Obama's economic train on a one-way, dead-end track
Edmund Jenks | June 30, 2010 at 08:37 amby
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We are nearing the second quarter of 2010, ending 17 months of a disastrous economic policy that has not delivered jobs and has increased government debt to one-trillion dollars, four times larger than at anytime in our history as a country.
The $787 Billion dollar (revised upward to $865 Billion dollars), stimulus spending package has not delivered on its promise to hold unemployment down to only 8% (currently hovering around 10%) and the "shovel ready" projects that local and state governments had in the wings and were often cited as to where the money would be spent only amounted to about 10% of the spending. Most of the spending has been absorbed by the extensive network of bureaucracies that paid for studies performed by people who were already employed in education and research organizations ... organizations that do not add to the Gross Domestic Product of goods and services that grow an economy and build an economy.
The recognition of the one-way government spending track that dead-ends when the money runs out - because printing money without the goods & services to back up the amount of dollars flowing in the economy, devalues the economy and leads to inflation - even has liberal observers at Mainstream Media outlets (MSM) up in arms in frustration.
This excerpted and edited from the New York Times -
Wrong Track Distress
By BOB HERBERT, Op-Ed Columnist, New York Times - Published: June 28, 2010
It’s getting harder and harder for most Americans, looking honestly at the state of the nation, to see the glass as half full. And that’s why the public opinion polls contain nothing but bad news for Barack Obama and the Democrats.
Mr. Obama and the Democrats have wasted the once-in-a-lifetime opportunity handed to them in the 2008 election. They did not focus on jobs, jobs, jobs as their primary mission, and they did not call on Americans to join in a bold national effort (which would have required a great deal of shared sacrifice) to solve a wide range of very serious problems, from our over-reliance on fossil fuels to the sorry state of public education to the need to rebuild the nation’s rotting infrastructure.
Mr. Obama had campaigned on the mantra of change, and that would have been the kind of change that working people could have gotten behind. But it never happened. Job creation was the trump card in the hand held by Mr. Obama and the Democrats, but they never played it. And now we’re paying a fearful price.
Fifteen million Americans are unemployed, according to the official count, which wildly understates the reality. Assuming no future economic setbacks and job creation at a rate of 200,000 or so a month, it would take more than a decade to get us back to where we were when the Great Recession began in December 2007. But we’re nowhere near that kind of sustained job growth. Last month, a measly 41,000 private-sector jobs were created.
We are in deep, deep gumbo.
The Obama administration feels it should get a great deal of credit for its economic stimulus efforts, its health care initiative, its financial reform legislation, its vastly increased aid to education and so forth. And maybe if we were grading papers, there would be a fair number of decent marks to be handed out.
There is a widespread feeling that only the rich and well-placed can count on Washington’s help, and that toxic sentiment is spreading like the oil stain in the gulf, with ominous implications for President Obama and his party. It’s in this atmosphere that support for the president and his agenda is sinking like a stone.
Employment is the No. 1 issue for most ordinary Americans. Their anxiety on this front only grows as they watch teachers, firefighters and police officers lining up to walk the unemployment plank as state and local governments wrestle with horrendous budget deficits.
By nearly 2 to 1, respondents to the most recent New York Times/CBS News poll believed the United States is on the wrong track. Despite the yelping and destructive machinations of the deficit hawks, employment and the economy are by far the public’s biggest concern. Mr. Obama is paying dearly for his tin ear on this topic. Fifty-four percent of respondents believed he does not have a clear plan for creating jobs. Only 45 percent approved of his overall handling of the economy, compared with 48 percent who disapproved.
It’s not too late for the president to turn things around, but there is no indication that he has any plan or strategy for doing it. And the political environment right now, with confidence in the administration waning and budgetary fears unnecessarily heightened by the deficit hawks, is not good.
It would take an extraordinary exercise in leadership to rally the country behind a full-bore jobs-creation campaign — nothing short of large-scale nation-building on the home front. Maybe that’s impossible in the current environment. But that’s what the country needs.
These words above were written by an op-ed opinion columnist for the New York Times who has always been a champion of progressive politics and liberal causes and happens to be African-American ... a tough, but honest assessment.
But the track analogy does not end there ...
This excerpted and edited from the Los Angeles Times -
With federal stimulus funds running out, economic worries grow
Much of the $787-billion stimulus [adjusted up to $865-billion] has been spent, creating jobs and extending jobless benefits. But with lawmakers reluctant to approve more funding, concerns are rising about staving off another recession.
