What’s it take to fix the economy?

Posted on August 4th, 2010 by admin

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Stimulus spending did not create the new jobs as promised, but it did add nearly a trillion dollars to the country’s deepening deficit. Other efforts to reduce unemployment have been spectacularly unsuccessful. The only significant drop in the numbers came from the government hiring of temporary workers to conduct the census. What will change this situation and get Americans working again?

Some politicians are calling this the “Summer of Recovery;” however there is little evidence to suggest this is true. Unemployment hovers at 9.5% and with under-employment (those who have given up looking or have part-time jobs when they want to work full-time) the rate is actually closer to 17%. New private sector jobs are not opening as hoped. And, when positions become available, they are often at pay levels lower than what was previously paid for similar work.

The government continues to spend, with or without approved budgets. The rationale of the proponents of this policy is that spending has saved jobs and averted a deeper recession or possibility a depression. Extending unemployment benefits does not take the place of job creation, but the government can’t create jobs in the private sector. And the actions taken to date have not fostered an atmosphere for business to start hiring, again.

Yes, larger companies have money in reserve, but economic and political uncertainty causes them to play their cards close to the vest. No one has the confidence to aggressively invest in a murky future. Smaller firms, usually the job engine in an economic recovery, are having difficulty borrowing money in order to build their businesses. The cost of health care and the possibility of the tax cuts being repealed at the end of the year are just two reasons why they are reluctant to hire.

Consumers are not rushing to stores, the housing market is on life support and the stock market is bumping along at about where it was at the beginning of the year. Inflation is low, but so is the interest rate on savings accounts. No wonder confidence is low.

The public seems to think that deficit reduction is the right solution. A June Wall Street Journal/NBC News survey reported that 63% of the respondents said, “The President and Congress should worry about keeping the deficit down, even if it means the economy will take longer to recover.” This suggests no more spending until there’s a plan to pay down the deficit. What a concept!

More stimulus spending would result in higher taxes as would cap and trade and the many of the other bills currently bouncing around Congress. In fact, 61% of those surveyed by Rasmussen believe health care costs will increase and 56% would like to see this legislation repealed. Yet the politicians can’t seem to help themselves. They are likely to continue their spending spree right up to election day. Then it will be your turn to let them know how you feel about what they have been doing to the economy.