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First, The Bad News

by Gene Mirabelli on August 18, 2011 · 2 comments

First the bad news—the ultra conservative Tea Party faction has effectively manipulated the Republican majority in the House of Representative. Now for the worse news—policies espoused by Republicans and Tea Party reactionaries are going to make matters worse, much worse.

Here are two ugly facts, ugly but true. One: We are in a recessionary period caused by the near collapse of our financial system. Two: financial recessions generally take a long while to resolve themselves—think five or 10 years—and employment tends to improve even more slowly than the economy. A lot of economists have pointed this out. And here’s a notable example: Harvard economist Kenneth Rogoff, along with Carmen Reinhart, published a big thick book back in 2009, This Time Is Different, surveying eight centuries of financial crises. Century after century, the story has been about the same, but each generation of fools thought their own financial recession was different.

Now Tea Party people and other reactionaries apparently don’t know this. Rogoff’s book is heavy with statistics, which may explain why no one in the Republican Party seems to have read it. On the other hand, they may understand economics, but want to make sure that things stay bad enough to assure a Republican candidate wins the next election for President.

If you haven’t been driven mad by endless shouting about the deficit, you may recall that most of the new Republican House members swept into Congress with cries of, “Jobs! Jobs! Jobs!” But after taking their oath of office, those same new congressmen and congresswomen cried, “Cut the deficit!” They cried that “the people” had sent them to Washington “to put our fiscal house in order.” No poll ever found that “the people” believed cutting the deficit was more important and creating jobs. But Republicans got their way.

Cutting the deficit does absolutely nothing for creating jobs now. On the contrary, cutting the deficit cuts jobs.

Our last-minute Budget Control Act of 2011 requires $917 billion in initial deficit reductions over 10 years, including $350 billion from the base defense budget. The slicing is spread all around for a decade, but it starts right away. Fiscal 2012 begins in less than two months, which means that agencies of government from the Pentagon to the Environmental Protection Agency are now scrambling to find where they can cut.

Here’s a gruesomely relevant page from history. In 1937, as the United States began to emerge from the Great Depression, President Roosevelt’s advisors convinced him to cut spending and balance the budget. So the government cut workers from the Works Progress Administration, and Public Works Administration projects were brought to a halt. Republicans rejoiced that the nation was putting its fiscal house in order. Manufacturing collapsed 37 percent, and from 1937 to 1938 unemployment rocketed from 14 percent to 19 percent. Consumers cut back on their spending and in response production fell even further.

In 1938 Roosevelt refunded the WPA and the PWA; the economy improved. Conservatives like to say that what really ended the U.S. depression was World War II. They’re right. The country spent massive amounts to produce guns, ships, tanks, planes, bombs and thousands of other military goods. All that government spending lifted the United States out of the Great Depression and barely four years later the nation emerged as the world’s greatest economic power—a superpower. Those who learn nothing from history are doomed to repeat it, so get ready.

Barack Hussein Obama isn’t Franklin Delano Roosevelt, and the current congress isn’t going to permit him to establish anything like the PWA or the WPA. Times aren’t that bad yet and the country has become so conservative that some historians now regard Richard Nixon as a center-left president. Obama has asked and will ask again for an extension of unemployment benefits, for continued suspension of the payroll tax, and for the creation of an infrastructure bank.

Those would be nice and might prevent things from getting worse, but unless the infrastructure bank is big and quick, these steps won’t lift us from the slough were in. Obama will also ask for swift passage of the patent streamlining bill and foreign trade agreements. Those are predicted to have benign long-term effects, but what we need is jobs right now.

It was said of the Ancien Régime in France that they had learned nothing and forgotten nothing. As for the Tea Party in the House, they haven’t forgotten they came to Washington to cut taxes, and they haven’t learned a damn thing about economics. It’s still jobs that we need. Yes, we also need a long-term plan to reduce our rate of spending. But to radically cut domestic spending now is for the nation to cut its own throat. If Republicans prevail, we’re in for a longer and harder slog than ever.

{ 2 comments }

StarBucks August 25, 2011 at 11:33 am

I agree with Gene Mirabelli. The only way for the U.S. to crawl out of this depression is to murder, torture and rape hundreds of thousands of people.

Kevin McCashion August 25, 2011 at 12:04 pm

Interesting that Mirabelli pines for the WPA and PWA as modeled on the programs of Hitler and Mussolini.