For months we have been forced by politicians in Washington to address the wrong problem at the wrong time: deficit reduction without tax hikes during a deep, deep recession, or as I like to call it the Not So Great Depression. We wasted valuable month not addressing the single most important thing that gets you out of economic difficulties: creating jobs. Sure, it was mostly the Republicans (especially the ideologues huddled under the Tea Party banner) who are to blame, but a lot of Beltway Dems and Media Elites fed into to the phony “deficit” crisis story, when the real problem facing our nation was ignored. Economists of all stripes were running around with their hair on fire telling anyone who would listen that job creation (which would increase both tax revenue and demand for goods and services) was far more important than the death match we just went through over raising the debt ceiling.
Well, we sure solved that debt ceiling issue for the time being. However, the grand debt ceiling bargain only promises more spending cuts, less stimulus, and more job losses. So it shouldn’t come as a shock that the stock markets aren’t thrilled with the result, especially in light of bad news regarding lack of growth on the labor front (per the Wall Street Journal, Murdoch Mouthpiece):
NEW YORK (Dow Jones)–Commodities, currency and equities markets were in a state of near-panic Thursday, as central banks took increasingly drastic steps to salvage the global economic recovery.
Stocks and oil prices plunged, while gold set new record highs as investors flocked to assets they hoped would hold their value if major economics slipped back into recession.
Investors already nervous about slowing growth in the U.S. and Europe were further rattled when Japan’s government launched a yen-selling campaign. Officials said the move–backed by Y10 trillion in easing measures from the central bank–was necessary to counter a sharp rise in the yen’s value, which threatens a fragile economic recovery. Switzerland’s central bank made a similar move on Wednesday.
In essence, most if not all the gains the markets made earlier in the year have been erased. Austerity is not a plan for economic recovery. All it does is artificially inflate the price of bonds, and even at that it ultimately fails. Just ask the bondholders who lost their money when Argentina defaulted on its debts. But austerity plans do a dandy job of killing good jobs:
There are two problems with the jobs recovery: Employers haven’t added enough jobs. And those they have added aren’t particularly good ones. […]
“Growth has been concentrated in mid-wage and lower-wage industries. By contrast, higher-wage industries showed weak growth and even net losses,” said Annette Bernhardt, policy co-director for the National Employment Project. She said that growth has been far more unbalanced than during previous job recoveries.
Bernhardt’s analysis of the first seven months of job growth in 2010 found that 76 percent of jobs created were in low- to mid-wage industries — those earning between $8.92 to $15 an hour, on average, well below the national average hourly wage of $22.60 in 2010.
You keep cutting spending and all you do is add to a vicious cycle. Cutting spending leads to more jobs lost in both the public and private sector, lower demand, fewer jobs created and those that are created — how shall I put this? — suck. It happened in 1937 when Roosevelt felt compelled to do a deal with the deficit hawks of his era, and it’s happening now. Luckily for the US economy (though not for the millions of people who died) the massive spending increases brought about by America’s entry into WWII more than made up for that mistake.
However, I don’t see any world war on the horizon that will provide the sort of government stimulus spending we need, much less tax increases ion the wealthy to help pay for it. No, that kind of national sacrifice is a thing of the past.
And yes, this is the Republicans plan to win the elections next year: keep the misery index high.
In fact, misery, as measured in the unofficial Misery Index that simply totals the unemployment and inflation rates, is at a 28-year high, reflective of how weak the economic recovery has been and how far there is to go. […]
That was back in June when investors in the markets were still relatively optimistic. Back before we knew government was only going to be allowed to “contract” by Congress, and Social Security, Medicare and Medicaid benefits will be put at risk by the so-called “super commission.” We already know that whatever tax increases or tax reform recommendations are proposed by the super commission the Republicans won’t agree to them. We also know the defense department and defense industry are gearing up to prevent their ox from being gored. Which leaves – guess what — cuts to Medicare among other social safety net programs, guaranteed by none other than Eric Cantor:
WASHINGTON—House Majority Leader Eric Cantor on Wednesday suggested that Republicans will continue a push to overhaul programs such as Medicare, saying in an interview that “promises have been made that frankly are not going to be kept for many” and that younger Americans will have to adjust. […]
Congress left Medicare recipients untouched directly in order to win enough Democratic votes for the debt package to become law.
But Republicans could make a new push to cut back on Medicare as the debt-reduction deal is implemented. The law initially provides for $917 billion in spending cuts over a decade, but a bipartisan committee of lawmakers must come up with by Nov. 23 a proposal to find another $1.5 trillion in deficit reduction. The panel’s members—half of whom will be Republican lawmakers—could try again to change Medicare.
Erase that “could make a new push to cut back on Medicare” above to “will.” Naturally, any such cuts will have short term and long term consequences for the economy, none of which will benefit anyone who isn’t already wealthier than God or has a guaranteed pension and health care plan when they retire (like Eric Cantor, e.g.).
Yet, we continue to hear doublespeak from our national media regarding the issue of the GOP’s failure to support or enact legislation to create jobs. Oh they cover it for a while, but trust me, come the time when the commission issues its report (or more likely doesn’t) all we will hear about is the need to cut, cut cut spending, but only certain kinds of spending: the kind that hurts most Americans while preserving the wealth and profits of corporations and the wealthy. In short, the debt ceiling bill didn’t end the Republican assault on job creation or cuts to our social safety net. It just made certain that the republicans and the media that enables them will once again generate a phony crisis to cut entitlements.
Progressives have been demanding for moths that Democrats attack Republicans at possible opportunity by shouting the question “Where are the Jobs!” the GOP promised in the mid-term elections. I haven’t seen enough of that to be honest with you. It should be the only talking point the Democrats employ from now until November 2012. We should be organizing rallies to go to Republican town halls to shout that very message: Where are the jobs?” You Republicans promised jobs? Where are they?
We better hope all the Democrats in the House and Senate up for re-election understand that placing the blame for the economic mess 99% of our country is in must be laid at the feet of the Republicans beginning yesterday. My fear, however, is that, just like 2010, Republicans will lie and lie and lie, and in the end the tail of blame for our lack of decent jobs (and possible cuts to entitlements0 will be pinned to the Democratic Donkey. And we all know what that would mean.
