Legislation to stimulate the economy by sending out checks to every household in America should sail through Congress with little opposition. After all, what legislator is going to stand in the way? Why play the role of the Grinch when you can be one of a cast of hundreds playing Uncle Samta Claus, giving taxpayers the generous gift of their own money?
This quick, one-off version of tax relief won’t do any harm to the economy. Neither will it provide much of a stimulus. Some people will go shopping, but the spree won’t last long. A good chunk of the money spent will be used to purchase goods made in other countries, thereby muting the stimulative effect here in the USA. Other people may use the money to pay down personal debt. This will shift some of the overall level of indebtedness from personal accounts to the national debt, helping it reach the ten trillion dollar mark a few months earlier. Those of us who are debt-free may choose to add to our savings. (Who knows this might bump the national savings rate back into positive numbers.) When all is said and done the effect of this particular stimulus to the economy will be negligible and short-lived.
What is disturbing about this approach to staving off a recession is that a far more effective means of doing so is not even being discussed. Reports indicate that some Democrats are disappointed that the stimulus package will not include an extension of unemployment benefits. I am disappointed that the idea of putting people to work is not included. It is time once again for a liberal dose of New Deal-style public works programs.
I am aware that using the words “liberal” and “New Deal” will touch a raw nerve with many “conservatives” who have devoted a great deal of effort to dismantling the New Deal. Before the knee-jerk reaction sets in, (Oops Too late ) I hasten to add that Ronald Reagan, among others, advocated replacing welfare with “workfare.” Reagan believed that giving someone a hand up in the form of a job is preferable to giving them a hand-out in the form of welfare benefits. I agree.
Article comments
— go to most recent comments1 - P.Marlowe
Winston, I think I like you already! We're certainly thinking alike. See my piece on FDR written a few weeks ago... "Wanted: An FDR for the 21st Century." (Dec 12th, 2007)
Marlowe
2 - Lumpy
Put what people to work? despite a minuscule rise in unemployment it remains at historically low levels. Those who are not working now are effectively doing so by choice. They are either chronically unemployeble or choose not to make the adjustments necessary to find work after having lost a job.
Plus iinjecting another $150 billion into the economy ought to generate far more jobs than we actually have willing workers ro fill.
3 - Baronius
People indicated that they plan to save money (or pay off some debt). Yup. That'll happen.
4 - Irene Wagner
Lumpy---the REPORTED US unemployment is articificially low because it doesn't reflect:
# those working part time jobs because they can't find full time jobs in their field.
# college graduates working full time entry level service industry positions because they can't find ANY job in their field
# jobless folk who have not exhausted their benefits or savings yet but will before long have to apply to the government for help. At that point, they will be part of the unemployment states.
# incarcerated individuals. The US jails its citizens at 5 to 8 times the rate of other industrialized nations. Many of those incarcerated have committed victimless crimes.
Unemployment is one indicator of a sick economy. The US economic system needs an overhaul.
5 - Irene Wagner
Who is going to pay the salaries of those "put back to work?" The government? It's already deeply in debt. The industries (textile, electronics et al) who've had to export jobs just to stay afloat?
6 - Winston Apple
Marlowe,
I just finished reading your piece on FDR. I enjoyed it a lot. I have been re-reading some of FDR's speeches lately and always find myself amazed at his insights and his willingness to speak truth aloud. I thought your excerpts from his speeches were excellent.
I also liked your own line about "the soul numbing, utter callousness of American corporate greed." Finding an effective means of reining in corporate power within the framework of a market economy and democratic principles is one of the most important challenges facing the American people (and people around the world).
Winston Apple
7 - Irene Wagner
So if the corporations are exporting jobs because they're greedy, and somehow incentive is provided for them to bring the jobs back home, is the American market, or ANY market going to pay for goods that are produced so much more cheaply in China or Mexico or India?
The only effective means of providing American incentives for American companies to hire here instead of offshore would be to provide some sort of protection for American-made goods by putting a tariff on foreign-made goods. That's the only "tax" that's approved by the Constitution.
