a world that resembles the utopian one world society seen in Star Trek movies.

    Its going to take some really smart people to get us out of this one. Unfortunately our government is seriously short on brainpower.

    This you think there is any left over genetic material so we can clone up. Henry Ford, Howard Hughes, Ronald Reagan, Steve Jobs, Bill Gates, Werner von Braun, and about 1000 others like this?

    HK

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