I continue to remain dumbfounded over what Congress is doing. Our problem, in a nutshell, is that Americans saw the financial disaster that the crash in the housing market and financial institutions have created. Americans response to this was to stop buying. Therefore, we have an economy that has plenty of supply and no demand. The purpose of a stimulus bill would be to increase demand. As President Barack Obama said last night, the purpose of the stimulus plan is to spend money. Thus, increase demand and get the economy going.
The new job numbers are out and they are awful. 598,000 jobs were lost last month alone. Over 1.5 million jobs lost in last three months. We've now had 14 straight months of job losses. 3.7 million people have lost their jobs since the start of this recession. The unemployment rate is now 7.6%. The employment rate for men 66.1% is the lowest level ever recorded. The unemployment rate for blacks is 12.6%, Hispanics -- 9.7% and for whites 6.9%. We can take these numbers and slice them and dice them and dissect them but the bottom line is it looks ugly. It looks ugly from every angle.
So, a reasonable person would expect that the Senate will look at these numbers and act quickly to increase spending in the economic stimulus plan. We would expect that our senators, knowing at least a little something about the economy and economic principles, would come to their senses and pass a spending plan to help state and local businesses and governments and more importantly to help us, the American people. But no. The Senate is one place where logic and facts cannot penetrate those cold stone walls. The package that appears to have come out of this "compromise" has over 40% of the overall spending is made up of tax cuts. Not infrastructure. Not aid to states.
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I believe the House will restore at least some of the spending once it goes through the Senate-House Committee before they vote again.
But I am glad this bill is getting a second and third look. The original was too bloated with nonsense. There should be a return on each dollar spent...rather than simply flushing good money (borrowed money) down the toilet.
There is still not enough money going towards helping Green companies get started...helping small businesses get up and running or to expand.... and creating sustainable jobs across all sectors (especially in the industries of the future... energy...technology, transportation, science, etc).
The layoffs you cite are across the board... a point I made a week ago. But the stimulus seems too narrowly focused on infrastructure projects. The bank teller, retail manager, customer service rep., auto salesperson, admin. assistant, teacher, social services worker, real estate agent, etc is not likely to be the person pouring concrete or working a jack hammer.
I know that folks are hoping that Keynesian Economics works and that the money will trickle from infrastructure projects down through the rest of the economy... but I just don't know how successful that will be...and how quickly the rest of the workforce will see the benefits. And hopefully there is enough money coming to keep people in their homes and stabilize the housing market.
There have not been that many test cases to put this into practice...(Keynesian Economics). The New Deal had mixed results...and it took a long time for things to turn around. Japan tried this as well... and had mixed results.
For unemployment to rise .4 in one month is mind boggling. That means the bottom is falling out of the economy. The fact that the number of unemployed keeps rising is not the troubling part...it's the rate. And what drives me crazy is that most of this is psychological... there is no confidence anywhere in the economy... from consumers, Wall Street traders, business leaders...politicians.... banks... and its beginning to feed on itself. The constant post-911 gloom and doom news coverage is largely to blame. This all = entertainment and ratings for CNN, MSNBC, and the rest. They are getting off on people's suffering and scaring the Country. They are hyping everything...especially the bad news.
Something has to be done quick. At this rate... I think we'll hit 10% or worse... before it turns around. The economist nerds are saying the same thing. I believe The Wall Street Journal had an article this week that mentioned 11%. I hope everyone is wrong on that...and it won't get that bad.
There has to be a bottom somewhere in this.
I believe in the tax cuts for individuals..., especially those of modest incomes...because they are likely to spend at least some of that money. But i'm not crazy about the idea of the tax breaks for businesses. Those business owners will simply pocket that money or pay down debt. There is no guarantee that they will increase payroll. In fact, the Republicans tried that before... didn't work.
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