I want to follow-up on my last post dealing with our economic prospects in the coming year, exacerbated by Sequestration, or mandatory across-the-board budget cuts, beginning in January, 2013.
Things to ponder:
Whatever one’s politics, the Obama administration, in its doubtless sincere efforts to stimulate the economy, may have actually done it harm by adding $4 trillion to our national debt, now over a staggering $15 trillion. Nearly a trillion was spent on bailing out the banks, largely responsible for our economic meltdown.
These increases average a trillion dollars per year since this administration has been in office, with little to show for it. In fact, our stagnant economy may well plunge again. Last month’s economic figures, while showing a 180,000 job increase, did not alter the grim unemployment fallout, which remains at 8.2 percent. With more than 5 million unemployed, we have to do much better to make this sorry mess go away.
Certainly, this present recession, perhaps a euphemism, invites comparison with the Great Depression of the 1930s. While the latter was the mother of all depressions, with unemployment reaching a 26% level, making our present crisis seem puny, it does resemble our situation in its stubbornness, despite the Roosevelt’s fervent efforts, to yield results. What most people don’t know is that unemployment had actually increased under Roosevelt when he ran for reelection in 1936. It would take a world war to purge our economic woes.
I must confess I don’t think anyone has a definitive solution to what ails us, despite the heated rhetoric in an election year. Simple answers won’t do more than sugar coat a complex problem.
What’s more, our fate in a global economy isn’t entirely within our hands.
What if Israel attacks Iran?
Or if the economic malaise in Europe has no bottom and nations like Greece, Italy, Spain and Portugal default? Like the tsunami debris from Japan now washing-up on our West coast shores, we can’t escape the tidal impact of a European collapse resulting in reduced imports of American goods.
Back to our own shores again, if automatic cuts affecting defense go into effect next year it’s estimated that a million jobs will be lost. That’s more than all the projected jobs created in the American economy this year!
It seems a given that without confidence in the private sector, which is our primary catalyst for job creation, we’re doomed to a tortoise pace in achieving remedy.
And there are yet other mitigating factors that may compromise economic recovery. Although the health care reform measure has several desirable features, it may be the wrong time for it in a down economy. A recent survey indicates many employers anticipate costs increases with its implementation, so add this to the mix. If I were an employer, I’d certainly opt for caution when it comes to hiring or expanding inventory.
To be sure, economics has rightly been called “the dismal science,” except I’d underscore “dismal,” and eliminate “science,” since that implies probability corroborated by empirical data. Again, no one has the definitive answer, so be wary of snake oil formulas in this election year.
It’s all like some devastating disease that, despite our best efforts, defies our remedies. Much as we’d like, there’s no quick fix.