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Debt ceiling-deficit bill may cost 323K jobs, not rooted in economics

by rescuetruth on August 3rd, 2011

In another showdown between Democrats and Republicans, the country is left with a decision that met the political and ideological goals of a minority of individuals, but makes little economic sense.  While it is reassuring that Americans were generally disgusted by the behavior of members of Congress, one can only be so hopeful that it was for the right reasons, at least from an economic standpoint.  In the end, the debt ceiling-deficit deal does nothing to create jobs or correct the growing infrastructure deficit, and may end up hurting GDP growth and worsening unemployment.

According to John S. Irons at the Economic Policy Institute, the deal will likely reduce GDP by 0.3 percent, and cost the country 323,000 jobs.  The EPI article also included GDP and jobs projections for President Obama’s payroll tax holiday, and the extended unemployment insurance package.  If the payroll tax holiday and unemployment insurance provisions are not extended, the EPI estimates that GDP could shrink $241 billion (1.5 percent), along with the loss of almost two million jobs.1

Just a few days ago, the Bureau of Economic Analysis released a report showing a 1.3 percent increase in real gross domestic product in Q2 of 2011.  Some of the gains in Q2 from increased investment, slowing imports, and increased government spending were offset by a significant slowdown in consumer spending.  Unfortunately, the report also included revised estimates that put growth at only 0.4 percent in Q1, down from 1.9 percent.  In addition, the annual revision to GDP said the following:

Today, BEA also released the 2011 annual revision of the national economic accounts. The general economic picture from 2007 to 2010 was not significantly changed. However, the revised estimates show a sharper cyclical contraction in GDP during 2008 and the first half of 2009. Over the six quarters of the contraction, the cumulative decrease in GDP was 5.1 percent, compared with 4.1 percent in the previous estimates.

Although I supported a clean debt ceiling increase and cited statements by credit rating agencies like S&P and Moody’s, Americans should not forget the significant mistakes made with regard to AIG and Lehman Brothers.  Just prior to the collapse of AIG and Lehman Brothers, Moody’s, S&P, and Fitch maintained an A or higher rating for both companies.  In short, members of Congress should consider the overall ramifications of a credit downgrade, but any debt-deficit deal should not be geared toward the satisfaction of the credit rating agencies, but instead, what makes economic sense for the majority of Americans and the country as a whole.

From the start, President Obama stressed a “balanced approach” to this deal that included a combination of spending cuts and revenue increases.  In the end, despite overwhelming public support for both spending cuts and tax increases, the Budget Control Act was completely unbalanced boasting 100 percent spending cuts.  In case anyone was wondering, the “savings” did not come from wasteful defense spending, agriculture subsidies, or tax loopholes.  The cuts stemmed from the elimination of subsidized education loans for graduate and professional students.

The feeble economic growth and lack of jobs will undoubtedly weigh upon President Obama’s chances for reelection.  With the majority of Republican voters unwilling to give Obama an inch, unconvinced Independents, and disillusioned Democrats, Obama’s chances are looking a bit grimmer.  Most importantly, the most recent debacle in Washington, D.C. shows that Republicans in Congress are willing to take the country to the brink of economic destruction to achieve specific ideological goals.  If that is the case, how can Americans expect to see real action from President Obama and the 112th Congress, outside of tax cuts for the wealthy and more austerity?

Notes

  1. The EPI projections are based on multipliers from Zandi, the CBO analysis of the August 1 Budget Control Act of 2011, CBO economic projections, and analyses from the Joint Committee on Taxation (2010).
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  • http://profiles.google.com/ridereye Rider I

    How the US has historically used mineral rushes to get it out of Deficits and stop foreign economic take over.