I don't deny that there's corporate greed, but that's mostly reflected in the overblown salaries of the CEO's and top management of some of the biggest corporations. There are plenty of smaller "hometown" industries that have had to shut down because they simply COULD not compete with larger industries who exported jobs, while they themselves were desperately trying to hold on and be faithful to the local employees who'd served them for years.
8 - bliffle
The chickens are coming home to roost. The consequences of 7 years of bad federal economics are going to come back on us in spades. And it doesn't matter whether it's caused by incompetence or by deliberate plan. this administration has saddled US citizens with $4trillion of new debt and depleted our treasury and our credit rating which will ensure that it will take decades to recover from the damage, if ever. Also, we are engaged in a bootless war at a great distance where there is little hope of a favorable outcome, and even now this malevolent president is forging a treaty with the corrupt puppet government in Iraq to station troops in Iraq as long as necessary (contrary to the US Constitution which requires congressional approval for all treaties; but then, Constitutionality has never been a part of Bush Administration considerations). the cost of this fruitless war increases every year and is currrently about $200billion/year, that we know of.
Plus, the administration has propagated political cronies throughout the federal executive system who openly dole out political patronage and fail to do their REAL jobs. All of which will be obligations on every Americans future.
9 - Clavos
Irene #4,
All the points you make are true, but since those factors have ALWAYS been part of the calculation of the unemployment rate; it's still comparing apples to apples, and the rate is currently very near a historic low.
I know that some industries here in South Florida cannot find enough warm bodies to fill all the positions they have available. This is especially true in the skilled and unskilled construction trades, the hospitality industry, and especially in the entry level jobs in fast food, among many others. We don't have enough teachers, cops or firemen (but too many politicians!).
The medical field is particularly shorthanded, especially in nursing and a wide variety of medical positions below physician, including virtually all the technician fields.
South Florida hospitals are currently actively recruiting medical personnel in the Caribbean and as far away as South Africa, to the degree that those areas are complaining of medical brain drains.
10 - Irene Wagner
Clavos, I thought I had heard---can anyone find a source to prove or disprove this?"that the algorithm for calculating unemployment rates had changed sometime during the Bush years, to make the indicator reflect a rosier picture of the economy. I thought I remember its having to do with the weight given in the equation to part-time jobs vs. full-time jobs.
How could the algorithm, no matter what it is, or was, take into account those people who are employed in jobs they for which they are over-educated, in the “skilled and unskilled construction trades, the hospitality industry, and especially in the entry level jobs in fast food?” You don’t see recruiters on college campuses looking to fill that type of job. The United States used to make things. Now we’re becoming a nation of service industry workers---and what happens as more and more folks are running out of money to pay for the services?
Healthcare and teaching (in some fields) are wide-open, that’s true. On the other hand, the burnout rate in the nursing profession is incredible, which is one of the reasons, though not the only one, jobs are opening up there. Not every kind of teaching job is easy to find"ask any liberal arts major. Math and science teaching positions have always been hard to fill because the pay is so much better in industry. I’m not sure how long that situation is going to last as more highly qualified computer scientists and engineers retread with a few ed. courses while watching their industry jobs sail across the ocean, along with any hope of enjoying the same standard of living they had when they were working in industry.
Yikes Clavos, I had no idea it was getting this late. I’ll have to peek in sometime this week to see what people found out about that algorithm. Thanks for the discussion.
11 - Dave Nalle
# those working part time jobs because they can't find full time jobs in their field.
And they would rather work part time than find a field which they could earn a better salary in and work full time? I'd call that voluntary underemployment and not something the government can easily address.
# college graduates working full time entry level service industry positions because they can't find ANY job in their field
Unless they majored in something truly bizarre, there are regions of the country where anyone who is halfway literate and can type or use a computer can find a good paying fulltime job in a second. Skilled jobs for college graduates are going begging and being sent overseas or filled with green-card workers, so if the people you describe exist their problem is a lack of motivation as much as anything.
