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More Stimulus Badly Needed to Create Jobs
This is the worst Labor Day for American labor in decades, maybe since the Great Depression. Unemployment is at 9.5 percent (as of July), and if we add in the people involuntarily working part time or who have given up looking for work, we get 16.5 percent of the labor force. This means that unemployment plus underemployment has risen by about 14.6 million people since the recession began.
How bad does it have to get before the Congress (and the President) decide that we need another stimulus to get this economy moving? The collapse of home sales in July to the slowest pace on record was a reminder that the market for housing is likely to be depressed for years to come. Home prices have another 15 percent to fall, to get back to pre-bubble trend levels. Add that gloom to the labor market, and no wonder consumer spending has been weak in this recovery.
You know things are bad when the Chairman of the Federal Reserve - trying to calm the markets, as he attempted last week -- makes a speech to his fellow central bankers assuring the world that the Fed has more tools in its toolbox of monetary policies if things get more desperate.
But compared to the elected branches of our government, the Fed has done a lot to counteract this recession. It can and should do more - such as raising its targeted rate of inflation -- but right now we need Congress and the president to act.
Fears of a double-dip recession, which is a real possibility, are only part of the story. If the economy limps along at the growth of the last quarter - 1.6 percent - or less, and therefore job creation does not keep up with the growth of the labor force, it will still feel like a recession to most Americans. Even people who are employed will be reluctant to spend because of job insecurity. And businesses will hold back on investment; business investment (not including inventories) is still down 15 percent from its pre-recession peak. The technical definition of recession will not matter, except to the National Bureau of Economic Research. Employment is what matters.
Republicans have successfully promoted the idea that we already tried a stimulus and it didn't help. There are few, if any, economists who would agree. The non-partisan Congressional Budget Office estimates that between 1.4 and 3.3 million more people were employed by mid-2010, because of the stimulus.
The problem is that there is no stimulus any more, as state and local spending cuts outweigh what little impact remains of federal stimulus on growth. The results of these local budget cuts can be tragic, as on July 20 in San Diego, when a two-year-old child died after a response from emergency medical services was delayed because of fire department cutbacks.
What is the argument against another stimulus? Simply that it will add to our national debt. But what is another few percentage points of debt compared to leaving millions of Americans unemployed, indefinitely, and the risk of a downward spiral that could sink the economy even further? It is better to err on the side of caution - and yes, the side of caution is avoiding the more serious risks.
A national grass-roots non-profit group called Jobs with Justice is organizing a nationwide effort on September 15 to pressure Congress to act. It makes sense to me. Maybe voters should make it a "litmus test" for every Congressional candidate in November: no new stimulus, no vote. If they don't care enough about our jobs to make a simple commitment like this, they don't deserve to have a job either.
- Posted in
40 Comments so far
Show AllBut compared to the elected branches of our government, the Fed has done a lot to counteract this recession.
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The Fed has permanently destroyed the economy.
It handed out at least $23 trillion to the Wall Street Casino bankers who have since hoarded, gambled or lent it back to the government to fund our wars of empire.
That money is purposely being kept out of the real economy causing it to wither and die.
The mandate of the Fed is to fight inflation and ensure full employment.
The end result of their efforts will be hyper-inflation and full unemployment.
Bernanke is a criminal and you Mr. Weisbrot must be living on some other planet.
You can't keep borrowing money from other countries for programs that don't work. It's like calling for more Bush tax cuts when the first one didn't work. This article could have been written by Grover Norquist.
I am from Spain, and i don't know this Grover Norquist. It seems the best way to increase employment is to use government funds to issue contracts to companies which in turn will hire people. An alternative is to issue tax credits for companies and individuals which carry out certain investments.
One are where this seems to be useful is the construction of renewable energy power units. Thus there could be a serious effort to build more wind mills, and to install a very well built power distribution system, which takes the electricity from windy areas to the areas where people live.
Other approaches could involve construction of hydroelectric plants, and also tidal energy plants. And they could encourage the construction of plants which use geothermal energy. All of these can reduce energy imports, and create work which is highly paid.
I am not sure about other alternatives, because the USA is so large, but they could also try building more public transportation networks, which are so rare in the USA.
Some good ideas there. Especially the tidal energy.
"One are where this seems to be useful is the construction of renewable energy power units. Thus there could be a serious effort to build more wind mills, and to install a very well built power distribution system, which takes the electricity from windy areas to the areas where people live."
I was under the impression (by all reports)this did not work well in Spain. That companies had taken advantage of the program and that it also cost jobs?
