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Have You Gotten the Economic Wake-up Call Yet?

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Republicans have long argued that the deep federal budget cuts they have dreamed of would somehow jumpstart the ailing U.S. economy and spur new job creation.  GOP lawmakers, in fact, insisted on enacting the largest single-year budget cut in history as a precondition to avoiding a government shutdown earlier this year.  If the Republican theory was correct, that huge cut, and conservative promises of more of the same, would right now be encouraging huge job growth.  That isn’t happening.

The Labor Department reported Friday that employers added just 54, 000 jobs in May, and the nation’s unemployment rate actually shot up to 9.1 percent. The economy is so close to stalling out that economists have begun to worry once more about a double-dip recession. How much more bad news will it take to convince folks that the twin conservative economic theories of federal budget cuts and tax cuts for the rich just don’t work?

Chad Stone, chief economist at the Center for Budget and Policy Priorities, a Washington think tank, says:

Today’s employment report should be a wake-up call to policymakers who continue to say the budget deficit is a more immediate threat to the economy than the jobs deficit.  Nearly two years after the economy technically turned the corner from recession to recovery, job growth was disappointing in May and unemployment remained high. At the same time, interest rates are very low, indicating that financial markets are far more concerned in the near term about a sluggish recovery than about deficits, debt, or inflation.

Republicans, allegedly, are supposed to be about looking out for business interests. But, as Stone says, business clearly is more interested in getting the economy moving than it is in tackling the deficit.  In fact, conservatives will only make a bad economy worse, Stone says, by agreeing to increase the federal debt limit only after further budget cuts.

“Lawmakers must raise the debt ceiling so that the United States does not default on its obligations arising from tax and spending legislation that was previously enacted,” Stone says. “If implemented now, those budget cuts would drain purchasing power from the economy at a time when the recovery is already losing momentum and forecasters expect another quarter of sluggish growth.”  So why aren’t politicians of either party truly listening?

Half of all Americans continue to rate the economy and jobs as the top national priority, more than twice the number who claim the deficit and government spending as their No. 1 concern, yet neither party is really taking on this issue.

Robert Reich, the prominent economist who was labor secretary during the Clinton administration blames Democrats as much as Republicans:

Republicans don’t want to do anything about jobs and wages. They’re so intent on unseating Obama they’d like the economy to remain in the dumps through Election Day. They also see the lousy economy as an opportunity to sell Americans their big lie that government spending is the culprit — and jobs will return if spending is cut and government shrinks.

Democrats, meanwhile, don’t want to admit the recovery has stalled. They worry such talk will further undermine consumer confidence or spook the bond market. They don’t want to head into the election year sounding downbeat. And they don’t think they have the votes for anything that will have much effect before Election Day anyway.

An even bigger reason, Reich says, is that the unemployed and economically struggling in this country simply are not well-connected politically.

The unemployed are politically invisible. They don’t make major campaign donations. They don’t lobby Congress. There’s no National Association of Unemployed People.

Their ranks are filled with women who had been public employees, single mothers, minorities, young people trying to enter the labor force, and middle-aged men who have been out of work for longer than six months. You couldn’t find a collection of people with less political clout.

Reich is right, of course. And yet, we’re coming toward a presidential election year in which we in the middle class will have as much influence as we will ever have. It’s past time to say, once and for all, that budget-and-tax-cut economics don’t work, and never will.  And it’s time for Democrats, from President Obama on down, to realize this fact and focus, instead, on solutions that will.

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About Scott Nance

  • Leroy

    Good article, Scott.

    It’s all true: the path to prosperity goes through higher employment, not debt reduction. You’d think that we would have learned that lesson by now, In 1937 FDR relented to republican demands and tried to cut spending only to send the economy back down. It’s always that way with recessions.

    We are suffering a Demand Drought, consumers aren’t buying enough stuff for the simple reason that there are fewer of them with any money and the others have less disposable income.

    Damn the deficit torpedos, full speed ahead with employment!

  • Baronius

    So, if you and John Lake are correct, the economy is simultaneously booming because of President Obama and teetering because of the Republican House. Either way, I should vote Democratic, I guess.

    What bugs me the most about this article is the extensive quote from Reich. Not one word of it was economic analysis. Read it over. It was all about politics. It bugs me that you’re using his credentials as an economist to promote a political angle.

  • Cannonshop

    #2 Point of order? the section’s “Politics”, and if you’ve ever read (and I know you have) papers by economists, they tend to be dense, dry, and easily interpreted to mean or support whatever the reader’s (or promoter’s) own views dictate. Reich is an economist by credential, but a mouthpiece for the party (in his case, Democrat) platform by trade.

    #1 Leroy, this might interest you if you’re open minded enough to look at a different take on Roosevelt’s policies. There are some interesting links there.
    (assuming I got the formatting right, it should link to Walter Williams’ homepage.)

  • Cannonshop

    crap. did something wrong.
    it’s this, drat it.

  • Leroy

    Cannon: I looked at your citation and was disappointed.

    This is what it promised :

    “Great Myths of the Depression:
    “HERBERT HOOVER believed government should play no role in the economy.”

    “GOVERNMENT PROGRAMS helped lower unemployment by putting many Americans to work.”
    “FRANKLIN ROOSEVELT’S ‘New Deal’ saved America from the failure of free-market capitalism.”

    Those are just typical strawmen.

    Then the article itself skips around from one anecdote to another. Arguments are only supported with other arguments.

    Nothing new.

    Nothing but an editorial. Overall, it’s a pretty low quality citation. A waste of time.

  • Cannonshop

    #5 Leroy, like all politics, people will tend to take from a source what they wish. I didn’t actually expect you to do MUCH reading of the material before dismissing it, but as a hard-core pessimist, I can’t claim disappointment.

    The straw-men you mention, however, were in the U.S. history textbooks we had in high school in the 1980’s, and my niece (now graduation-bound from HS) today, so they’re not the right-wing constructs you’re looking for-they come from YOUR side of the aisle, thus making them somewhat amusing, since you obviously do not believe in them yourself, a visit to your local school board might be in order if for no other reason than to assure that your kids (or the kids in your area) aren’t being indoctrinated with such “right-wing fallacies”.

  • Leroy

    They’re STRAW-MAN arguments, Cannon! Nobody’s going to defend them. Since they’re made of straw they’re easy to beat up, but they’re YOUR arguments, not the lefts. Your rightist guy only SAYS they’re left arguments because they’re so easy to beat up.

    Get it?

  • Cannonshop

    #7 Leroy, the Right certainly isn’t writing the text-books, which is where those arguments are most commonly found-in public school text-books, in public schools, which are predominantly run and staffed by members of the LEFT.

    It’s your baby, dude.

  • Leroy

    Cannon, not pleased with the paltry advances of his strawman army calls up strawman reinforcements! The damn field looks like a fire hazard.

  • Cannonshop

    It’s not a straw man, Leroy, You yourself repeated the basic myth in post…number 1 of this thread-the myth that the “New Deal” did anything other than prolong the Depression. I referenced you a source, you didn’t like that so you called it a straw-man…but maybe you do so because really, you can’t argue it on merits.