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Sharon SecorMore About: Economy - Economics USA
White House Efficiently Pre-Excuses Future Unemployment Rate Increase
In a rare demonstration of efficiency in government, the White House offered an excuse well in advance of unemployment rate increases. Rather than wait for the results of jobs programs and the effects of the recovery that the administration assures us is happening and is in progress to issue an official explanation for increasing unemployment, the Obama administration has already made its explanation, according to a recent AFP news report.
The expected continuing of high unemployment rates that, according to the article, “may even rise” isn’t due to poorly planned jobs programs or because, after shoveling trillions of dollars into propping up banks and lenders, the credit and debt based economy is too hollowed out for recovery. As counter-intuitive as it may sound, the administration tells us that unemployment will remain high “because of labor market growth and the return of more discouraged workers to the labor force.”
As the details of the various federal government jobs plans come out, it isn’t surprising that the administration feels inclined to point out that unemployment can be expected to remain high for the near future. According to an Associated Press report published on February 11, 2010, “there's a problem with the bipartisan jobs bill emerging in the Senate: It won't create many jobs.” Looking at the numbers related to what the AP report refers to as the “centerpiece” of the Senate bill, that seems to be a pretty accurate assessment.
This “centerpiece” involves exempting “businesses from paying a 6.2 percent Social Security tax on the wages of new employees, as long as the workers have been unemployed at least 60 days.” As explained by the AP report, the Congressional Budget Office “estimates that such a tax break would generate only eight to 18 full-time jobs per $1 million in tax breaks.” That is a pretty small return on a million dollars, but – as our record breaking deficits demonstrate – expecting the government to manage money more effectively is an exercise in wishful thinking, at least when it is our tax dollars they are spending.
It is no surprise that the government finds it difficult to create jobs. While they may set the economic climate legislatively, the direct creation of jobs isn’t really the president’s responsibility, nor is it that of Congress. What is the president’s responsibility, however, is to tell us the truth and that is something that he is not doing, particularly in terms of the economy and the employment situation. If the government were telling the truth, depression, not recovery would be the word of the day.
Assuming the word recovery refers to recovery for everyone, not just Wall Street, then the concept of a jobless recovery is nonsensical at best. With foreclosures on the rise, record levels of consumer debt, the additional burden of bailing out Wall Street thrust upon the taxpayer by a government that serves the highest bidder, rather than the people as a whole, and continued high unemployment, as well as astronomical government debt (which is also extracted from the citizenry, one way or another), claims of recovery seem to be more deception than fact.
With the current structure of our economy, 70 percent of our economy depends on consumer spending and about 80 percent of our jobs come from the service industries. The easy credit that has fueled consumer spending for the past decade, helping to create the illusion of prosperity, is no longer available. Consumer spending has dropped at a record rate. Credit continues to contract. According to a February 17, 2010, Telegraph article, “bank lending in the US has contracted so far this year at the fastest rate in recorded history.”
The economic facts are simple – and stark. Recovery of the sort that matters to the people cannot occur within this context. The consumer doesn’t have the cash or credit to spend, thus that 70 percent of the economy that needs consumer spending to function and profit isn’t going to get it, which means that segment – where 80 percent of our jobs come from now – isn’t going to be hiring. In fact, it is more logical to assume that they will continue to lay-off and cut back.
The insane levels of government debt are going to translate into even more hardship, via increased taxes, currency devaluation, and inflation as government printing presses churn out more fiat currency due to nations and investors being less inclined to purchase US debt. And, yet the government continues to speak to us about a recovery in progress, a jobless recovery, as though we are all idiots and completely lacking in common sense. “Labor market growth and the return of more discouraged workers to the labor force” – Ha! If it wasn’t an excuse so pathetic, so deceptive, it would almost be funny.
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