I like your ideas but in the USA, the costs for public transportation and the renewable energy projects are not known. In some ways, they cost less and in some ways more. Trying to convince people to raise taxes on the wealthy to pay for public transportation and subsidized renewable energy projects is like trying to teach a 4th grader quantum physics.
Responsible borrowing, deficit spending, is appropriate when used for projects which will yield a return to pay back the amount borrowed plus the interest. The USG used deficit spending to fund the Pentagons/spy agencies which is either blown up or subject to graft and corruption, neither of which will result in a return to pay back the amount borrowed which is never even taken into consideration by the USG because the way its is, without accountability, facilitates the graft and corruption.
I am confused about your mention of Grover Norquist. He is the last person in the country who would recommend that Washington do more. He wants to cut the federal government to the bone.
I mentioned Grover simply because the stimulus bill passed last year is more on tax cuts. Why would we need a stimulus bill to make Washington do more? I don't understand. All I see is more borrow, tax, and spend. What's the difference between tax and spend liberals and borrow and spend conservatives?
You want to see stimulus cut me a check and i will be out stimulating
the heck out of things.
capitalism is failing as surely as communism did, its time to get over it
and move on. You can not base an economy on war..
SUPPORT THE EMPIRE SEND YOU NEIGHBORS KIDS..
The author states the current congressional mindset: "What is the argument against another stimulus? Simply that it will add to our national debt."
What a bogus argument!!!
Our government didn't hesitate for a minute to spend over three trillion (that's three million million dollars) on our imbroglio in the Middle East, but can't seem to find a way to help its own citizens who are out of work, losing their homes, and on the verge of bankruptcy.
President Eisenhower's dire warning about the MIC has come true in spades!!! We have become once again a "warring nation" AT ALL COSTS!!!
Even worse, our Congress (half of whom are millionaires) is completely ignoring the desperate financial plight of many citizens while it refuses to require that the very wealthy pay their fair share of taxes. They insist on calling it a "tax increase" for the wealthy! What's wrong with this picture?????
Congress DESPERATELY needs a "make-over," i.e., DON'T VOTE FOR ANY MEMBER WHO DOESN'T SEE THE NEED FOR IMMEDIATE ASSISTANCE TO OUR CITIZENS WHO, THROUGH NO FAULT OF THEIR OWN, ARE LOSING ALL THAT THEY'VE WORKD FOR!!!
America is BROKEN! Only WE can FIX IT! It will never fix itself! The next vote you cast at the polls may be the most important one of your life.
Those opposed to a jobs stimulus don't want it because it is something that will work and for which their be a return on the amount borrowed to pay it back. Without the FDR programs from the 30's deflation would have resulted now which the PREDATORY CAPITALIST WELFARE KINGS want to happen so they can buy up the country's assets at bargain prices, even more of a bargain than exists now.The Wall St.bailout is indeed a failure and if I were a Wall St. CEO I would grant myself a huge bonus. In fact I think it was designed to fail so the failure could be assigned to President ObambyaBush and he fell for it, or is complicit, because it was engineered by Paulson, Bush hurriedly with the sky is falling hysteria. Then the question of campaign contributions, bribery, come into account. Without the New Deal the mess we have now would be worse.
"Republicans have successfully promoted the idea that we already tried a stimulus and it didn't help."
Thats because for once they are telling the truth. And as for the bromide that "we just didn't spend enough", thats a fairy tale for children.
In deference to folks that believe that spending more would create jobs or that the money would go to our citizens...simply follow the money trail from the last stimulus. If you do that, then call for more spending to help our "citizens" with a straight face if you can. Unless you classify Goldman Sach's as a "citizen"
Not all of the money that flowed out of Washington went to Wall Street. The money that went to the states allowed them to keep teachers on the payroll.
Republicans would say that the stimulus did not work if the unemployment rate dropped to 3%.
True as far as it goes. But if you l;ook more closely, you'll find that a bit of that money for "teachers" was indeed banked by the states. And when that money runs out...what then? Subsidizing jobs is not stimulating the economy in my view, It simply postpones the need to solve the problem.
"Republicans would say that the stimulus did not work if the unemployment rate dropped to 3%."
The republican "stimulus" didn't work either. Aside from which, Obama and the democrats may be keeping the country in the ditch, but it WAS the republicans who put us here. So the "Italian Salute" to them.
"So the "Italian Salute" to them."
LOL
An appropriate salute though, don't you think? :)
With both arms.
That was GREAT! Thanks!
Mighty,
Appropriate indeed!!!
