Submitted by Lawrence Rafferty-Guest Blogger
Weren’t we told that if the Debt Ceiling was not raised that the Triple A credit rating of the United States would suffer? I guess the credit agencies don’t care if 1.8 Million jobs are lost in the process! “The Economic Policy Institute, a top nonpartisan think tank, estimates that the deal struck this weekend to raise the nation’s debt limit will end up costing the economy 1.8 million jobs by 2012. Today the Senate is expected to approve the package passed yesterday by the House and send it to President Obama. But while the unemployment rate remains above 9 percent, the deal does nothing to address chronic joblessness.
The agreement would reduce spending by at least $1 trillion over 10 years, but even the near-term cuts could shrink already sluggish GDP growth by 0.3% in 2012. According to EPI, the plan “not only erodes funding for public investments and safety-net spending, but also misses an important opportunity to address the lack of jobs.” In particular, the immediate spending cuts and the “failure to continue two key supports to the economy (the payroll tax holiday and emergency unemployment benefits for the long term unemployed) could lead to roughly 1.8 million fewer jobs in 2012.” Think Progress
Let me get this straight. We allegedly saved our credit rating by agreeing to slash government spending without any increase in revenues, but we put almost 2 million jobs at risk at the same time. That sounds like a perfect storm for Main Street. Even the President of the bond investment firm Pimco thinks that the debt deal will weaken the economy. “But left out of the equation thus far is what impact those sorts of cuts will have on an economy struggling to recover from the Great Recession. Mohamed El-Erian, CEO of the bond investment firm Pimco, said yesterday that the deal will weaken the already fragile economy: The potential budget agreement “does nothing to restore household and corporate confidence. So unemployment will be higher than it would have been otherwise, growth will be lower than it would be otherwise, and inequality will be worse than it would be otherwise.” […] “We have a very weak economy, so withdrawing more spending at this stage will make it even weaker,” El-Erian said.” Pimco
There are experts making the argument now that the special Congressional Committee established by this debt ceiling agreement must be used to include revenue enhancements and job creation measures in order to help the struggling economy. “The deal pending before Congress today just starts the process. The next steps, including who is appointed to the committee, are crucial in determining the consequences unleashed. While the committee is charged with finding a net decrease in the deficit of $1.5 trillion, there are better pathways to that result. The committee could find more revenue and spending cuts and include proposals that help foster job creation.
Indeed, job creation and boosting the economy should be an important litmus test for the work of the committee and progressives should hold the committee, its members, and the resulting product to that standard. If the committee’s proposal doesn’t accomplish this in its recommendations, then it’s hard to imagine how those recommendations will be any better than a stalemate that produces the automatic cuts to both domestic and defense spending—and potentially the expiration of all the Bush tax cuts.” American Progress
When will Congress actually do something to help create jobs? The Stimulus helped, but it was not enough. People need jobs increased, not increased cuts. Can jobs be saved or is it too late? Does Congress really care about everyday Americans or do the wealthy and corporate interests rule the day? I am open for suggestions!
Submitted by Lawrence Rafferty-Guest Blogger
The more comments I read from ‘real people’ about this fraud that the uber-wealthy and the tax evading multi-national corporations and war profiteers have foisted upon the American people the angrier I get, and then I am overcome with a feeling of impotence when I realize that I am unable to do anything about this. I spent almost forty years as a lawyer, a sole practitioner who bore proudly the name of street lawyer. I think back to the years when I was in university and in law school and warmed and guided by the then struggles of our people over Civil Rights for all of us not just the descendants of slave owners but for all of us. I remember our outrage as young americans over the fact that our government was carpet bombing great areas of Asia in the name of the great fiction of the time the Domino Theory of international politcs and other baldfaced lies. I like to think that though I was never in the military (though I was drafted) that I am a Viet Nam veteran also, having fought that awful war on the streets of Los Angeles and San Francisco. Over my career I represented only people most of whom were poor or close thereto. The only corporations I ever represented were vanity entities for individuals. I fought for civil rights for all of us including and perhaps most importantly those of gay people in a county that is not known for giving a rat’s ass about anything other than the accumulation of wealth. Finally I had had a enough of the bullshit (pardon my french but I dont know the english word for that) and went home to lick my wounds and listen to the birds sing. Now I am sitting here in my dotage, not quite in a rocker yet, listening to christianist politicians bash anyone who is different from them, crazy people wanting to amend the Constitution for all sorts of nefarious purposes. I listen to people tell me it is good for America to send jobs overseas to protect the economic interests of those multinationals that dont even pay taxes! I watch Obama whom I championed as our best hope for a return to our grand experiment with the Jeffersonian promise of liberty and equality for all surrender everything to the forces of mendacity that own and operate the Congress. I watch a SCOTUS that is packed with justices who beiieve fervently that our Constitution has a meaning that is unchanging and fixed as of 1789. All of us are trapped again by the bullshit (there’s that word again) we are fed by entities and interests that are at best artificial and merely legal fictions but which are very wealthy.
