It is an ugly balancing act – protecting our national credit reputation by controlling the deficit vs. not providing sufficient stimulus to bring the country out of its recession. With projected annual growth rates projected at or around 1%, in medical terms, we are virtually flat-lining. Britain’s comparable deficit reduction program generated higher unemployment (hmmm… that appears to be happening here), fewer homes sales (ditto), lower retail sales (started well, but they are slipping again), lower growth (ditto) and a whole lot of riots (not here, at least, not yet).
Conservative forces on this side of the pond are hell-bent on deficit reduction, no matter the cost. Many in Congress made blanket “pledges” about what they would or wouldn’t do about deficits and taxes, again, no matter the cost. Did they really believe that their judgment was or would be so inferior, so impaired, that they needed firm rules to replace analyzing problems and voting for real solutions at the relevant time the issues were presented again?
Rick Perry’s “traitor,” Fed chief Ben Bernanke (maybe, he’s in that new category, Traitor-Nerd-Wonk) was the center of attention in Jackson Hole, Wyoming at an annual policy conference on August 26th. Wall Street wanted more “quantative easing” (read: buy the bad paper off our books so we can make more money), and where there is still funding to do that, the Federal Reserve Chairman stopped short on making that pledge. Instead, he chastised elected Washington to recognize their role in the recent economic turndown: “‘The country would be well served by a better process for making fiscal decisions,’ he said.
“Mr. Bernanke said he remained optimistic about future growth — he gave no indication that the Fed would increase its economic aid programs, though he said the central bank’s policy-making board would revisit the issue at a scheduled meeting in September — but he warned that the government had emerged as perhaps the greatest threat to recovery… ‘The quality of economic policy-making in the United States will heavily influence the nation’s long-term prospects…’” New York Times, August 26th.
As popularity polls suggest, we may have the least competent, least intelligent Congress in recent memory. When a quick economic fix to a problem that had been decades in the making wasn’t forthcoming, the recent mid-terms produced an anti-intellectual, anti-incumbent backlash that placed clearly unqualified candidates in office. If smart people can’t solve our problems, let’s elect doctrinaire dummies! Their vector – that Washington wasn’t working and that the big Wall Street stimulus programs did little for the average American – was dead-on; their solutions pushed slogans and mythologies that clearly have made matters vastly worse.
If there is another major downturn, these individuals are without the slightest doubt the responsible culprits… and President Obama, effectively endorsing their choices and pressing on in useless wars, must accept his culpability in this process. Watch him propose a jobs/infrastructure construction bill, requiring more stimulus expenditures, that he knows will be shot down by the Tea Party in the House… just to be able to pin any economic downturn on his opponents. There’s little consumer demand and severely contracting government demand out there in the marketplace, and folks are talking about “growth”? Growth is the only path out of this mess, by the way, but Congress is going out of its way to stab that prospect in the heart.
And here’s a huge hint, Washington, folks care a whole lot less about the deficit than you think… and those that do often mistakenly think somehow reducing federal spending will have a positive impact on employment. They’re the ones who probably got a D in entry-level college economics. While that old maxim, “It’s the economy, stupid,” still applies in spades, let me refine that quote to the summer of 2011: “It’s unemployment, stupid,” noting that not having a job or worrying about losing your job is now America’s pastime.
As Nicholas Kristof wrote for the August 27th New York Times: “Some 25 million Americans are unemployed or underemployed — that’s more than 16 percent of the work force — but jobs haven’t been nearly high enough on the national agenda… When Americans are polled about the issue they care most about, the answer by a two-to-one margin is jobs. The Boston Globe found that during President Obama’s Twitter ‘town hall’ last month, the issue that the public most wanted to ask about was, by far, jobs.” Add the corollary fear, collapsed housing prices, and you will understand the country a whole lot better.
While fiscal conservatives – both Democratic Blue Dogs and Republican Tea Party members – believe that pulling government out of the spending pool is a good thing, that private decisions are always going to be better, there also appears to be a failure to appreciate the difference between investing and spending. That may be why they have decimated school budgets, withdrawn infrastructure repair/growth and scientific research, all of which represent a cash investment with a hard dollar rate of return… because they believe the private sector will do those jobs better???? Explain to me how that works. Bad schools with increasing class size and less classroom time will be better with less government money because?????
If we ignore fixing budgets, roads and levees, the natural disaster that may ensue that will cost billions more is a good thing? Americans will be vastly better off by our continuing battle in Afghanistan (we borrowed the entire cost of this war, by the way, since we reduced taxes during this process), which will unravel and fall apart whether we leave today or in ten years…and that’s worth every penny because????? Is stupid a necessary prerequisite for federal office these days?
I’m Peter Dekom, and it is unfortunate how few members of Congress still believe in America enough to invest in America.
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