It reminds of when President Bush said that it was nice to see some folks waving with all five fingers to greet him as his motorcade made its way from the (Stanfield) airport to the city of Halifax, Nova Scotia..... Note how he emphasized "some folks" and certainly not all folks...lol
I had not heard that. What a picture! Thank you so much, I needed that! Some of the narrow minded bigots that post here lead me to despair, then you, or SR, Cygnus, Peggyfor peace, Sheepherder, or someone with a brain makes a comment and it charges me up!
My thanks...again!
I actually stopped writing any detailed comments to this site some time ago....Usually by the time I read the articles any opinion I would wish to share had already been articulated by one or more of the comment participants here at CD....Most times the comments I do make are structured in such a way as to encourage others to continue to present ideas which challenge this relatively newly minted American citizen to think outside of my personal comfort zone.....I have said this many times...We are blessed with many excellent thinkers here at CD...
I believe in the absolute necessity of good government..The role of the peoples representative should be the most honorable (and honored) position in the land...call me naive if you like but I still believe that honor and decency in public life is still possible..Yes I believe it is possible here in these United States of America. We have our work cut out and it is going to be one hell of a ride....
Take Care
Thomas Gilbert
Your analysis is incomplete.
The stimulus was only marginally effective because it's just one element of necessary comprehensive economic reform.
If our manufacturing base was not spread out all over the world those stimulus dollars would've stayed at home and have a multiplier effect.
If profits were shared with workers instead of siphoned up to top managers and board members those stimulus dollars would be pumped back into the economy and again increased their multiplier effect.
If the tax structure did not allow for millionaires to avoid paying their fair share those stimulus dollars would help balance the deficit, lower the debt and could be used for critically needed, economically stimulating infrastructure.
Stimulus can be very effective.
However, the economy needs to be structured progressively for full benefit. Currently, it is not.
Not to mention the overwhelming amount of the stimulus came from the Federal Reserve, $23 trillion.
All of this loot was given to banks, casinos, mortgage companies and governments overseas. None of this money was given to citizens in need.
Obama's bailout package, by comparison was a paltry, one-time shot of $800 billion.
About 40% of this was wasted on worthless tax cuts based on erroneous supply side economics.
The remaining 60% of which perhaps 2/3 has been spent has provided a weak but temporary bandage to our hemorrhaging economy. Its positive effects are already deteriorating.
So out of nearly $24 trillion in stimulus perhaps $400 billion to date has been allocated directly to the citizens.
Piddly amounts of stimulus in an economy rigged to reward millionaires and punish working-class citizens better explains why the situation has continued to worsen.
"Piddly amounts of stimulus in an economy rigged to reward millionaires and punish working-class citizens better explains why the situation has continued to worsen."
Well stated!
"If our manufacturing base was not spread out all over the world those stimulus dollars would've stayed at home and have a multiplier effect."
And this is the crux of the matter, if Obama had restored the protections of laws (Glass Stegall, etc), regulations and oversight...had revised our tax and trade policies, we would be on the way to recovery.
No one has ever in history been able to spend themselves out of a recession or depression bu goverrnment spending in peace time, not ever...the goofs!
"If profits were shared with workers instead of siphoned up to top managers and board members those stimulus dollars would be pumped back into the economy and again increased their multiplier effect."
Absolutely spot on. If workers and shareholders were paid their fair share, money would be circulating instead of gathjering dust in a few folks pockets.
"Absolutely spot on. If workers and shareholders were paid their fair share, money would be circulating instead of gathering dust in a few folks pockets."
Mighty,
Good point...
"No one has ever in history been able to spend themselves out of a recession or depression bu government spending in peace time, not ever...the goofs...
Well certainly not in this global race to the bottom world...Money goes to the rich guys who invest it outside of the country.... As many said here before...The whole damn structure has to change......
Thomas
"If our manufacturing base was not spread out all over the world those stimulus dollars would've stayed at home and have a multiplier effect."
Cygnus,
Exactly...Without a large domestic manufacturing base what is there to stimulate?....
"If the tax structure did not allow for millionaires to avoid paying their fair share..."
Very good point.
Further stimulus would further stimulate an economy that is structurally kleptocratic - the biggest thieves rise to the top and structure things so more of all wealth continues to be stolen and shoveled to the kleptocrats at the top.
Without restructuring, further stimulus only postpones the inevitable day of restructuring.
Weisbrot should focus on the restructuring that is needed - income cap, wealth cap, guaranteed wage, universal health care, wages for housework, END THE WAR BUDGET, etc.
AND: Further stimulus would further stimulate an economy that is quite literally killing us all by destabilizing the living planet we are all still part of.
