Pssst, the Economy Is Collapsing, Don't Tell Congress
The latest mutterings from Congress, especially the Republican leadership, indicate that they still don't have a clue about the seriousness of the economic downturn we are facing. They are saying that they can't have a stimulus package ready for when President Obama takes office in two weeks, and that a package probably won't be ready until well into February.
This delay is inexcusable. Remember when the Wall Street boys needed their TARP bailout in the fall? President Bush and his crew, together with the Democratic congressional leadership, with a huge chorus of media cheerleaders, all told us that the economy would collapse without immediate action. That is almost true now in the case of stimulus.
At this point, there should not be much question about the seriousness of the need for stimulus. The $8 trillion housing bubble that our economic leaders somehow could not see is in full collapse, with house prices falling at more than a 20 percent annual rate in the most recent data. The immediate impact of the collapse was to cut the housing sector in half.
More importantly, the lost housing wealth, combined with the loss of $8 trillion in stock market wealth, is causing consumption to plunge. We are going to see the largest set of bankruptcies and store closing in the retail sector ever. More than 10 percent of the workforce is employed in the retail sector. The layoffs will almost certainly top 1 million and could hit 2 million.
And, when those stores go out of business, they are not going to be sending their rent checks to shopping mall owners. The bubble in commercial real estate, which followed on the bubble in residential real estate, is also collapsing. Look for more surprised economists as hundreds of billons of bad loans on commercial properties suddenly appear on the banks' books in the next few months.
In addition, we have the cutbacks in state and local governments, all of whom are being squeezed by plunging tax revenues. Since these governments are generally forced to balance their budgets, they have no alternative to making cuts and/or raising taxes. This is exactly the worse course for the economy right now.
This is the area that Congress could most easily address right now. Both red states and blue states are subject to budget squeezes. There must be a package of aid to state and local governments that President Bush and the Democrats on right now. President Obama can always add to such a package after he takes office.
This stimulus package should have been approved two months ago, but for whatever reason no action has been taken. As a result, we are seeing painful layoffs and cutbacks in state and local governments that are completely unnecessary.
There is no justification for further delay. Congress should immediately approve whatever assistance President Bush will agree to now, there is no reason that the public should be forced to wait until mid-February for Congress to begin to take steps to ameliorate the crisis.
If there is not interest in Congress today for serious action, perhaps the loss of more than 500,000 jobs that the Labor Department will report on Friday will help to focus its attention.
Constituents need to start screaming to their representatives to "get the lead out" if we don't get a stimulus package moving in the first few days.
January 5, 2009 10:40 AM | Reply | Permalink
Screaming won't work with some of these special interest Senators.
It's only when it begins to hurt the pocket book will they listen.
We need to force consequences.
If the Red State Senators want tax cuts instead of Government stimulus. Let that be their share, and no more.
We’re all supposed to serve the greater cause, but some individuals are motivated by selfish desires.
If the tax cuts work in their region and it produces good results. Isn’t that great.
But if it is found that citizens migrate out of the region, because the tax cut plan, fails to deliver as promised, then the States with loss of citizens, not only lose Seats in Congress but they must bear the cost of the migration and the burden it places on the States having to receive the migrants.
UPDATE THE FUNDING MECHANISM, TO REAL TIME
Do not use the outdated, census formula.
The moment a person moves out of State, the cost will be charged against the State for a period of time. The loss of citizenry reflects on the State for failure to protect and serve its people. Those are consequences with teeth.
If you’re a Representative of a State, with substandard living conditions, and offer no safety net, or have no real living wages, and your citizens decide to leave for another area it will cost you.
And to those who are fortunate enough to live under a State Government that truly cares about it’s people; remember to support your LOCAL business, not the slave States.
January 5, 2009 2:00 PM | Reply | Permalink
I agree with tlees2's comment.
Really. Is there any reason why Congress cannot pass an immediate tax cut on wages? It would put money in the pockets of the middle class right now instead of having to wait for the stimulus. An easy first step.
Or are they waiting to give it in one big lump to impress us?
January 5, 2009 10:57 AM | Reply | Permalink
The biggest, fastest and most beneficial action the federal government could take (even bigger and better than wage tax cuts) would be to provide low interest (3% or 4%) interest mortgages to every American either on a new home or as a refi. That will immediately pay off the millions of bad mortgages that are waiting to explode as red ink on the books of the banks, and by reducing the monthly outlay for mortages dramatically it would serve as an immediate economic stimulus because every homeowner would have more money to spend. The government can adjust the value of the home to a realistic and accurate level as well which would help to restabilize home prices. Any difference between the old mortgage and the new that needs to be paid off can come out of TARP funds. This will cost less than the wasting of funds we've seen thus far and actually generate a profit for the government.
