Monday, July 19, 2010

Unemployment Benefit Extension: Stimulus or Increase debt

President Obama took a mini-vacation over the weekend will be holding a Rose Garden press conference this morning to berate Republicans for their filibustering of unemployment extended benefits. During Obama's weekly internet address he stated, "Too often, the Republican leadership in the United States Senate chooses to filibuster our recovery and obstruct our progress. And that has very real consequences" ( President Obama fails to realize that prior to Sen. Kennedy's death the Democrats had 60 votes to overcome any filibuster Republicans attempted in the Senate. That power in the Senate allowed Obama and Democrats used that power to pass $862 billion stimulus plan last year that was suppose to keep unemployment below 8% and create 8 to 9 million jobs. As we all know unemployment has topped 10% and still hovers around 10%. Now, if one believes the government numbers the Stimulus saved or crated 2.3 million jobs since passing stimulus.

Speaker Pelosi, and was echoed by MSNBC Pundits, are stating that extending unemployment benefits will stimulate the economy. Really? People, on average, are paid just enough money to make the bills. How is just making the bills stimulating the economy? Republicans are right in blocking the extension of unemployment benefits as it does not stimulate the economy. What about President's pledge of "Pay as you Go". It is not the Republicans are against the unemployed; rather they are holding Obama to his own motto. Many economists are stating that the recovery is stalling out.

The Star Tribune ran an article from the New York Times, The Rich are Cutting Back, Stalling Economy's Recovery, on July 17th. Mark Zandi, chief economist for Moody's Analytics stated in the article, "One of the reasons that the recovery has lost momentum is that high-end consumers have become more jittery and more cautious." To which the article hints that additional stimulus may be required. During the last session of the Minnesota Legislature an additional tax on the richest Minnesotans was floated and a similar tax hike is being floating around Washington D.C. and perhaps this is the real reason why the rich are jittery about spending more money.

Motoko Rich, who authored the above article, stated that the top 5 percent income earners represent 60 percent of the country's economic activity. That being said does it make sense to take more money away from the top 5 percent? The CBO warned late last year that the United States is on a collision course as debt ratio is on a trajectory that will put the United States in the league of Greece. So let Obama slam Republicans in the Rose Garden today as the Republicans are just holding Obama to his own words; "Pay as you Go". Still unsure how extending unemployment benefits will stimulate the economy as I doubt people are using those checks to buy a home, a car, a new TV or going on vacation; rather isn't the money being used to keep the lights on, the roof over their heads, and food on the table?