Will it be a double dip recession or another great depression? There are reasons to be concerned. Just look at the new folks who are heading to Washington, D.C. They have absolutely no grasp of how to govern and no idea about how to manage an economy. Then, look around the world and see even more reasons to worry. Great Britain is launching an austerity program that will shrink government and add to that country’s economic misery. This is the first time since the 1980s that this country and Great Britain will have conservatives in control of their legislative bodies at the same time. To make matters worse, the European Union is planning to investigate and control spending and borrowing of each member country. In short, a large part of the free world is heading toward economic catastrophe that will come about by imposing austerity programs. If you own stocks or mutual funds, you have every right to be scared to death.
This country still has a stubbornly high unemployment rate that hovers around 9.5%. That figure does not include those who have given up their job searches, those who are underemployed in part time or low wage jobs, or those who have been forced into pre-mature retirement. While there have been several steps taken to restore economic stability, it takes time for them to work. There is no magic bullet that can be used to address long-term economic problems in just 19 months, but apparently, voters thought that President Obama and the Democrats should have corrected mistakes of the previous administration in less than two years.
Voters must have thought that the Democrats had not done enough because they voted to send 60 new Republicans to Washington to join the Republicans who caused the problems in the first place. Voters must have thought that Democrats could overturn past Republican mistakes and make things all better in short order. Like mothers who kiss their children’s booboos, to “make them all better,” Republicans have given us false hopes of turning this economy around, on a dime, without job creating stimulus spending, without regulations of the irresponsible Wall Street corporations that ran wild without them. Those are the same firms that needed a government bailout to save them from bankruptcy and to prevent an economic monetary crisis. The TARP program may have been the one thing that the Bush administration did right.
Without intervention by the Obama administration and the Democrats in the House and Senate, hundreds of thousands of more jobs would have been lost. The Democrats saved jobs in the auto industry, in education, and in police and fire protection departments across this country. Without their intervention, the economic recovery would have been a non-starter. The Republican answer is to give more tax breaks to rich corporate executives who make millions of dollars a year and to ignore the needs of average Americans who have seen their homes lost to foreclosure and their jobs disappear to China and elsewhere outside of the United States. Republicans want to continue to give tax breaks to companies that send their manufacturing jobs out of this country.
The simple fact is that businesses do not hire until they are certain that they can sell more products or services in order to generate revenues and profits. In deep recessions, such as the one inherited by the new President, Barack Obama, and the Democratic Congress, the only spender that can generate economic activity is the federal government. That spending need not be wasteful such as building a “bridge to nowhere”. It can and should be used to upgrade the nation’s infrastructure, to build a renewable energy economy, to provide the means for upgrading education, for helping more students to go to college, to put people to work, to put money in their purses and billfolds. The stimulus plan has worked to slow and reverse job losses and to create new and meaningful work but we still need more of the same.
The administration has done a poor job of telling its story and of educating the public about what it has done to stop the bleeding. Obama has not bragged about the gains made under his leadership. He has not driven the facts home to the American voters. As a former professor, he should be our educator-in-chief. He is certainly capable of that, but has not made an adequate effort to shine the light on his accomplishments. He should have been, and must become, more forceful in telling the country what he and the Democrats have done for us. He needs to fight for his programs and think less about compromising with people whose only goal is to see him fail.
If the Republicans are able to control the agenda for the next two years, it will not be Obama or the Democrats in Congress who are at fault when the next recession or depression hits this country. The blame will belong on the backs of the neo-conservatives who have fought against every legislative advance that has been made in the last 19th months. The party of "hell no" is now in charge; now you can put the blame on John Boehner who will be the next Speaker of the House of Representatives, and his Republicans allies in the congress.
Let’s not forget the Supreme Court which ruled that corporations could donate unlimited funds to political campaigns. Thanks to that ruling, our airwaves were polluted with lies, distortions, and exaggerations that painted Democratic candidates as incompetents and tied to those people who were demonized as “hateful, evil leaders, Harry Reid, Nancy Pelosi, and our President Barack Obama. All were held up to public scorn. Republican campaign organizations painted our President as not an American. Shouldn’t we all be insulted by campaigns that participate in the “politics of personal destruction”? Yes we should! Let’s just say “hell no” to those who try to demonize our Democratic leaders who have worked so hard for our benefit.
