View Full Version : Summary Of How Repigs Blocked Faster Jobs Recovery

Gayle in MD
06-03-2011, 08:33 AM
<span style="color: #990000"> Since we all know, because we watched Republicans practice obstructionism beginning at the time of the actual crash, and continuing through the first years of this new admininstration, I won't list every single policy vote, by the right, which has hugely impacted what could have been a much stronger recovery, from switching over from investing in jobs, to highlighting debts, instead, to blocking greater spending, in the form of the stimulus, in order to speed job recovery.

As we all know, their main goal was to make this president, a one term president, and hence, they have done everrything they could, to block a speedier jobe recovery, including pushing to limit the suggested 1.3 trillion investment to under a trillion, or around 7 to 8 hundred billion, instead of doing what even the country's most respected expert, on the Great Depresion, Fed Chairman Bernake, told them to do from the start, and increae the stimulus, they blocked the needed 1.3 trillion, and hence, although new jobs have been created, and growth every quarter, it has been at a far slower pace, than we would have seen by now, thanks to the continued wrong headed economic philosophies of Republicans.

Their "Joke" to use the words of Wall St., of holding hostage the increase we need immediately, on the debt ceiling, is hurting us, just as their constant attention and focus on their ideological social issues, instead of focusing oon Jobs, is hurting the recovery, just a what happened in Japan, and the huge increases in oil prices, have had an impact, as well, which, of course, Republicans will never admit. </span>

Op-Ed Columnist
The Mistake of 2010
Published: June 2, 2011
Earlier this week, the Federal Reserve Bank of New York published a blog post about the “mistake of 1937,” the premature fiscal and monetary pullback that aborted an ongoing economic recovery and prolonged the Great Depression. As Gauti Eggertsson, the post’s author (with whom I have done research) points out, economic conditions today — with output growing, some prices rising, but unemployment still very high — bear a strong resemblance to those in 1936-37. So are modern policy makers going to make the same mistake?

Mr. Eggertsson says no, that economists now know better. But I disagree. In fact, in important ways we have already repeated the mistake of 1937. Call it the mistake of 2010: a “pivot” away from jobs to other concerns, whose wrongheadedness has been highlighted by recent economic data.

To be sure, things could be worse — and there’s a strong chance that they will, indeed, get worse.

Back when the original 2009 Obama stimulus was enacted, some of us warned that it was both too small and too short-lived. In particular, the effects of the stimulus would start fading out in 2010 — and given the fact that financial crises are usually followed by prolonged slumps, it was unlikely that the economy would have a vigorous self-sustaining recovery under way by then.

By the beginning of 2010, it was already obvious that these concerns had been justified. Yet somehow an overwhelming consensus emerged among policy makers and pundits that nothing more should be done to create jobs, that, on the contrary, there should be a turn toward fiscal austerity.

This consensus was fed by scare stories about an imminent loss of market confidence in U.S. debt. Every uptick in interest rates was interpreted as a sign that the “bond vigilantes” were on the attack, and this interpretation was often reported as a fact, not as a dubious hypothesis.

For example, in March 2010, The Wall Street Journal published an article titled “Debt Fears Send Rates Up,” reporting that long-term U.S. interest rates had risen and asserting — without offering any evidence — that this rise, to about 3.9 percent, reflected concerns about the budget deficit. In reality, it probably reflected several months of decent jobs numbers, which temporarily raised optimism about recovery.

But never mind. Somehow it became conventional wisdom that the deficit, not unemployment, was Public Enemy No. 1 — a conventional wisdom both reflected in and reinforced by a dramatic shift in news coverage away from unemployment and toward deficit concerns. Job creation effectively dropped off the agenda.

So, here we are, in the middle of 2011. How are things going?

Well, the bond vigilantes continue to exist only in the deficit hawks’ imagination. Long-term interest rates have fluctuated with optimism or pessimism about the economy; a recent spate of bad news has sent them down to about 3 percent, not far from historic lows.

And the news has, indeed, been bad. As the stimulus has faded out, so have hopes of strong economic recovery. Yes, there has been some job creation — but at a pace barely keeping up with population growth. The percentage of American adults with jobs, which plunged between 2007 and 2009, has barely budged since then. And the latest numbers suggest that even this modest, inadequate job growth is sputtering out.

So, as I said, we have already repeated a version of the mistake of 1937, withdrawing fiscal support much too early and perpetuating high unemployment.

Yet worse things may soon happen.

On the fiscal side, Republicans are demanding immediate spending cuts as the price of raising the debt limit and avoiding a U.S. default. If this blackmail succeeds, it will put a further drag on an already weak economy.

Meanwhile, a loud chorus is demanding that the Fed and its counterparts abroad raise interest rates to head off an alleged inflationary threat. As the New York Fed article points out, the rise in consumer price inflation over the past few months — which is already showing signs of tailing off — reflected temporary factors, and underlying inflation remains low. And smart economists like Mr. Eggerstsson understand this. But the European Central Bank is already raising rates, and the Fed is under pressure to do the same. Further attempts to help the economy expand seem out of the question.

