The US recovery from the recession has stalled and Congress seems not to have noticed. Maybe you noticed, because you’re one of the unemployed. If so, it’s doubtless cold comfort for you to know there are more than 13.9 million other men and women in the same dump.
Almost half the unemployed have been looking for a job for more than six
months, and about a third have been looking for work for more than a year. And if you’ve been looking for more than a year, the chances are you’ll be among the last to be hired. That’s the way it goes in today’s cruel labor market. Because so many workers are idle, employers can pick an choose and they prefer workers whose skills haven’t gotten rusty.
Meanwhile, the Republican dominated House of Representatives is calling loudly for cuts in government spending and in taxes. This is the same Republican party that took over the House a few months ago, saying that “Jobs! Jobs! Jobs!” were their top priority. It’s strange that lawmakers who say they want to provide jobs should be crying to amputate the federal budget and slash taxes. In fact, it’s bizarre, because doing that will bring not jobs but more unemployment while at the same time reducing the ability of the government to provide for the unemployed.
Municipalities and states cannot perform the kind of deficit spending carried out by the federal government. As a consequence, the recession has compelled cities and states to lay off workers – clerks, firemen, policemen, engineers, school teachers, and so forth. To immediately slash federal spending means that the US would reduce the already reduced flow of money to the already impoverished states, and at the same time fire US government workers, adding even more to the number of unemployed.
Virtually all economists agree that federal spending needs to be reduced. Republicans differ with Democrats — and differ with most economists — about when to cut spending and by how much. Republicans cry that we’ve already borrowed too much and that if we borrow even more our creditors will doubt our ability to pay what we owe. Oddly enough, that’s being said by the same political party which threatens to have the US not pay what it owes if Republicans don’t get what they want in spending cuts. According to conservatives, nations and institutions with money to loan will demand higher interest rates on what we borrow and – Wham! – we’ll be destroyed by inflation.
Actually, of course, money has rarely been cheaper to borrow. Rates are almost down to an all-time low and the US government is so highly regard that it can borrow at a measly 3 percent by promising to pay back in ten years. In other words, this is a good time for the feds to borrow.
Back in 2009 the Harvard economist Kenneth Rogoff, along with Carmen Reinhart, published This Time is Different, an interesting study covering eight centuries of “financial folly.” Eight centuries is a long time and the book is heavy with statistics, so it’s doubtful that many in the House of Representatives have read it. The book makes a crushingly forceful case that recessions caused by financial crises last much longer than other kinds of recessions. And that’s the kind of recession we have right now. Rogoff has warned repeatedly that the unemployment which began in 2009, if left to itself, will remain high for years.
Noble Prize economists, such as Paul Krugman and Joseph Stiglitz, have long recognized that unemployment would remain stubbornly high and have recommended government action to stimulate the economy and provide jobs. But that means more government borrowing and that’s precisely what Republicans oppose. They plan to slash government spending. And that has led to the astonishing statement by the Republican Speaker of the House, John Boehner: “One look at the jobs report should be enough to show the White House it’s time to get serious about cutting spending and dealing with our ailing economy.” You may find this hard to believe but it’s posted on the Speaker’s web site at speaker.gov.
Have Republicans forgotten that “Jobs! Jobs! Jobs!” got them a majority in the House? On the contrary, they remember that fact quite well. Indeed, they plan to campaign for the White House on precisely that cry for “Jobs! Jobs! Jobs!” But of course, they won’t be able to use that maneuver unless unemployment remains high. So, sad to say, Republicans have no incentive to provide a stimulus to the economy or to provide for any kind of jobs program. When Willie Sutton was asked why he robbed banks, he said, “Because that’s where the money is.” The House of Representatives is where money bills originate and Republicans have taken over the House.