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