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Houston we have a problem -- unemployment exceeds 10%
Maybe if Congress spends another $787 billion in the name of job creation, we can get the unemployment rate to 11 or 12%.
We've now had two very concrete examples of "stimulus" packages that didn't work - President Bush's $160 billion effort in February 2008 and President Obama's "super-size" version a year later. Neither has made the smallest dent in unemployment.
Not only did the unemployment numbers get worse, but the hourly hours worked stayed the same. So millions of Americans will have to start becoming full-time workers first before any new bodies get hired.
The White House says that the stimulus created as many as 1 million jobs. No one doubted that this massive spending would create a few and "save" a few jobs. But every new dollar in government spending is either taxed or borrowed from the private sector, which might have put it to better use.
If the government takes $1 from Paul, who might have invested it in a new business, and gives it to Peter, who buys a new lawn mower, the government records it as a net gain for economic growth via consumption. But the economy is hardly more productive as a result.
The lesson here is for both parties. Bush's cave-in to Democrats meant there was no debate in Washington over policies that might have produced a much better stimulus earlier on in the recession. A stimulus needs to be immediate, permanent, and at the margin of the next dollar earned.
Prime example that we haven't learned our lesson is the extension of home buyer credits and the additional unemployment benefits. Most home buyers would have bought a home anyways. And most unemployed (including myself) received plenty of weeks of unemployment benefits that helped us get back on our feet as we found a new job.
The best thing people can do right now is to stop trying to ram through a health-care bill that slaps a 5.4% tax "surcharge" on anyone making more than $500,000 a year. The Joint Tax Committee says that one-third of this tax increase will be paid by small business job creators who file their taxes under the individual income tax code. With north of 10% unemployment, we shouldn't be slamming small businesses.
Once Congress gets out of the way, the job market will have a chance to recover on its own.
We've now had two very concrete examples of "stimulus" packages that didn't work - President Bush's $160 billion effort in February 2008 and President Obama's "super-size" version a year later. Neither has made the smallest dent in unemployment.
Not only did the unemployment numbers get worse, but the hourly hours worked stayed the same. So millions of Americans will have to start becoming full-time workers first before any new bodies get hired.
The White House says that the stimulus created as many as 1 million jobs. No one doubted that this massive spending would create a few and "save" a few jobs. But every new dollar in government spending is either taxed or borrowed from the private sector, which might have put it to better use.
If the government takes $1 from Paul, who might have invested it in a new business, and gives it to Peter, who buys a new lawn mower, the government records it as a net gain for economic growth via consumption. But the economy is hardly more productive as a result.
The lesson here is for both parties. Bush's cave-in to Democrats meant there was no debate in Washington over policies that might have produced a much better stimulus earlier on in the recession. A stimulus needs to be immediate, permanent, and at the margin of the next dollar earned.
Prime example that we haven't learned our lesson is the extension of home buyer credits and the additional unemployment benefits. Most home buyers would have bought a home anyways. And most unemployed (including myself) received plenty of weeks of unemployment benefits that helped us get back on our feet as we found a new job.
The best thing people can do right now is to stop trying to ram through a health-care bill that slaps a 5.4% tax "surcharge" on anyone making more than $500,000 a year. The Joint Tax Committee says that one-third of this tax increase will be paid by small business job creators who file their taxes under the individual income tax code. With north of 10% unemployment, we shouldn't be slamming small businesses.
Once Congress gets out of the way, the job market will have a chance to recover on its own.
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Are you currently employed?
~OGD~
November 7, 2009 12:22 AM | Reply | Permalink
yes
November 7, 2009 7:02 AM | Reply | Permalink
Sorry to hear it Bill. Best of luck!
Don't agree on the unemployment insurance. There are a lot more long-term unemployed this time given the depth of the recession, and I don't think those payments are holding them back from trying to find work. I have no idea whether it is useful as 'stimulus', but it does help those who need it.
As for the health reform - I'm not too enthusiastic, but for different reasons than you I guess. I would have rather seen an expansion and reform of medicaid - cheaper, simpler. But, hey, people will get coverage which is good.
Stay well.
November 7, 2009 9:16 AM | Reply | Permalink
I think you misread the question. Either that or you are sorry that I have a job?
November 7, 2009 6:26 PM | Reply | Permalink
woops, I misread. Glad to hear it.
;0)
November 9, 2009 2:06 PM | Reply | Permalink
Then stop your damn worrying...
And get back to actually being productive.
~OGD~
November 9, 2009 12:01 PM | Reply | Permalink
I am being very productive.
Just because I have a job doesn't mean that I shouldn't be worried about the economy. I went through an unemployed stint last year so know what it feels like.
I'm not really sure what your point is. You blog about lots of topics on here.
November 9, 2009 12:10 PM | Reply | Permalink
Bill Ferrin, trolling on TPM does not qualify as a job.
November 14, 2009 1:43 AM | Reply | Permalink
I do not consider posting about unemployment and how we should fix it as "trolling". Nor did I ever say that posting comments here is my day job. It is not. Clearly nobody is paying me to participate on TPM.
November 14, 2009 10:04 AM | Reply | Permalink
Just as people who crunch numbers for a living predicted at the beginning of the year. And who have also predicted to continue through the first half of next year before it starts easing. This was a gift on the national Christmas tree in December of 2008. The objective observers recognized it for the chunk of coal it was.
November 7, 2009 6:17 AM | Reply | Permalink
Employment is, and has been long recognized as, a trailing indicator in recessions. Economic activity has picked up substantially in the last quarter in multiple sectors. Hours worked have increased. Economic output has increased. A significant B-2-B client of mine tells me that while they were looking, last year, at cancellations happening left and right, they are writing bids and quotes at a fast pace this year.
Will you be as quick to give credit when hiring picks up in a few months?
Somehow, from both the tone and nature of your posting history, I doubt it. You are a chronic naysayer, and I suspect you will go to any length to avoid such a thing.
November 7, 2009 9:44 AM | Reply | Permalink
Hiring will not pick up in a few months. Take a read of this http://www.investorsinsight.com/blogs/thoughts_from_the_frontline/archive/2009/09/25/welcome-to-the-new-normal.aspx
November 7, 2009 6:38 PM | Reply | Permalink
Um, excuse me bill, but when you weren't looking the Repubs and Bush passed the largest tax cut for the wealthy (and your supposed "small business owners") in my lifetime during the last Administration. This happened immediately BEFORE we sunk into this Great Recession. We see how great that worked, eh? What's your next plan? Maybe pass some cake all around?
Take your Reaganomics and your trickle down bullshit someplace else. It ain't working here.
November 14, 2009 7:28 AM | Reply | Permalink