Business & Economics

Why Washington should pay attention to the economy here and now

Robert Reich

After a week of non-stop Osama Bin Laden, Washington is now returning to the battle of the budget deficit and debt ceiling.

All over Capitol Hill Republicans and Democrats are debating spending caps and automatic triggers, and whether to begin them before or after Election Day.

But if you don’t mind my asking, what about the economy? I’m not talking about the economy five or ten years from now, when projections show the federal budget wildly out of control or when foreigners might start dumping dollars.

I’m talking about the here and now economy – the one Americans are living in day to day.

The Labor Department reported today that unemployment for April was 9 percent, up from 8.8 percent in March. And that doesn’t people working part-time who’d rather have full-time jobs.

Yes, 244,000 jobs were added in March — but that’s chicken feed. We’d need 350,000 a month, every month for the next three years, simply to get back to where we were before the Great Recession.

And the percent of working-age Americans actually working – 64.2 percent – hasn’t improved. It’s almost as low as it was in the depths of the recession. 13.7 million people remain out of work.

Hello Washington?

Even for Americans with jobs, wages are going nowhere. Basically, the only employers hiring are paying peanuts. McDonalds just announced it would start hiring big time.

In fact, there’s reason to worry we’re heading back toward recession. The Labor Department also reports new claims for unemployment insurance soared to 474,000 last week.

In the first quarter of this year the U.S. economy slowed to a crawl — a measly 1.8 percent annualized growth — down from over 3 percent last fall. Higher gas and food prices are putting even more squeeze on American households.

And housing prices continue to drop.

Washington is fighting over how much to cut spending over the next ten or twelve years.

But right now we need more public spending to get people back to work, stronger safety nets to help those who have lost their jobs or can’t find new ones, lower payroll taxes on average workers, and a requirement that Wall Street banks renegotiate mortgage loans so Americans can keep their homes.

Why isn’t Washington paying attention to what most Americans need in the here-and-now economy?

Because the White House and congressional Democrats don’t dare admit how bad the economy continues to be for so many people. They’re holding their breath, hoping the recovery catches fire next year before Election Day.

Republicans don’t dare admit how bad the economy is because they don’t want to increase public spending or strengthen safety nets. And their patrons on Wall Street don’t want to modify mortgages. Republicans would rather Americans believe their big lie that taming the deficit will create jobs and restore the economy.

So Washington would rather fight over the long-term budget, spending caps, taxes, and trigger mechanisms than do something about the pain most Americans are experiencing today.

But the here-and-now economy the most important thing on Americans’ minds.

Ironically, Washington’s disregard for what’s happening right now is also worsening the long-term budget problem. That problem is not the debt per se; it’s the ratio of debt to the overall economy. If the economy sputters or continues to grow at a snail’s pace, that ratio becomes worse and worse.

In other words, attending to the here-and-now economy is also good for the future.

Earth to Washington: Listen to America.

Cross-posted from Robert Reich’s blog.

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Comments to "Why Washington should pay attention to the economy here and now":
    • Tom Hickey

      Mr. Reich,
      Has anyone in congress ever asked how many U.S. Military bases are over sea’s? I’m curious how much per year the Fed. Deficit could be paid if the U.S. closed 85% of those bases oversea’s. And end both wars in Afghanistan and Iraq.

      Also for health care… I wonder how many hospitals if mandated by congress to become not-for-profit, would it save people in the long term instead of this miracle cure for our health industry. A 15 Trillion dollor deficit will soon be upon us at the rate our congress is going.
      I believe our people are supposed to be in control of congress. But it seems to me that we are now being oppressed by a dictatorship government.
      There is no Democracy in the United States anymore. Do you have any thoughts on these comments….?

      We’re going down for the final count in just a few more months if this government keeps moving in the fight to tax us supposed americans more than we are now….

      [Report abuse]

    • Anthony St. John

      Maybe we should temporarily resort to the Oliver Cromwell method of legislative attention getting, disband Congress for awhile until politicians want to do more than just stay in office.

      Of course Obama’s job title would have to change to President Protector until politicians are dedicated once again to serving We The People instead being indentured servants to special interests.

      [Report abuse]

    • Roger

      Could it be that their stuck in a delusional world of their own wealth and political ideologies not to see past the doors of the capital buildings. American aspiration’s have been eroded by war I wish they would inspire equality by closing tax loop holes so the rich and corporations pay more but maybe I’m just as delusional as them for thinking they will do anything that will bring on the changes that we need for progress in America.

      [Report abuse]

    • Anthony St. John

      Robert, the fact is that short-term thinking is the Achilles Heel of the human race and our brains just haven’t evolved far enough beyond basic jungle survival to deal seriously with the long-term future yet.

      Our politicians certainly prove that, but then we keep allowing them to get away with it so the political party leaders rule us in favor of whichever special interests pay them the most, and We The People haven’t been special interests for far too long.

      Our Founding Fathers were as far as politicians ever evolved in our Democracy, and since then politicians have reverted to acting like their chimpanzee ancestors.

      [Report abuse]

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