Last week the GOP was running around like Chicken Little trying to make it appear that President Obama had said he was going to fix the economy by the Summer. Well that just wasn’t’ the case. Obama made it clear, even before he was sworn in, Obama Says Economic Recovery Will Take Time.
President-elect Barack Obama, who takes office in just over a week, warned Americans not to expect any quick solutions to their economic woes.
In a television interview on Sunday, Mr. Obama sought to dampen public expectations that his $775 billion stimulus plan, with its emphasis on infrastructure, alternative energy, health care and education, would jolt the economy out of recession.
Of course the $787 billion stimulus passed all the while we kept hearing about how it would take a while for the money to get into the system. We all learned the term “shovel ready”. And as this points out, If the stimulus hasn’t worked, then doesn’t that mean the GOP tax cuts are to blame?
Krugman likened the tax cuts in the stimulus as fat, in that it would provide little genuine nutrition to the American economy. Correct me if I am wrong: the vast majority of the spending measures in the stimulus have yet to occur, whereas the tax cut effects were immediate. Right? So when the Republicans are saying the stimulus has failed aren’t they really saying the tax cuts have failed? I feel like I am missing something because no one has really pointed that out.
Economists like Paul Krugman and Joseph Stiglitz, believed a bigger stimulus was needed. Krugman also knew the projects would take time to get going, and wanted some targeted tax cuts included in the stimulus for immediate impact. Here’s what Krugman had to say in his latest column about the ecnonomy, Boiling the Frog.
Start with economics: last winter the economy was in acute crisis, with a replay of the Great Depression seeming all too possible. And there was a fairly strong policy response in the form of the Obama stimulus plan, even if that plan wasn’t as strong as some of us thought it should have been.
At this point, however, the acute crisis has given way to a much more insidious threat. Most economic forecasters now expect gross domestic product to start growing soon, if it hasn’t already. But all the signs point to a “jobless recovery”: on average, forecasters surveyed by The Wall Street Journal believe that the unemployment rate will keep rising into next year, and that it will be as high at the end of 2010 as it is now.
Now, it’s bad enough to be jobless for a few weeks; it’s much worse being unemployed for months or years. Yet that’s exactly what will happen to millions of Americans if the average forecast is right — which means that many of the unemployed will lose their savings, their homes and more.
To head off this outcome — and remember, this isn’t what economic Cassandras are saying; it’s the forecasting consensus — we’d need to get another round of fiscal stimulus under way very soon. But neither Congress nor, alas, the Obama administration is showing any inclination to act. Now that the free fall is over, all sense of urgency seems to have vanished.
This will probably change once the reality of the jobless recovery becomes all too apparent. But by then it will be too late to avoid a slow-motion human and social disaster.
This is all a precursor so that everyone knows that what the stimulus that was passed did was make it so the economy wouldn’t go into free fall – it stopped the hemorrhaging. But it won’t stop the bleeding forever and fix the economy overall. That will take much more, including health insurance reform.
This all leads to what Harvey Kronberg wrote in his New 8 Commentary about Texas Gov. Rick Perry’s antics regarding the stimulus this past session. Could DC dollars slow Texas economic crash?
It’s true we are faring better than some other states but that is little consolation to the growing numbers of Texans who’ve lost their homes and jobs. We have already lost more than twice as many jobs as the comptroller predicted for the year and more are coming.
For politicians, this is a mixed bag. Gov. Rick Perry claims anti-Washington purity because he rejected less than half a percent of the $16 billion in stimulus dollars available to Texas government and schools.
Yet, the Obama stimulus filled a big hole in our state budget and prevented wholesale layoffs of state and public school employees. Austin is a company town with government as a major employer. Imagine what our unemployment and sales tax numbers would look like without the stimulus.
But, I doubt the governor will be sending any thank you notes to D.C. this year.
Perry enjoyed some good poll numbers in the last couple of weeks, but if the accelerating downward trajectory of our state economy continues for many more months, voters may start telling pollsters the state is heading in the wrong direction. That’s always bad news for incumbents.
But wait, we have more stimulus dollars heading to Texas for infrastructure later this year. It is debatable whether there are enough dollars to actually jump start our economy, but the new dollars will at least help mitigate the pain.
Don’t get me wrong. The growing federal debt is likely to give us heartburn in a few years, but so far it seems that Perry is the big winner with Washington spending. He gets to rail against Washington at the same time D.C. dollars are at least slowing the Texas economic crash.
In essence Perry used the stimulus for what would benefit his political campaign and the parts that wouldn’t he turned down. It had nothing to do with what was best for Texas, Texas businesses, or Texans. As we can see by this recent news item, Employers’ unemployment insurance taxes likely to rise, workforce commission chairman says.
Most Texas employers should plan for their unemployment insurance taxes to increase significantly next year, Texas Workforce Commission Chairman Tom Pauken of Dallas said Tuesday.
While tax rates won’t be set until December, Pauken said that mounting layoffs are close to exhausting a state trust fund, forcing him and two fellow commissioners recently to authorize what they expect to be $2 billion of interest-free borrowing from the federal government.
That’s just so the commission can pay Texans’ unemployment benefits into next year, when Pauken said he anticipates issuing $2 billion of bonds to repay the feds.
Of course Congressman John Carter has been a fair weather supporter of the stimulus too, Right back at it again.
So tell me: how do you (a) support a spending freeze and (b) vote against the stimulus bill that contains this funding, but then (c) turn around and claim that you supported this funding???
Apparently, it’s all in a day’s work for Rep. Carter.
It’s no surprise that the stimulus is being used by Republicans to talk out of both sides of their mouths. Most economists agree that the stimulus that was passed earlier in the year helped, but much more is needed. But no one should be fooled as to the fact that it’s going to take a while to get the economy humming again, and Obama made that clear before he took the oath of office.