Without massive redirection of economic activity to harmonize our human systems with the Earth's living systems, further stimulus only feeds the death machine.
Weisbrot should focus on the redirection that is needed - END FOSSIL FUELS, invest in and subsidize local and regional economies rather than globalization, etc etc etc...
WEBWALK: Great post.
Yes, the housing bubble! When it broke the value of everyone's portfolio crashed. But, the banks got bailed out!
The borrowers of money must pay back the banks as if nothing has happened.
Something's not fair here.
As the tax base dwindles; fees are going up for public and mandatory services.
All petroleum based products are near the same price as when gas was at $4 dollars a gallon.
It's the workers who pay the price for Wall St. gamblers who privatize profit and then socialize their losses!
the gulf of mexico is not an aberration...
it is a bellwether, an omen...
we must rethink what constitutes daily existence before daily existence escapes us...
we are not facing a dying economy, we are facing a dying planet due to our economy...
we must take back the land, and learn to live locally, among our neighbors...
we have allowed ourselves to be driven down the wrong road...
we must take the wheel, and get back on the right road...the road of individual engagement, rather than societal dependence...sharing the nearby lands, rather than owning miniscule pieces of the living world...
Global Start Date: September 22, 2012...
"I can't believe the things I used to make myself believe."
- Bedhead
For the most economically honest and historically valid take on the current U.S. economy, amble on over to counterpunch.org and read, respectively, the Paul Craig Roberts entitled Death by Globalism and the Michael Donnelly piece entitled Some Fight Back (actually a review of a new book by Joe Bageant).
Both the DLC Dim and GOP economists deny the horrific effects of the "free trade" regime on our real economy and its inability to "recover" without a new false asset bubble of some kind. Contemporary U.S. economics and agricultural sector structure have eliminated any survival fall-back position for the teeming millions eliminated from the industrial and post-industrial workforce. If the economy and/or government truly collapse, those tens of millions will have no way to feed themselves. This means that in that event there will either be chaos or a brutal Police State with concentration camps for the "economically un-viable" that we used to call the blue-collar working-class and welfare-dependent under-class. The Tea Party Libertarians and corporatist Republican fascists rejoice at this prospect and Glenn Beck has cried crocodile tears about the economic fact that "there will be suffering" as they "restore" America.
As far as I can see we aint going to "stimulate" our way out of this mess for several reasons. For the last 30 years we have been shipping jobs overseas. First it was the low paying manufacturing jobs, then it was IT, now it's lawyers, tax prepares, etc. The Amerikan corporate slogan now is "Anything that CAN be done remotely cheaper, WILL be done remotely cheaper.
Now thanks to all this pressure from outsourcing, wages in this country have not kept up with inflation. This little "inconvenient" problem was gotten around by easy credit, and by average Joe six pack cashing out home equity from the inflated value of his home to keep the whole economic house of cards going. Well folks that party is officially over.
Now we find ourselves with a large portion of our jobs outsourced, the ones that remain in general pay squat, and people either cant get credit, or don't want it, and so cant buy crap to get the consumer economy restarted.
So how the f*** are you going to "stimulate" your way out of this mess? Seriously how? In my personal situation my former employer finished the complete outsourcing of the IT area I worked in, at the same time Obama was stimulating his little heart out. (and I am quite sure my former company was not the only one doing this).
And you know what big companies are doing with the profits they've been hoarding? Are they using these profits to hire more Americans? No they are using them for acquisitions of other companies. And you know what happens during acquisitions? Redundancies are looked for, then eliminated via layoffs. Look for those in 2011, and 2012.
Serious fundamental changes need to be made in this country to turn things around. Laws need to be written to force companies to bring jobs back to this country, and act in ways that are good for the long term economy, not just for short term profits. And guess what folks that aint gonna happen, because our two corporately run parties aint going to let it happen.
Stimuluses now will only "stimulate" the economy while they are being applied, once they stop their effect on the economy will stop. There will be no lasting effect because of the poor underlying conditions.
We are looking at the end of the Amerikan empire. It's going down, and aint coming back. It simply can't. It is too corrupt, and its citizens too bamboozled by corporate think tank propaganda to even know what they should do in their OWN BEST INTEREST!
As bad as the democrats are as a party, and they are bad, the republicans are worse. So we bounce back and forth from one party of corporate interests, to a totally insane party of corporate interests. I hear that there is a good change that the insane party may be running the show after the next election. Do you think they are going to do ANYTHING rational to turn this country around? NO WAY!
