PAYGO: "Pay As You Go". On its surface, this sounds fairly sensible. In fact, it sounds very fiscally conservative. So why is it that the Democrats are all for it, and Republicans are all against it? Check out the strictly party-line Senate vote: on Thursday, all Democrats voted for the measure, and all 40 Republicans voted against it. The House adopted such a rule in a 265-166 vote last July.
This strictly party-line vote is particularly interesting since when PAYGO was first introduced in the Omnibus Reconciliation Act of 1990 when 47 Republican representatives voted for it, and 18 Republican senators, including Bob Dole, voted for it.
In fact, here's a list of five Senate votes from 2003 to early 2006 (when the Republicans held both houses of Congress), and every single vote includes several Republicans who voted for PAYGO, and some of those same Republican senators are among those who voted 'No' on Thursday.Now why is that? Why is it that Republicans would not support fiscally-conservative PAYGO legislation in the first place? Why is it that Republican senators who were for PAYGO are against it now?Mainly, it's because the Republican Party is enforcing a "Just Say No" policy because they just don't want President Obama to succeed in anything he does, period. Now that sounds petty, an unbecoming accusation of an entire political party, but I suspect that in their eyes, there's a very, very good reason. But I'll get to that later.Now, back to the president's efforts to rescue the American economy. It seems that everyone on the right, most independents, and many on the left are starting to think that the unemployment situation's not getting any better, that if we have a recovery at all, it will be a 'jobless recovery' such as the one that doomed Bush 41's reelection hopes back in '92.Is that really the case? Not according to this article in Bloomberg.com:
Business executives say spending will increase further as profits rise — third-quarter earnings increased 10.8 percent, according to Commerce Department figures, the most in more than five years — and demand strengthens. Of U.S. companies followed by Morgan Stanley analysts in New York, 38 percent intend to raise capital spending over the next three months, up from a low of 3 percent in August.
“The groundwork has been laid for a very powerful recovery in capital spending,” said Joseph LaVorgna, chief U.S. economist at Deutsche Bank Securities in New York. “It won’t take much of a spark to get companies to start spending and hiring.”GDP rose 5.7 percent in the fourth quarter as factories revived assembly lines and consumers and companies spent more, the Commerce Department reported on Jan. 29. Purchases of equipment and software increased 13.3 percent, the most since the first quarter of 2006. ...
Morgan Stanley’s January business conditions index survey found that 34 percent of companies plan to increase hiring, up from 8 percent in August. “Rising jobs will provide the gains in income and confidence needed to support consumer spending,” Richard Berner, co-head of global economics at Morgan Stanley in New York, said in a telephone interview.
Frankly, this doesn't look like 'doom and gloom' to me. What it does look like is a serious problem for the Republicans this fall if the American economy has recovered to any semblance of its pre-Bush robust performance by then. "It's the economy, stupid!" Those words were true in '92, and they're true today.The Republicans still have some advantages, however — foremost of which are the short memories of Americans, and our national preference for instant gratification. If the American voting public forgets what (and who) got us into the Great Recession, and if they blame Obama for the recession lasting so long (compared to its severity, it's really been rather short), then they will likely make significant gains in the congressional elections - particularly in the House, where it is quite conceivable that they could take the majority.On the other hand, if the Democrats are successful in reminding the American public of whose polices got us into the recession, and whose policies helped us recover more quickly than most expected, then we will lose fewer seats than the majority party normally does in mid-term elections...and we might even gain a few.What will be the determinant? Jobs, of course. It's now looking as if we may have had positive job growth in January...and if the economy keeps growing as it seems to now, we'll certainly have positive job growth in February - not even a year after the Dow bottomed out in the mid-6000's! And what happens when an economy grows? Jobs.That's why the Obama Administration did what they did — because they knew that they had to take care of Big Business first — because if Big Business failed, that many more people would have been thrown out of work...and we would have fallen into a vicious circle down into Depression. How do we know this? From the Columbia Encyclopedia:
Economists have disagreed over its causes, but certain causative factors are generally accepted. The prosperity of the 1920s was unevenly distributed among the various parts of the American economy—farmers and unskilled workers were notably excluded—with the result that the nation's productive capacity was greater than its capacity to consume. In addition, the tariff and war-debt policies of the Republican administrations of the 1920s had cut down the foreign market for American goods. Finally, easy-money policies led to an inordinate expansion of credit and installment buying and fantastic speculation in the stock market.
Our productive capacity is now much less in relation to our consumptive capacity, and our tariffs are few and far between, but uneven prosperity, war debt, easy-money policies leading to expansion of credit and installment buying and fantastic speculation, sound familiar?They sure do! They're what the Republicans gave us during Bush 43's presidency!But that's not all - there's something else in the same reference:
The economic, agricultural, and relief policies of the New Deal administration under President Franklin Delano Roosevelt did a great deal to mitigate the effects of the depression and, most importantly, to restore a sense of confidence to the American people. Yet it is generally agreed that complete business recovery was not achieved and unemployment ended until the government began to spend heavily for defense in the early 1940s.
I remember a popular saying during the recessions of the early 80's and early 90's: "What we need is a good war!" Why? Because it was WWII that finally brought us out of the Great Depression because we suddenly became nearly fully employed as a nation, thanks to the military buildup.