# jobless folk who have not exhausted their benefits or savings yet but will before long have to apply to the government for help. At that point, they will be part of the unemployment states.
That's always true. No more true now or two months from now than it was yesterday. There's no advance indicator of a future rise in unemployment.
# incarcerated individuals. The US jails its citizens at 5 to 8 times the rate of other industrialized nations. Many of those incarcerated have committed victimless crimes.
Yes, but that's nothing new. And they certainly aren't part of the general, employable population. They're irrelevant.
Unemployment is one indicator of a sick economy. The US economic system needs an overhaul.
The average level of unemployment for the last decade is 4.94%. That means that our unemployment is currently all of .06% higher than average. That's hardly a sign the economy needs an overhaul.
And just for the record, the past decade has been one of unusually low unemployment. If you go back 10 more years you see an average over 6%.
BTW, just for the record, if you don't like unemployment figures, the figure for those actually employed full time is right about average for what it's been during the past decade and considerably higher as a percentage of population than it was in the 1980s.
In short, the entire argument about people being out of work is just utter garbage.
dave
12 - Dave Nalle
And one more thing. You mentioned the plight of the poor college graduates. Unemployment for college graduates has been declining steadily since July of last year and hasn't been this low for a full quarter since 2001.
Dave
13 - Winston Apple
The threat of recession looms because of the downturn in the housing market. Housing starts are down. Theoretically, that means there are some construction workers somewhere who are currently out-of-work, and/or not working full-time.
“There is work to be done. . . . Assessments of bridges around the country show a substantial percentage in need of repair or replacement. The sewage systems in many of our cities need to be updated and/or replaced.” [From my post]
An analogy: Suppose your house needs a new roof and one of your neighbors is an unemployed (or under-employed) roofer. Would you (1) hire him to fix your roof, or (2) give him a gift certificate to go shopping at the local mall, while your roof goes unrepaired and he remains unemployed?
If you chose option #2, congratulations! You are qualified to serve in the U. S. Congress.
14 - Ruvy in Jerusalem
Winston,
Your comments are too late, like those of Marlowe.
When FDR faced a massive economic downturn and the threat of revolution, he was able to take the kind of steps he did because America was a creditor nation. And do note, that for all of his efforts, it was the massive war production due to WWII that finally pulled America out of its economic mess.
Today, your nation is a debtor nation. This means that your economy is dependent of the good will of your creditors, thugdoms like China and Arabia. It's a whole different ball-game now. Your government has you mired in the Mesopotamian mud of a useless war, and poured your money down the Tigris and Euphrates. Even New Orleans has been victim to this war, as levee repairs scheduled to be done there were put off to spend more money in Mesopotamia. Much of (albeit, not all of) Katrina's damage wad due to this.
It may appear to you that you live in a rich nation. You do not. Your government does not have teds to call in overseas, and is on the horns of a terrible dilemma, seemingly forced to keep soldiers stationed overseas at tremendous cost or suffer loss of face in the world, yet facing real economic difficulties at home that bromides and Prozac will just not take care of, and which do require calling home those thousands of soldiers now overseas.
Your candidates for commander-in-chief all seem to be mental midgets, incapable of facing the daunting task in front of them. I do not envy any man (or woman) chosen to lead you. If elections do indeed occur, and someone is chosen to replace the fool in the White House now, that someone has the thankless task of leading you over a precipice, or leading you to a terrible contraction of your power and influence in the world. That bugaboo of the seventies, the Pitiful Helpless Giant, is what you have finally become.
For your answer as to why, stroll over to the nearest gas station, and look at the price of gasoline. The oil and banking establishment has sucked you all dry, and they have effectively closed off all avenues out of the hell they have designed for you.
You all have my sympathy.
15 - Cannonshop
Okay, how many of you have been out of work in the last ten years?
Check this out: Unemployment Statistics do NOT include you when your benefits run out. Sorry to say it, but once you're off the unemployment dole in your state, your name is taken off the list, you cease to exist for purposes of accounting unemployed statistics.