I apologize for the rant for using up some Professor Turley’s bandwidth to post it. Have a nice day.
Lrobby99,
Obama has brought thousands of troops home from Iraq and ended our combat missions there. Now, Afghanistan is a different matter, but he did not run for President on ending Afghanistan.
While just an Illinois state senator with little chance of advancement, Barack Obama announced his opposition to the Iraq War. That single act seperated him from Hillary Clinton and won him the 2008 nomination. Since then he has either compromised, or found ways to lose, on every issue to come along. The truth is Obama was far more ready to campaign for president than to lead the nation.
“We allegedly saved our credit rating by agreeing to slash government spending without any increase in revenues,…”
By what percent will government spending be cut? This is the first time I’ve seen the cuts characterized as “slashing” spending.
I heard El-Erian on NPR a week or two ago going on & on about how the debt needed to be controlled & implying that cuts were the only solution.
These guys come off the same as the pundits before a big election. You will notice that they will make several, often wildly different, predictions on the outcome in various places. Then, after the actual results are in they will trumpet the one closest to the results. Back when I watched The McLaughlin Group I caught Johnny doing that several times.
I know some of you here are old enough to remember when Japan was an economic super power. When they hit a small bump in the road & there was a demand for austerity the government jumped in the boat big time. They have been in the austerity boat for 2 decades now & have slow/no growth, unemployment and no end in sight.
But Krugman is a hippy to be punched for saying austerity is not the way out of this mess. I’ll be dead but my children will still be looking at double digit unemployment and wondering how America could ever have been a first world nation.
None of these equations balance:
Mitch McConnell 100% = Barack Obama 0%
John Boehner 100% = Barack Obama 0%
Tea Party 100% = Barack Obama 0%
Corporations, Billionaires, Fascists 100% = American People 0%
eniobob,
the jobs crisis caused by this debt ceiling agreement has hit home in Sen. McConnell’s state. What is good for the goose is good for the gander, isn’t it?
http://blogs.voanews.com/breaking-news/2011/08/03/us-transportation-chief-calls-for-congress-to-resolve-faa-funding-dispute/
Did somebody say something about the TSA job and expenses not being paid…hold back in the bill…was the GOP did not want to subsidize smaller airports….of course the DEMs did….all is well….
“Mike WRONA-Huff Post-Super user
5 minutes ago (2:01 PM)
McConnell screws America and gets praised. Will he arrange a Fed taxpayer bailout for KY’s unemployment crisis?:
KY Businesses Could Lose $640 Million in Federal Tax Credits (Source: Natl Fed Ind. Businesses)
———-———-———-———-———-———-———-———-
FRANKFORT, Aug. 1, 2011 – The past several years, Kentucky has borrowed about $900 million from the federal government for unemployment benefits.
It has to make a $28.5 million interest payment by Sept. 30, but officials say it’s about $20 million short.
It’s unclear whether state law allows the governor to simply take the money from Kentucky’s “rainy day fund.” Statutes say state government can’t raise unemployment taxes to make up the difference without the consent of the General Assembly.
If the state misses the deadline, Kentucky businesses could lose $640 million in federal tax credits.
NFIB/Kentucky has met with senior administration officials to craft alternatives for averting the economic damage that this situation could cause. All options for ensuring that Kentucky businesses are not crushed by the weight of a FUTA tax increase are being explored, both on the federal and state levels. NFIB/Kentucky will continue to represent the small business perspective and interests as the situation develops.
NFIB/Kentucky is following the situation closely. If you have any questions about this or any other issue affecting your small business, contact NFIB/Kentucky State Director Tom Underwood by email or call 502-223-5322.
The Rep-Cons have the gloves off and the mommy’s boys will do as they are told.”
Good Post.
Let’s not forget the building boom taking place.
Elaine and eniobob,
thanks for the links. Who will protect Main Street’s interests is the big concern.
raff:
From what I understand this deal is taking away the governments ability to put money into the economy when it so desperately needs it.
This is beyond cutting off your nose to spite your face,Its cutting off your head because you don’t like a certain tie.
“Withdrawing government spending literally “takes money out of the economy.” We have a crisis because of lack of demand. Republican solutions of giving the wealthy and corporations even more money and tax cuts obviously will not work because the rich don’t create jobs, we do. The rich are already richer than ever, with a greater share of the income and wealth than ever, and giant corporations are already sitting on tons of cash.
