Polls show that the American Majority is much more concerned about jobs than deficits. So why is DC talking only about deficits instead of jobs, when jobs are the medicine for deficits? And why is DC only talking about budget cuts as a path to fixing the deficits, when the deficits were caused by tax cuts and lack of jobs? In fact most of the “deficit cures” being discussed in DC don’t make the deficit better, they make deficits worse because they kill jobs.
Stimulus Ends And Job Growth Ends, Too
Now that the stimulus is running out, so is any sign of a jobs recovery. The stimulus stopped the economic freefall that was occurring under the prior administration, and restored at least some job growth. It worked, but it was not big enough. Much of it was wasted on tax cuts that leave behind only debt, and it is running out. At the same time, state and local government cutbacks are working against any current economic rebound. For the longer term, badly-needed restructuring of trade deals, development of a national industrial policy and removal of the plutocratic tax and regulatory changes that led to intense concentration of wealth have not occurred, keeping the economy from moving forward. See for yourself in the following chart:
Follow the timeline on this chart:
- First, the Bush freefall,
- then the effect of the stimulus spending,
- then the stimulus winds down,
- combined with state & local budget cutbacks.
Until needed changes are made the economy remains mired in the failed Reagan/Bush/Bush plutocratic, everything-to-the-top structure and cannot sustain itself without stimulus. The worst thing that could happen now is federal budget cutbacks on top of the state and local government cutbacks. Pulling that much out of the economy, laying off all those government employees, and ceasing to invest in the infrastructure and education that make us competitive in the world would be a tragic mistake.
Jobs In The News
Stimulus winding down, state and local governments cutting back, trade deficit increasing again… Which brings us to to this week’s economic news. Reuters: Private sector job growth slumps in May,
The ADP report showed private employers added a scant 38,000 jobs last month, falling from a downwardly revised 177,000 in April and well short of expectations for 175,000. It was the lowest level since September 2010.
… A separate report showed the number of planned layoffs at U.S. firms rose modestly in May with the government and non-profit sectors making up a large portion of the cuts.
… The housing market, meanwhile, continued to struggle as a report from an industry group showed applications for U.S. home mortgages fell last week, pulled lower by a decline in refinancing demand.
The pace of growth in the manufacturing sector tumbled in May, slackening more than expected to its slowest since September 2009, according to an industry report released on Wednesday.
… New orders fell to 51.0 from 61.7 in April, the lowest since June 2009. The index for prices paid fell to 76.5 from 85.5, below expectations of 82.0.
This chart from Business Insider shows what the Standard & Poor’s Case-Shiller Index looks like on a graph chart: bad. National home prices are back to their 2002 levels, according to the index data released May 31.
. . . Moreover, consumer confidence unexpectedly declined in May to its lowest level in six months due to the lackluster job market and declining home values.
Austerity Cuts Jobs
But DC is not only not talking about jobs, they are talking about austerity — cutting the very things that create jobs. History and the experience of other countries as they struggle to crawl out of the economic collapse has shown again and again that government investment in infrastructure and education and scientific research and manufacturing are the path to recovery. England, Greece and others trying austerity are falling back into recession. Meanwhile China is investing hundreds of billion in high-speed rail and other infrastructure. Germany is investing in manufacturing. Others are investing billions more in infrastructure. All are pursuing green energy sources.
Mired in austerity ideology we are doing none of these. For example, on a PBS NewsHour discussion of the House vote rejecting a “clean” debt-ceiling bill Tuesday, Rep. Peter Roskam said,
…any raising of the debt ceiling has to be preconditioned upon cuts that drive towards a real economic recovery and long-term growth and prosperity and job creation.
Rep. Roskam actually claimed that cutting the things that have proven to drive growth and job creation will drive growth and job creation.
Austerity Can’t Cut Deficits
The other day I wrote about calculations that shows that cutting budgets does not cut deficits. From See WHY Austerity Can’t Reduce The Deficit, (click through to see the calculations that prove austerity can’t reduce deficits),
Austerity — cutting government benefits and services — is not the path to fixing deficits. In fact, economists warn that trying to fix a sluggish economy by cutting government spending will just make things worse. Worse yet, this approach can have damaging effects that last into the future. This can be easily shown with simple calculations.
Jobs First In Democracy
In a democracy jobs would be the first topic of discussion and the only toipic until plenty of good-paying jobs are available. But in a plutocracy — government by the wealthy — jobs for regular people would be of little concern. Which are we seeing here?
The American Majority clearly, absolutely, firmly and primarily want jobs as government’s — our — first priority (click through to see the polling), while our leaders are talking about doing things that cut jobs and cut the thing that We, the People do for each other.
The solution to the huge post-collapse jump in deficits is to restore the jobs. Restoring good-paying jobs starts to restore the tax base and stops the emergency spending on the unemployed. The increased demand as people find work and paychecks revives retail and manufacturing. Housing recovery, for example, depends on more jobs. With more jobs and better pay. Unemployment is high and wages are low, so many people just can’t afford to buy — or keep — a house.
Just cutting people out of the economy doesn’t fix the problem, it shifts the problem and eventually will kill the economy.
Jobs First In Election
One thing is for sure: jobs will be the first concern of voters in the coming 2012 elections. And Republicans understand that making things worse now helps Republicans later. The question is why aren’t Democrats and the President focusing on making things better now to help themselves and all of us later?
Dave Johnson (Redwood City, CA) is a Fellow at Campaign for America's Future, writing about American manufacturing, trade and economic/industrial policy. He is also a Senior Fellow with Renew California. Dave has more than 20 years of technology industry experience including positions as CEO and VP of marketing. His earlier career included technical positions, including video game design at Atari and Imagic. And he was a pioneer in design and development of productivity and educational applications of personal computers. More recently he helped co-found a company developing desktop systems to validate carbon trading in the US.
"The world is a rigged game"
Matt Taibbi at Rolling Stone: “Word has leaked out that the London-based firm ICAP, the world’s largest broker of interest-rate swaps, is being investigated by American authorities for behavior that sounds eerily reminiscent of the Libor mess. Regulators are looking into whether or not a small group of brokers at ICAP may have worked with up to 15 of the world’s largest banks to manipulate ISDAfix, a benchmark number used around the world to calculate the prices of interest-rate swaps.”
On winning and values
So, right-wingers, you want a society where families are stable, where everybody looks like you and shares your Christian faith, and where the government pretty much stays out of your business? It’s not in some Randian fantasy, it’s right here in the USA.
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