Now, here's something else you probably haven't noticed:
Your wages if you ARE working, don't keep up with the actual costs of living, unless you work for Uncle Sam, or the State. This is particularly true of people who make things, or build things.
16 - Winston Apple
Ruvy (#14):
I totally agree with your statement that for that for all of (FDR’s) efforts, it was the massive war production due to WWII that finally pulled America out of its economic mess. The fact that Roosevelt never fully bought into Keynes equation was addressed in an early draft of my post, but I edited it out, feeling that I could address it more effectively in another piece I am in the process of writing.
I am painfully aware of the difference, which you so kindly point out, between the US being a creditor nation (during FDR’s time) and a debtor nation now. I am familiar with all of the arguments about how our national debt isn’t really all that high when compared, in historical context, as a percentage of our GDP. However, ten trillion dollars sounds like a lot of money to me.
I also know that I handle my personal finances very differently. My wife and I recently paid off our mortgage. The only credit card balances we are carrying are the result of zero percent offers the credit card companies keep sending us. We take them up on their offer. We put the money into our savings account and earn interest until the zero percent period is about to expire. Then we pay the balance in full. Total cost to us: zero. Interest earned last year with credit card company money: nearly two thousand dollars.
On the other hand, nearly one third of the taxes we pay to the government goes to pay interest on the national debt. As a person who has always hated paying interest, that drives me crazy. (I’m not really looking for a job with the government, but if the next president wants to put me in charge of managing the nation’s finances, I am willing to serve.)
You say that “FDR faced a massive economic downturn and the threat of revolution.” I agree, but would amend your statement slightly to argue that a big part of the reason “he was able to take the kind of steps he did” was because of the “threat of revolution.”
The economic crisis we face today is not nearly as severe, but corporate influence, in general, and the influence of the military-industrial complex, in particular, have indeed put us on the “horns of a terrible dilemma, seemingly forced to keep soldiers stationed overseas at tremendous cost or suffer loss of face in the world . . .” I think the key word here is “seemingly.” I hope (against all odds) that Congress and the next president do call the troops home. Not just the ones stationed in Iraq, but all of our troops, from all over the world.
Other nations manage to buy oil and other needed resources without projecting a global military presence. We are always told that our troops are protecting “American interests.” A more accurate term would be “corporate interests.”
I disagree with your assessment that our “candidates for commander-in-chief all seem to be mental midgets.” I wouldn’t classify more than one or two of them “mental midgets.” I simply believe that in order to raise the money they need to win under the present system, they have to sell their soul to corporate interests. Escaping that influence is indeed a “daunting task.” Should we ever manage to elect a president and a Congress relatively free of corporate influence, the task of getting our economy back on track might still be daunting, but would be less so.
I hope our next president does oversee “a . . . contraction of (our) power and influence in the world.” Please note the missing word. I don’t believe this would be a terrible thing. I never wanted my country to take on the role of policing the world. I hope we resign that role immediately. We should work constructively with other nations to promote world peace. If the United Nations is not up to the task, we may need to form a different type of organization.
We may well be a “Pitiful Helpless Giant” at this point in time. I believe we are still capable of helping ourselves out of the mess we’re in. A button I have (left over from the sixties) reads: “If the people will lead, eventually the leaders will follow.”
It would take a real renaissance of informed and active citizenship on the part of the American people to restore our nation to greatness. I’m not optimistic that will happen, but change is in the air. I am trying, against all odds, to keep hope alive.
- Winston Apple
17 - P.Marlowe
Winston... Ruvy is just being particularly "down" today (see posts under my "American Theocracy" article)
I would argue this point you made here - not with you per se, but in that this is often said:
"The economic crisis we face today is not nearly as severe, but corporate influence, in general, and the influence of the military-industrial complex, in particular, have indeed put us on the "horns of a terrible dilemma..."