So with the stimulus winding down, and state and local budget cuts causing layoffs of teachers, firefighters and other government employees, Republicans are demanding even more layoffs from federal budget cuts as a “cure.” But cutting government as a prescription for creating jobs sounds a lot like their claim that cutting taxes increases revenue. The problem is a lack of demand, and budget cuts taking hundreds of billions out of the economy only makes that worse.”
http://institute.ourfuture.org/blog-entry/2011062312/debt-ceiling-deals-cuts-could-crash-economy
The winners and losers in the debt ceiling deal
When the cuts come, expect the military-industrial complex to fend off the worst. So what lobby will protect social services?
By Amy Goodman
http://www.guardian.co.uk/commentisfree/cifamerica/2011/aug/03/debt-ceiling-deal
Excerpt:
President Barack Obama touted his debt ceiling deal Tuesday, saying, “We can’t balance the budget on the backs of the very people who have borne the biggest brunt of this recession.” Yet that is what he and his coterie of Wall Street advisers have done.
In the affairs of nations, Alexander Hamilton wrote in January 1790, “loans in times of public danger, especially from foreign war, are found an indispensable resource.” It was his first report as secretary of the treasury to the new Congress of the United States. The country had borrowed to fight the revolutionary war, and Hamilton proposed a system of public debt to pay those loans.
The history of the US national debt is inexorably tied to its many wars. The resolution this week of the so-called debt ceiling crisis is no different. Not only did a compliant Congress agree to fund President George W Bush’s wars in Iraq and Afghanistan with emergency appropriations; they did so with borrowed money, raising the debt ceiling 10 times since 2001 without quibbling.
So how did the Pentagon fare in the current budget battle? It looks like it did fine. Not to be confused with the soldiers and veterans who have fought these wars.
“This year is the 50th anniversary of [Dwight] Eisenhower’s military-industrial complex speech,” William Hartung of the Centre for International Policy told me while the Senate assembled to vote on the debt ceiling bill. Speaking of the late general turned Republican US president, Hartung said: “He talked about the need for a balanced economy, for a healthy population. Essentially, he’s to the left of Barack Obama on these issues.”
Michael Hudson, president of the Institute for the Study of Long-Term Economic Trends, explained the history of the debt ceiling’s connection to war:
“It was put in in 1917 during the first world war, and the idea was to prevent President Wilson from committing even more American troops and money to war. In every country of Europe – England, France – the parliamentary control over the budget was introduced to stop ambitious kings or rulers from waging wars. So the whole purpose was to limit a government’s ability to run into debt for war, because that was the only reason that governments ran into debt.”
The Budget Control Act of 2011 assures drastic cuts to the US social safety net. Congress will appoint a committee of 12, dubbed the “Super Congress”, evenly split between Republicans and Democrats, to identify $1.2tn in cuts by Thanksgiving. If the committee fails to meet that goal, sweeping, mandatory, across-the-board cuts are mandated. Social services would get cut, but so would the Pentagon.
Or would it? The Congressional Black Caucus and the Congressional Progressive Caucus opposed the bill. Congressional Black Caucus chair Emanuel Cleaver called it “a sugarcoated Satan sandwich”. For fiscal years 2012 and 2013, the discretionary funding approved is split between “security” and “nonsecurity” categories. “Nonsecurity” categories like food programmes, housing, Medicare and Medicaid (the basis of any genuine national security) will most likely be cut. But the “security” budget will get hit equally hard, which Democrats suggest would be an incentive for Republicans to cooperate with the process.
I am still waiting for an economic explanation as to how we can starve our way to prosperity.
eniobob,
the news doesn’t look good. Is this an intentional refusal to create jobs by corporations who are sitting on 2 trillion dollars?
“The early days of the recession were characterized by massive layoffs across industries, and while economists caution that the labor market isn’t there yet, a surge of private sector layoffs in July may indicate that the American recovery is stalling out.
This week has been a worrisome one for economists who monitor the health of the U.S. economy, with mounting signs all pointing in the same direction: For the average American worker, a rebound will not be soon forthcoming. In fact, things seem to be moving in the other direction.
GDP growth is weak; new hiring is not keeping pace with populations growth, according to fresh data; and growth in manufacturing — which once lead the recovery — has practically ground to a halt. But most worrisome of all the signs, perhaps, is the return of mass layoffs.”
http://www.huffingtonpost.com/2011/08/03/layoffs-us-firms-jobs-july_n_916934.html
“When will Congress actually do something to help create jobs?”
When the corporatists Congress really works for have succeeded in turning the American job market into a third world market they can exploit to their greedy heart’s content.
“Can jobs be saved or is it too late?”
That is the question.
“Does Congress really care about everyday Americans or do the wealthy and corporate interests rule the day?”
Not a bit and for now. The wheel always turns. It’s just a matter of how many people will be crushed in the process.
Great article, Larry.