I can tell you exactly what they are going to do, because it is all they ever do. They will cut taxes further for the rich and the corporations. They will "deregulate" further allowing companies to screw the average American even further. Then they will get their "think tanks" to convince Americans that the only way out of this is to cut social programs, which will just drive the country further into the ground.
As far as the middle and lower classes in this country go. they are finished, done for. They aint coming back because they have no one to represent their interests in a meaningful way.
That's all folks...
Tom
While much of what you say is true (and you forgot to mention the foreign workers they are bring in via H1 and other programs....
"As far as the middle and lower classes in this country go. they are finished, done for. They aint coming back because they have no one to represent their interests in a meaningful way."
I believe this is wrong. The Middle Class is quite pissed off and have no intention of taking it anymore. They voted Bush out, not Obama in and he is already out. They are replacing our Congressional warriors with others come November.
Watch the democrats run for cover if I'm right. All of a suddeen it will be "Who? Not me!)voted for that Health Care plan and stimulus. And they aren't going to accept the Boniers and McConnels back either. And if the Middle Classs does well, the lower classes will do better.
They really have had a bellyful. If I'm right, you'll know in November.
Different.
Different.
Different stimulus. It does make a difference on what the government spends money.
It's not like the government has not spent or -- particularly! -- given away a lot of money. That may stimulate something somewhere, but stimulus to a US economy will tend to be spending at home, and spending that stimulates it well will tend to be spending to create something that people need or provide services that people need.
Also, money trickles down poorly. The "stimulus" that as been done so far has been almost exclusively to prime the economy (or, let's face it, to pretend to) by priming the pockets of wealthy gamblers and killers. The problem with a bad economy is that food and housing and education and transport cease to be supplied. The stimulus should pay for food and housing and education and transport -- appropriate transport and connectivity and appropriate energy.
This is not the same as handouts to rich psychopaths.
So? we stop forign aide, UN payments and the Wars-R-Us MIC, and we have plenty of money,, Give everybody legal and illegal alike a million, one time and stop!
Next year we take the money and setup free health care, SSI retirment only for all, means test all other handouts.
The next year quit means testing, and just give the money to whoever asks for it 10% interest.
We have all the money we need we just use it wrong.
>^^<
Metal writes:
"Contemporary U.S. economics and agricultural sector structure have eliminated any survival fall-back position for the teeming millions eliminated from the industrial and post-industrial workforce. If the economy and/or government truly collapse, those tens of millions will have no way to feed themselves."
So true, and one of the major differences between the Great Depression and our current debacle. Back then a far higher proportion of the population was rural and could look out for their own subsistence, including through neighbor bartering.
As for the "stimulus bill," where I live it is being used to hire big contracting firms to build expensive road and storm sewer projects that as best I can tell were NOT needed (but for which plans had been drawn up long before the passage of the stimulus bill. Hmmm.)! No question that much of the stimulus payout has been politicized. And big, politically connected construction firms do NOT hire locals. (I actually do favor Keynesian stimulus programs---in theory! In practice under the current stimulus bill, there is favoritism and boondoggling (and those stupid tax breaks included in the bill that provide almost no stimulus at all).
Oh, and by the way, there will be no "recovery" given existing political conditions, which are now utterly corrupted. People who worry about a W-shaped recession ought to be more worried about an L-shaped recession that will produce a "new normal." We need an American Gorbachev. What we got with our vote for "Hope" and "Change" was a political Yeltsin (without the booze). (And wasn't Larry Summers deeply involved in THAT disastrous financial restructuring, complete with overnight billionaires and a drastic reduction in the standard of living for millions, as is now happening here?)
-30-
So the few stimulus bills we've had so far have stimulated the rich and just maybe tickled the poor, who would want another one?
As with Fran Korten's '10 Ways to Solve the Jobs Problem', this article doesn't mention the biggest contributor(s) to job losses: "globalization" and "free trade". The loss of our productive jobs, even professional ones, has been to other countries where the labor is cheaper*. Those jobs won't come back unless we, corpoREAL citizens do something about it (if we can). They (multinational corporations, and now, even more egregious, our own state governments) do it (off-shore), and we (consumers/citizens) buy, and accept, it. Formerly, the government was there to protect us from this condition (disease), but now all bets are off. "Our" pro-globalization government now represents corpoRATE interests over those of corpoREAL citizens. We corpoREAL citizens are partly to blame because we go along with, or even celebrate it ("save money. live better!"). We blithely accept corporate rule, while we vehemently resist governmental governance.
*with all of its attendant causes and results, like slavery, no social taxes (i.e. benefits), child labor, corporate despotism, pollution, etc.
"I owe my soul to the Company Store." - from the song "Sixteen Tons"