We tend to think that we have secure fiscal and economic "safety" mechanisms in place today that we didn't prior to FDR... On the face of it we do... But THEY are being threatened as well. The continued drum beat of "privatizing" Social Security... The MASSIVE switch from what were solid, well protected pensions to the 401K that is sitting out there getting hammered today... The MASSIVE shift in well paying jobs to off-shore facilities (my son makes very good money for Yahoo! I warned him two years ago to not expect this to last... Sure as hell, the CEO this week is talking about laying of initially - hundreds of U.S. workers... I wonder if Terry Semal would be willing to part with the more than $80 million he made last year to help these people? It would cost him just $17 million approximately...)
We keep placating ourselves when those in power due to their unmitigated greed drive the world's economy to these disastrous drop-offs that the "safeguards" will save us... What safeguards?
THE SAFEGUARDS are/is the GOVERNMENT! The one thing Ruvy said that hits home is that we are no longer a creditor nation... NOT just that but this is NOT the 1980s either. There are THREE HUGE PLAYERS in the world economy game now that were NOT there then: a united Europe, China and India. Throw in a cast of minor but significant players and all of a sudden the mighty America doesn't look so mighty anymore. Sure, it's still the biggest but it's an aging, weakened (via its own greed) America... The drive among those players now is not so much to PROP UP the old man as to pick his pockets...
So no, even though on "paper" we think things are safer economically than before they aren't. The "stimulus" package of $150 billion... Unless George is s****** gold bricks that $150 billion is simply ADDED to the national deficit.
No, we're not "safe" at all...
Marlowe
18 - Dave Nalle
Check this out: Unemployment Statistics do NOT include you when your benefits run out. Sorry to say it, but once you're off the unemployment dole in your state, your name is taken off the list, you cease to exist for purposes of accounting unemployed statistics.
This is why I cited actual employment figures - in my previous largely ignored comment - rather than just unemployment, and employment is up.
Now, here's something else you probably haven't noticed:
Your wages if you ARE working, don't keep up with the actual costs of living, unless you work for Uncle Sam, or the State. This is particularly true of people who make things, or build things.
Except that this just isn't true. The steady increase in wages at all levels of employment has regularly outpaced inflation in the cost of living by between 1 and 2 percent per year.
Dave
19 - Clavos
Irene, I don't know about the algorithm; in fact, I didn't (until now) know there was one, I was taught in my Econ classes in the 60s that it was a simple equation for calculating the unemployment rate. Perhaps Dave will weigh in on this point; I'm sure he's familiar with it.
Two points I can address:
First, people having to take jobs for which they are over educated is nothing new. That's one of the by-products of over educating the population; not everyone can or should receive a college education, yet for at least two generations now, we have assumed it's a universal right.
I graduated from college in 1969, during another period when college-level jobs were scarce. The first 18 months I had a degree, I was unable to find college-level work, and worked as an auto mechanic in a Buick dealership. Tough, but not a disaster; I kept plugging away applying for jobs in my chosen field (airline administration) until I finally landed one. On the plus side: I can still fix a lot of things on my cars and boat myself, and even when I can't, I understand mechanics well enough not to be duped by the garage.
Second point: You're right about the burnout rate among nursing staff, but it's due precisely to the shortage of nurses (caused by the aging of the boomers), not the other way around.
Don't know if you've seen some of my other comments in the past on medical issues, but because my wife is chronically and severely in ill health with a massive spinal cord injury, I'm waaay more intimately familiar with hospitals and they're staffing/procedures/operations, etc. than I ever wanted to be.
Dave has mentioned in similar discussions, and I agree with him, that we have a peculiar situation at national level that did not exist years ago; namely, that people are no longer as willing to move to follow their work as they once were.
I worked thirty years (finally!) in the airline industry, during which time we moved and lived in a total of 5 different cities in 3 different states. People who worked for IBM in those days used to joke that the acronym stood for I've Been Moved.
African Americans in the South moved north in the hundreds of thousands during Reconstruction to seek work. Nearly as many of them moved back south during the 50s and 60s as the South began to boom again.