Tuesday, March 29, 2011
Austerity programs are causing riots
Today, TV news carried videos of riots in Great Britain. Students were protesting cuts in spending for education and huge increases in college tuitions. The British austerity program brought those riots on. The United Kingdom plans to cut 490,000 government employees and expect to lose an equal number of jobs in the private sector. Government jobs will be cut by 19 percent and defense spending will be cut by 8%. These are the deepest cuts for the U.K. since World War II. Ireland has planned the toughest budget in that country’s history. Irish banks have been bailed out and a carbon tax has been imposed. Public employees will get a 5% pay cut. Child benefits will be cut by about 10% and Social welfare programs will be cut.
If you have watched television you know that when France was in the process of raising the retirement age from 60 to 62 there were widespread riots and strikes in protest. We might not think that a small increase like that would warrant that type of reaction. This observer thought that the French reaction was far too extreme. After all, Social Security retirement age in this country is between 65 and 67 years of age. However, if there are no private retirement programs in France and workers are forced to stay on the job for an extra two years, the work force will grow and that will leave less room for new employees. This increase could well drive up the French unemployment rate. On the tax side, those with the highest incomes will see a 1% tax increase.
Most of us probably witnessed riots in Greece on TV when that country announced its austerity program. Greece was facing a debt crisis when it took steps to correct its budget imbalances. Like France, Greece increased the retirement age by just over two years to just over 63. Greece has frozen public sector wages and pensions. Greece, like many other European countries, has a value added tax. Their plan calls for increasing that tax from 19% to 23%. The VAT is a regressive tax that hurts low and middle income families inversely to their incomes. In short, a very low wage family must pay the same sales tax as the rich but it takes a much larger percentage of their incomes because they make so much less.
I predict that making these huge budget cuts will lead to a far more difficult recovery from, or a recurrence of, economic recessions. In deep economic downturns, governments must to spend in deficit in order to restore economic health. The world went through a very deep depression that started with the stock market crash of 1929. It took over a decade and years of deficit spending during WWII to pull this country out of the mire. The recovery started in the 1930s when the government started public works programs, building roads, bridges, schools etc. Unemployment during the 1930s was in the mid twenties. The recovery worked until the President decided to try to get the budget under control. That led to a new recession in an already weak economy.
You can read more information at the following websites. Some data for this blog was borrowed from each of them. The opinion is mine.
http://www.bbc.co.uk/news/10162176
http://zfacts.com/p/318.html
http://www.huppi.com/kangaroo/Timeline.htm
If you have watched television you know that when France was in the process of raising the retirement age from 60 to 62 there were widespread riots and strikes in protest. We might not think that a small increase like that would warrant that type of reaction. This observer thought that the French reaction was far too extreme. After all, Social Security retirement age in this country is between 65 and 67 years of age. However, if there are no private retirement programs in France and workers are forced to stay on the job for an extra two years, the work force will grow and that will leave less room for new employees. This increase could well drive up the French unemployment rate. On the tax side, those with the highest incomes will see a 1% tax increase.
Most of us probably witnessed riots in Greece on TV when that country announced its austerity program. Greece was facing a debt crisis when it took steps to correct its budget imbalances. Like France, Greece increased the retirement age by just over two years to just over 63. Greece has frozen public sector wages and pensions. Greece, like many other European countries, has a value added tax. Their plan calls for increasing that tax from 19% to 23%. The VAT is a regressive tax that hurts low and middle income families inversely to their incomes. In short, a very low wage family must pay the same sales tax as the rich but it takes a much larger percentage of their incomes because they make so much less.
I predict that making these huge budget cuts will lead to a far more difficult recovery from, or a recurrence of, economic recessions. In deep economic downturns, governments must to spend in deficit in order to restore economic health. The world went through a very deep depression that started with the stock market crash of 1929. It took over a decade and years of deficit spending during WWII to pull this country out of the mire. The recovery started in the 1930s when the government started public works programs, building roads, bridges, schools etc. Unemployment during the 1930s was in the mid twenties. The recovery worked until the President decided to try to get the budget under control. That led to a new recession in an already weak economy.
You can read more information at the following websites. Some data for this blog was borrowed from each of them. The opinion is mine.
http://www.bbc.co.uk/news/10162176
http://zfacts.com/p/318.html
http://www.huppi.com/kangaroo/Timeline.htm
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