So the mistake of 2010 may yet be followed by an even bigger mistake. Even if that doesn’t happen, however, the fact is that the policy response to the crisis was and remains vastly inadequate.

Those who refuse to learn from history are condemned to repeat it; we did, and we are. What we’re experiencing may not be a full replay of the Great Depression, but that’s little consolation for the millions of American families suffering from a slump that just goes on and on.


06-03-2011, 09:13 AM
Please, do yourself a favor and seek professional help. Seriously and respectfully.


Gayle in MD
06-03-2011, 09:22 AM
Here is an interesting look back, another good summary of what happens to us when the right takes over.

<div class="ubbcode-block"><div class="ubbcode-header">Quote:</div><div class="ubbcode-body">US Elections: The Deficit Hawks Have Already Won

Posted By Jeff Madrick On<span style='font-size: 14pt'> November 2, 2010 </span>@ 8:00 am In Uncategorized | 1 Comment

Jeff Madrick [1]

Austerity economics [2] has won in Europe. But there is a mythology traveling around that the U.S., at least, has retained the Keynesian orientation that helped cut short an economy spiraling downward into full-fledged depression. Not so. The deficit hawks have also largely won in the U.S. The announcement [3] last week that GDP grew at an annual rate of 2 percent only brings the point home: the U.S. needs a serious fiscal injection quickly. But it is not going to get it.

A year and a half after the recession was supposed to have ended, GDP has still not reached its pre-recession peak of 2007, the longest such stretch in post-World War II history. Unemployment stands at 9.6 percent and underemployment above 17 percent. The Congressional Budget Office figures GDP could be six percentage points higher before the economy reaches full capacity—that is, before inflation is any real threat.

A stimulus with the economy performing so much worse than its potential will almost certainly not add to future debt because tax revenues will rise rapidly as incomes rise in response to the government spending. With such weakness, a substantial fiscal stimulus will likely have a high multiplier if it is designed correctly– aid to the states, unemployment insurance, some serious investment in infrastructure, and federal employment of idle workers.

But the deficit hawks, backed by many millions of dollars from powerful interests, will hear none of this. They are using the sudden $1 trillion rise of the budget deficit to 10 percent of GDP as a way to rally fear. They cite outrageous deficits to come in the 2020s and 2030s. The fear-mongering has suppressed serious discourse about the need for stimulus now.

President Obama has himself joined the deficit hawks by endorsing a fiscal commission [4] to find ways to reduce the future deficit. It will report on December 1. The administration is also endorsing a three-year freeze on discretionary spending.

With no strong sponsors for stimulus in Washington, the likelihood that the American economy will muddle along at high unemployment rates is now great. Quantitative easing [5] by the Fed won’t do the trick alone. Lower rates are only one side of the equation, demand for loans and investment in a growing economy is the critical other side. Oh, that’s, right, that’s Keynesianism.

No matter by how much the Republicans win the House, the future is now muddied. American worker frustration will only grow. They will lose skills and employability over time– and perhaps hope. Business will invest too little in productive areas, as they have been doing for much of the 2000s. The consequence for federal policies will be impossible to determine. But political fanaticism could grow, not recede as it usually has in American history.

The deficit hawks now have their sights on bigger game, however. The main cause of the sudden deficit surge is the recession, and after that, the Bush tax cuts and war spending. But the deficit hawks are targeting Social Security, Medicare and Medicaid, which have had nothing to do with the sudden deficit increase.

Their advocacy is based on a disinformation campaign, one so effective they seem to fool themselves. They talk mostly about how an aging population will place an impossible burden on American children when they reach adulthood. And then they focus on Social Security, I suppose because it is the biggest social program out there—so far, that is.

As the CBO notes time and again [6], however, Social Security payments will only rise from 5 percent to 6 percent of GDP in the 2030s or so and then stay there. Medicare and Medicaid payments will rise from 5 percent of GDP to 10 percent in 2035 and 13 percent in 2050.

Why all the talk about reducing Social Security benefits, then? Simply because there is less to cut to reduce any looming deficit in the system. Medicare and Medicaid are going up much faster, not due to aging but mostly because health care costs in general in the U.S. will rise so rapidly.

When groups like the Peterson-Pew Commission on the deficit talk about America’s debt rising to 200 and 300 percent of GDP in 25 to 35 years, they rarely say it is almost all because of health care spending and interest payments on the accumulated debt. If they did, they’d have to get serious about controlling those programs, for which they only propose modest reforms.

Let’s get Social Security off the table. Let’s put back on the table serious health care reform and then serious increases in taxes to close the looming fiscal gap. We can get the long-term budget deficit down to 3 percent of GDP and not cut social programs, which are among America’s greatest achievements.


06-03-2011, 09:31 AM
<div class="ubbcode-block"><div class="ubbcode-header">Originally Posted By: Gayle in MD</div><div class="ubbcode-body"> serious health care reform and then serious increases in taxes to close the looming fiscal gap. We can get the long-term budget deficit down to 3 percent of GDP and not cut social programs, which are among America’s greatest achievements.


Now that's funny, I don't care who you are!!!


06-03-2011, 09:31 AM