I see all the usual suspects, Republicans named Boehner and Cantor, Blue Dog Democrats who are actually Republicans in drag, and my favorite Knee Pad Media Pod People, are all clutching pearls and wringing hands over President Obama's plan to prop up the American economy with over $800 billion in spending.
As I see the situation, there are really only two choices.
Yesterday General Electric reported earnings down 34% from a year ago. For months we have been hearing about sales of car maufacturers, from Toyota to General Motors, down 25% to 50% over a year ago. Virtually all of the financial industry would not exist right now if it had not been for the big TARP bailout package.
The U.S. is now averaging 600,000 new unemployed workers per month….an incredible number, really. Bankruptcy and foreclosure numbers are astronomical. 55% of the houses actually selling are from sheriff and foreclosure sales. Predictions moving forward are not encouraging….
"…expect gross domestic product to decline at an annualized rate of at least 5% in the fourth quarter, the biggest drop in a quarter-century." Link
We know what has caused all this to happen. Recklessness mixed with criminality in the mortgage market during the 00's, leaving us with too many houses for too few buyers. A national economy addicted to instant gratification and enabled by an endless array of easy credit fixes. A government-gone-wild approach to taxes which insisted on cutting taxes even if it meant borrowing the money to do so!
Two choices now. Our leaders can choose to do nothing. They can. Government can follow the dictates of Blue Dog and Republican dogma and not inject any new spending into the economy. Let that great, marvelous and infallible 'free market' hand work it's god-ordained magic. Let the credit crunch, foreclosure, and unemployment chips fall where they may, and when the smoke clears, we'll start over. 20% plus unemployment, a rolling back of home ownership to Depression era numbers, a permanent reduction in wages…..may all come to pass, but hey, the market will have solved the problem. Just as both sides stood still and let the collapse happen, so too now, both sides can stand still and let the problem correct itself.
Or…
Our leaders can choose to do something. Government can attempt to soften the fall of this crash by propping up spending. Propping up demand. Redistributing tax monies in order to fill the demand void left by a population with little confidence, fewer jobs and less income.
Former Labor Secretary, Robert Reich…
"In my judgment, this will require a stimulus of about 6 and a half percent of gross domestic product, or a total of some $900 billion, spread over two years. That’s my estimate for the shortfall in private demand."
Those in the government-shouldn't-spend-any-more-money camp point to the higher national debt payments such spending would produce and conclude that such a course is unsustainable and, therefore, shouldn't be followed. While this camp has an argument worth listening to…..the inevitable conclusion of such logic would be for the government to do nothing.
So which should it be? Should the government spend more money it does not have attempting to prevent a national economic collapse…or should the government not do anything at all?
Does President Obama make a convincing argument in this morning's weekly address…..
…or not?