Today, workers are much less willing to move, so we have jobs going begging in boom areas like South Florida, while there's severe unemployment in the Rust Belt.
We probably are entering a recession, triggered by the sub-prime debacle, and it likely will last until the election, providing a real boon for the pols, who will spend 2008 throwing money and tax cuts (and maybe even make-work jobs) at the electorate, under the guise of ameliorating the effects of the recession, but really in service to getting re-elected.
20 - Ruvy in Jerusalem
Marlowe,
Ruvy is just being particularly "down" today (see posts under my "American Theocracy" article)
It is not an issue of being "down". You put your finger on the meat of my comments - you are a bunch of debtors and you must take into account the opinions of those to whom you owe money - or, as in the case of the Thugdom of Arabia, erase your debt by overthrowing the Wahhabi pigs who have worked so hard to destroy your country.
But from the looks of things, America is no longer in the mental or moral shape where its people (much less its bought out corporate slaves of politicians) can point at an enemy and say, "you deserve destruction!" The proof of that is how America's government reacted to the seizure of the Church of the Sepulchre in 2002, (the subject of that other comment) and in addition, how the Americans reacted to the de facto annexation of the northeastern Sinai to the Gaza Strip a few days ago. Again, they did absolutely nothing but pull their soldiers out.
Wow!! What courage!! What determination to stick to treaty commitments!!
So, to put it bluntly, you are too poor to effectively resuscitate your economy, and you are too cowardly (at the top) to effectively handle your real enemies. And your potential leaders do not have either the courage or strength to lead you out of the hell your oil and banking establishment has tossed you all into. Those are cold and bitter realities that you may not like, but are there on the table, in front of you.
Therefore, I feel sorry for the lot of you.
21 - P.Marlowe
"Except that this just isn't true. The steady increase in wages at all levels of employment has regularly outpaced inflation in the cost of living by between 1 and 2 percent per year."
Dave
**************************
EXCEPT Dave that government stats along with study after study from the National Bureau of Economic Research shows this simply isn't the case: one observation will suffice:
From 1970 - when the average income was $32,763 (adjusted for said inflation) to 2005 the average income of the BOTTOM 99% of this country only grew by $2,710 to $35,473. MEANWHILE... The top 1/100th of 1% of this country, who's 1970 average income was $3,641,285 saw their income in 2000 jump to $23,969,767 (adjusted for "said" inflation")- an INCREASE of over $20 million.
Aren't NUMBERS FUN?!!
Every SINGLE indication EVEN FROM PAPERS WRITTEN BY THE HERITAGE and BROOKINGS FOUNDATION (for God's sake!) show that the RICH are INDEED getting richer and the poor ARE getting poorer...
What's in the air down there Dave?
Marlowe
22 - P.Marlowe
Ruvy... I will agree with you that the corporate whores running this country don't have the spine needed to deal with the truly evil who advocate terror... Makes me wish for my YOUNGER DAYS when I was just a young fella making my way across the Roman Empire. Boy! Would be terrorists knew just how and from where and how QUICKLY the old hammer would strike back then should someone attack anything "Roman".
There is something to be said for this. One can NEVER give quarter or attempt to "reconcile" with a tyrant of any kind, under ANY condition. Terrorists are tyrants, albeit stateless ones.
Marlowe
23 - Dave Nalle
Regarding unemployment and how it is calculated. Irene seems to be perpetuating the common myth that the unemployment rate is based in some way on those who file for unemployment. That is not true. The US currently uses the standard OLI formula which uses the entire body of people who are able to work and not working, so if there was a change, it has to have been away from a less comprehensive measure, because the current methodology is comprehensive.
Dave
24 - Lumpy
So Marlowe, you're advocating the roman policy of decimating enemy populations. You think that if we just crucified one in ten Muslims they would behave?
25 - Lumpy
Marlowe. Your own figures in no. 22 show u to be wrong. If the 1970 figute is adjusted for inflation then the $3000 plus that median income has increased since then is a net gain in income. So that's pretty good.