One has to wonder why nobody in the Obama crowd even whispers about such a thing if they are interested in truly helping the American people. The most any of the Democrats talk about is allowing some minimal help to those who are already on the brink of foreclosure which is not much help at all.
January 5, 2009 3:46 PM | Reply | Permalink
Any difference between the old mortgage and the new that needs to be paid off can come out of TARP funds.
That amount is in excess of $ one trillion which is more than the remaining tarp funds and Obama's proposed fiscal plan.
January 5, 2009 5:55 PM | Reply | Permalink
state and local governments
Whatever happened to "revenue sharing", which I thought was a pet conservative way to devolve money and hence power down to those sacred local bodies...It certainly has the virtue of getting those bucks out the door in a flash--you don't even have to write the check, just put the dough on the wire.
California, for instance, has immediate and catastrophic cash-flow problems. I'm certain everyone else except Wyoming and Alaska do as well.
January 5, 2009 11:48 AM | Reply | Permalink
Revenue sharing, which replaced various Model Cities programs in the 1970s, was eliminated in the budget negotiations of 1986. When Model Cities funding was transformed into revenue-sharing, former Congressman John Burton noted that revenue-sharing was a bad idea, as it would enable Congress to eliminate the funding more easily.
January 5, 2009 12:52 PM | Reply | Permalink
Nero fiddled while Rome burned.
I keep reading that the economic tsunami isn't over, that its going to get worse in 2009. I ahv no cinfidence in today's Democratic leadership, the Dodds, Schumers, Clintons, Bidens, etc. of the DLC that had a great hand in bringing us this economic meltdown.
If the stimulus is delayed, if its not really what is needed, then I'm sure that will be the result of Democratic cretin's maneuvers to serve their masters on Wall Street and in the Corporate Boardrooms again.
This stimulus package and the fight to get it will tell us where Obama stands; is he just another servant of the monied interests or is he really the President of the people and the disciple of Change as he claims?
January 5, 2009 12:02 PM | Reply | Permalink
Well, Biden's going to advise Obama to do what Joe's always done for domestic politics. Cater to his favorite industries: consumer banking, finance, and director-friendly business interests. After all, they're all so educated and convincing!
And after commuting to/from Wilmington, Delaware for three years, I never once saw him on the platform.
January 5, 2009 2:41 PM | Reply | Permalink
I wonder if it would be constitutional to specify that no stimulus money could be sent to the district or a representative who voted against it, or the state of a senator ditto. That would unstick the wheels in fairly short order.
January 5, 2009 3:47 PM | Reply | Permalink
When I read headlines quoting McConnell opining on the proper economic stimulus and tax cuts, I want to scream. The Republican leadership has forfeited all credibility and moral authority on economic policy. Why reporters don't laugh in his face when he offers his discredited and worthless opinions is beyond me.
January 5, 2009 7:23 PM | Reply | Permalink
Constituents need to start screaming to their representatives to "get the lead out" if we don't get a stimulus package moving in the first few days. tlees2
“We know what the time constraints are. They are dictated by the sense of urgency that the American people have about their economic well-being,” said Speaker Pelosi.
Have no fear. The People -- in their wisdom -- have spoken and their representatives have listened.
Woo-hoo!
January 5, 2009 8:34 PM | Reply | Permalink
It will be interesting to see how the Democrats handle the Republican stalling tactics.
Will Harry forego bringing a bill up because Mitch threatens a filibuster?
Will the Obama Administration be quiet in the face of Republicans throwing monkey wrenches into the gears?
What will Nancy and Steny do?
Are the Dems already caving with the $300 billion in business/middle class tax cuts as part of the stimulus? Weren't the middle class tax cuts supposed to be separate from the stimulus?
A tax cut for people 'who may be considering layoffs'??? Obama is a clairvoyant?
This is going to be fun to watch.
January 6, 2009 9:12 AM | Reply | Permalink
Many business firms regardless of its size have been affected by the impact of financial downturns. Because of this, Filene's Basement has filed for Chapter 11 protection. Filene's Basement is a surprise filing, as discount and second hand retailers are typically into the black during recessions, but it's not as bad as you'd think. They are in need of a quick payday loan, but instead of going straight into liquidation, they are being bought by Crown Acquisitions (whose CEO bears no resemblance to Steve McQueen or Pierce Brosnan) who are partnering with Chetrit Group for the sale. (Both are large real estate firms.) The basic premise will still work, as the chain specializes in selling high fashion items at a discount, so people will still get Prada without payday loans at Filene's Basement.
May 11, 2009 1:32 AM | Reply | Permalink