Economics pt. II

Last night, a bout of frustration emerging from the inability of Congress to quickly deal with our economic meltdown overwhelmed me - and thus emerged my first post on economics. I would like to quickly describe the current political situation with our economics and why it is something that should be so frustrating.

With the massive loss in money circulating in our economy, and the spiraling effect caused by lowered housing values, a lack of available credit to consumers, and losing over half a million jobs each money - we have significant problems to fix in a hurry. Each day delayed is another *doing math* (500,000 divided by 30) is at least 16,667 jobs lost a day across the country. Many republicans have stated "We are in no hurry to pass this bill" because it is more important to get it right.



I guess there's no reason to hurry up because they're not the one's losing their jobs, though they ought to.

But it is worse than it seems. Nobel Prize winner in Economics, Paul Krugman explains the problem.

[...]According to the CBO’s estimates, we’re facing an output shortfall of almost 14% of GDP over the next two years, or around $2 trillion. Others, such as Goldman Sachs, are even more pessimistic. So the original $800 billion plan was too small, especially because a substantial share consisted of tax cuts that probably would have added little to demand. The plan should have been at least 50% larger.

Now the centrists have shaved off $86 billion in spending — much of it among the most effective and most needed parts of the plan. In particular, aid to state governments, which are in desperate straits, is both fast — because it prevents spending cuts rather than having to start up new projects — and effective, because it would in fact be spent; plus state and local governments are cutting back on essentials, so the social value of this spending would be high. But in the name of mighty centrism, $40 billion of that aid has been cut out.

My first cut says that the changes to the Senate bill will ensure that we have at least 600,000 fewer Americans employed over the next two years.[...]

Emphasis mine.

Time is of the essense, and we're not even doing enough whilst the Republicans think this is too much. John McCain's counter bill (mostly tax cuts) was less than $500 billion, and would have barely made a dent in the problem - or could have potentially made it worse. (see previous entry #16)

So, why are the Republicans not in a hurry and not interested in passing a bailout bill that will really help the economy recovery as quickly as possible? Well, see what they say:

[...]Republicans are relishing the opportunity to make a big statement. Rep. Pete Sessions (R-Tex.) suggested last week that the party is learning from the disruptive tactics of the Taliban, and the GOP these days does have the bravado of an insurgent band that has pulled together after a big defeat to carry off a quick, if not particularly damaging, raid on the powers that be.[...]

That's right... this is pure politics. This isn't about anything except their own desire for power and to hamstring government for personal gain. And that is what is so frustrating. This isn't about anything other than wanting to make a mess of things to show the Democrats in Congress that they can't do what they want to do with a united front of Republicans fighting back Taliban-style (to use their own words!).

This is ridiculous, awful, and truly devastating to millions of people. Here's to hoping our new president and the overwhelming Democratic Congress can overcome filibusters in the Senate, and getting absolutely zero Republican votes in the House to pass this bill, and many other bills to come, to help us right our economy and get people back to work instead of losing their jobs, homes, and dignity.