    In the US’s historical past the Druids have used and impressed upon the US leadership to use mineral resources to stop economic warfare, along with military take over. Some simple examples of the economic warfare strategy of mineral rushes to spread the US out and create US wealth to get us out of a Deficit situation are Fort Sumter. Where a long time Druid camp had made noticeable their secret chambers ability to gain wealth from the area via mass pys do name cognition. Alaska was before or after Fort Sumter but was done by the US government the same way to help US citizens create tons and spread out the wealth in the US. Along with get us out of a deficit during that time. The reason for both of these was because Russia at the time was planning to invade the Area’s and take them from US. In which we had to do something to stop them from doing that. Along with that during the Cold War the US used production mineral rushes to keep our production and manufacturing here in the US. Which allowed companies to have down the road access to minerals which was much cheaper than the Soviet Empire almost monopoly on the worlds resources.

    Today we see a similar problem. The Communist Chinese MSS have used their militarized economy. Where they do such military things as fund terrorist and genocidal dictators to get cheap resources to keep their economy at the top of the surplus and everyone else who will not do such military acts as funding the atrocities do not get to compete internationally with very noncompetitive prices. We have seen many companies complain in the US how they can;’t get access to resources in the US for a competitive overhead. Nor can they get them from US private enterprises. So they just off shore to Communist China. Which I have cited on this website many articles that state that is what the SASAC wished to do. Which was create a resource monopoly bind so everyone had to just offshore to their country. Leaving the world without jobs and the Communist Chinese with the monopoly on rare earth resources.

    Along those lines, we have seen the militarized economy of the Communist Chinese use their MSS agents at a mass quantity to constantly use lobbying and IP espionage activities. So the US believes it is a good idea to allow them to take our resource national security issues from us. Even though they have been known to cheat, kill and bribe to maintain a monopoly for theirs. Therefore, we can see how the Russian’s who I do not have access to their activities at that time can be analogized to the Communist Chinese. As they both had a similar idea of using the mass to enslave to a single party then use very noncompetitive non individual liberty prices to take the US’s business from them so as to weaken our economy and force closure of bases, along with intelligence agencies and create a necessary need to allow the Communist Single Fascist party to come in and control the US’s economy via their resource monopoly.

    As such, as we have done historically the way out of the deficit and the way to stay competitive in the world market is to start a resource rush. However, unlike gold which is not as expensive as some rare earth resources. We need to create a resource supply that is not necessarily gold but a gold mine. Like we did during Fort Sumter, Alaska and various areas during the cold war. This then could be done via a simple strategy. The strategy could be to allow three mine permits per state. Which could be for rare earth resources. These mines could be smaller mines around a quarter mile each and producing around 66 million a mine. Therefore, we would see a major influx of US jobs and economy as the US companies ownership of mines should that we have minerals for companies to create good paying jobs. Thus then allowing for a proper root style economic rebuild naturally through economics instead of forced through a stimulus. That will just fall through as our high number of business keep defecting each year to Communist China’s resource monopoly.

    Rider I
    http://rideriantieconomicwarfaretrisiii.blogspot.com/

    Competition builds more markets while monopolization destroy’s markets. Rider I 2011

    /ii

    I think the Constant violation of the Communist Party of China deserves sanctions for arming Qaddafi when fighting against UN troops as:
    US seeks more from China on Libya arms

     I  believe there is a Communist Secretary in every business and entity in Communist China. “The United States indicated Wednesday it is not satisfied with China’s explanation of a meeting in July between Chinese weapons makers and representatives of Libyan dictator Moammar Gadhafi seeking to buy arms in violation of U.N. sanctions.” Let’s see the Communist Party violates UN treaties with regards to Iran, North Korea, Al Queada, Hamas, then specifically sell’s weapons via a Party secretary entity of the Communist Party which is in every SOE watching over them and speaking to the party on first hand of business. Along with allowing nuclear material in areas of how terrorism like Pakistan and Iran. I think we should sanction them. Along with that they violate UN treaties with regards to funding and protecting genocidal dictators. The worst part is they just do it to get cheap resource contracts that nobody else can get. Along with that they sent a Communist disciplinary member to meet with Poland instead of a Diplomat, which the German Socialist Party did and So did the Soviet Empire. 

    /ii