By Alana Semuels, Los Angeles Times - June 30, 2010
With home sales sliding, employers reluctant to hire and world stock markets gyrating wildly, the U.S. economy is in danger of stalling. Now one of its only reliable sources of fuel is running out: federal stimulus spending.
Jitters about a global slowdown pounded world markets Tuesday after an index forecasting Chinese economic activity was revised downward and Greek workers walked off the job to protest government budget cuts. In the U.S., the Dow Jones industrial average plunged 268 points on news from the Conference Board that consumer confidence fell in June after three straight months of gains.
Economists worry that the weak labor market will spook U.S. consumers, whose spending fuels the economy. Dwindling federal stimulus funds are only heightening those fears.
The American Recovery and Reinvestment Act has been contentious since Congress approved it in February 2009 to aid an economy mired in a deep recession. Republicans have been particularly critical of the program and its price tag.
But seventeen months later, those stimulus jobs, along with temporary government positions created for the 2010 census, are among the few bright spots in a dismal employment market. The nation's unemployment rate is 9.7% and companies have shown little willingness to hire. Private-sector employers added just 41,000 jobs in May, out of a total of 431,000 jobs created.
The government has few levers left to pull to produce quick growth. Interest rates are already at rock-bottom levels. Concerns about swelling U.S. deficits have many on Capitol Hill opposed to the idea of another stimulus. That has some economists worried.
"There's an uncomfortably high probability that we slip back into recession," said Mark Zandi, chief economist of Moody's Analytics. "If we slip back, there's no policy response. We won't have the resources to respond."
To be sure, there are still thousands of ongoing stimulus projects and billions of dollars to be spent. The Obama administration is calling this "Recovery Summer" and will spotlight dozens of stimulus projects in the coming weeks. But many important programs are losing funding.
Efforts to extend those provisions are stalled in Congress. The National Employment Law Project estimates that 1.63 million workers will exhaust their benefits by the end of this week, and at least 140,000 workers will lose COBRA coverage.
In California, which has the nation's third-highest unemployment rate at 12.4%, the Employment Development Department estimates that 205,000 unemployed workers will not receive further benefits without congressional action. About 2 million Californians are unemployed; nearly half of them have been out of work for 27 weeks or more.
"There's nothing out there," said Jennifer Tilt, a 52-year-old resident of Bloomington, a town in San Bernardino County, whose unemployment benefits will expire soon. Tilt, who has a bachelor's degree, said she's applied for jobs at fast-food restaurants to no avail. She's dependent on her two grown children and her mother's Social Security check to pay the bills.
"The human impact of requiring us to find another $1.8 billion in spending cuts to replace federal funding that was designed to help states avoid deep cuts … is both cruel and counterproductive," Gov. Arnold Schwarzenegger wrote to the state congressional delegation earlier this month.
Republicans say extending benefits and other provisions of the stimulus bill will add to the country's trillion-dollar deficit. "Here's another idea Democrats should consider, one that Americans have been proposing loudly and clearly: Stop spending money you don't have," Republican leader Mitch McConnell of Kentucky said last week on the Senate floor.
But Democrats — and some economists — say that spending money now to create jobs and fund unemployment benefits is the only way to stave off another recession.
"What worries me the most is this idea that austerity is going to be helpful," said Michael Reich, a professor of economics at UC Berkeley, who said that ending unemployment benefits could drive more people to file for disability and hamper long-term growth. "When you make an economy shrink, it makes it harder to pay back debt in the future."
The nation's construction industry provides a window into the tough choices facing lawmakers. Federal tax credits have helped drive home sales while stimulus spending on infrastructure has put laborers back to work. Such subsidies are unsustainable in the long run. But when to pull the plug?
New-home sales dropped 33% in May as home-buyer tax credits ended. Construction employment declined in 25 states that same month, according to the Associated General Contractors of America.
Stop Spending, Stop Spending, Stop Spending money that does not exist.
It is time to implement what worked after the disastrous economy handed to us by the 39th presidency of Jimmy Carter. It is time to kill off the experiment of social engineering that caused this recession in the first place with the creation of sub-prime junk mortgages instigated through the quasi governmental organizations of Fannie Mae and Freddie Mac, cut taxed and regulation requirements imposed by the government which restrict businesses ability to invest and grow the goods and services they produce to meet the needs of our consumer-based economy. It is time to re-embrace American Exceptional-ism!
It is time to visualize becoming a winning team once again, here in Carter's Second Term.
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