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" (http://news.yahoo.com/s/nm/20100717/ts_nm/us_obama_republicans_3). 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?
Doesn't buying food help the economy? Or toliet paper? Or any other basics that people who don't have unemployment wouldn't be able to buy? Does foreclosed houses and homelessness stimulate the economy?
ReplyDeleteAnd you can't say that because unemployment is still around 10% that the stimulus hasn't worked or has had no impact. We can only say that the impact wasn't as great as hoped. We don't know what the numbers would be at if there was no stimulus. It could have hit 15% or it could have dropped to 7%. We just don't know.
Anonymous
ReplyDeleteIt can be said the Stimulus did not work because the two benchmarks were/are that unemployment would not got past 8% and we'd create 8 to 9 million jobs. Neither benchmark was met. In the business world that translate to failure.
Unemployment is 60% of ones wage for the most part. That means people are going bare bones and are not buying the same amount of food they once did, probably even cutting back on other items or buying more generic items, and definitely not buying or staying in their homes with unemployment.
It's only failure if it was achievable. The goals may have been to aggressive. That's a whole different problem. But we are unable to measure some of the benefit.
ReplyDeleteSo those purchase, even when cutback, don't stimulate the economy?
We need to stimulate the economy by having consumers spending more than they are now not spendig 40% less. The failure is using Keysian models to get us out and that is what Obama did.
ReplyDeleteHad we allowed people to keep more of their money through a tax holiday while holding spending there would have been more money going back into the economy. Mort Zuckerman even said today on CNBC that private business and consumer spending is required not more government spending.
So if I'm unemployed how much more money do I get to spend on this tax holiday if I'm not getting unemployment?
ReplyDeleteI do think that being able to collect for 2 years is far too long but can support any length with actual data to say it's right.
that shoudl be can't support any other length because I don't have data saying what is help and what creates dependence.
ReplyDeleteI do sympathize with those without a job; yet I do not wish to extend unemployment benefits indefinetly. I recognize it is tough finding a job but I draw the line when people can obtain a job then choose unemployment because it pays more. Unemployment benefits is a pool of money paid into to help transition one from job A to job B. Now if job B is less then job A and/or unemployment then so be it.
ReplyDeleteThe tax holiday window may have been shut. The tax holiday won't help the unemployed directly but it may get businesses hiring again. You don't find it alarming that the plan is tax the rich even though they represent 60% of our consumerism, how does that help anyone?