Poverty and Unemployment Are Fueling Voter Anger

Businesses don't fail to invest because the federal government owes money fearing future tax hikes. Economists like Robert Barro and Robert Lucas who propagate the "crowding out" theory are wrong to apply it to current conditions; US Treasury bonds are selling at lower and lower yields because there is no other low risk investment yielding over 3% return in the productive economy. If the private sector offers up its savings to the federal government at such low interest rates what it is basically saying is that deficits present a low long term risk to the economy and that the federal government should stimulate the economy with the revenues that the private sector has lent out so as to create sufficient jobs and growth to be able to pay the bondholders in the future. CBPP economist Chad Stone explains why John Boehner's recently made "crowding out" argument for cutting the federal budget by over one fifth is wrong;

"For government spending to crowd out private spending, the workers, factories, and machines needed to meet the demand generated by the government spending would have to be diverted from other productive activities. That can occur in a high-employment economy with no economic slack. But under current conditions, the situation is different. For example, when the government provides additional unemployment insurance (UI) benefits to workers struggling to find a job, businesses are benefitted rather than harmed: the benefits increase consumer demand for goods and services and thereby enable businesses to put unemployed workers back to work and put idle capacity back into production (or to refrain from cutting workforces and production even further). Neither the Federal Reserve nor financial investors buy Rep. Boehner’s argument. If the Federal Reserve did, it would be tightening monetary policy now by raising interest rates to forestall higher inflation, which would arise if government spending were generating excess aggregate demand that put a strain on the country’s productive capacity. The truth, of course, is that the Fed is much more concerned about economic weakness right now than it is about inflation and stands ready to ease monetary policy further, not tighten it. Similarly, the appetite for U.S. Treasury securities among financial investors would not be there if they feared inflation or higher interest rates or if they were more concerned about the impact of current government spending on future deficits than about how weak the economy is right now."

http://www.cbpp.org/cms/index.cfm?fa=view&id=3286

Even more stimulus is needed now. Another CBPP report asserts;

"A look at monthly employment data shows that the worst job losses occurred before the implementation of recovery policies enacted in February 2009. The largest job losses occurred in January 2009, and 70 percent of the jobs lost between January 2008 and December 2009 had disappeared by mid-March 2009..."

http://www.cbpp.org/cms/index.cfm?fa=view&id=3294

steve of IL 5:19PM September 18, 2010

that enable folks to achieve "the dream of starting their own businesses"?

You think it's "income taxes" on the net "incomes" that most new ventures cannot actually generate that are holding folks back? You think it's no access to credit for credit-worthy borrowers that's holding us back in a time when the nation is literally flooded with cheap money looking for a reliable place to be lent?

No, friends. It's not either of those things. Good existing businesses are short of SALES, and millions of unemployed people dream of mostly bad ideas for unneeded little "businesses" that cannot possibly either succeed (for lack of a market) or attract a scrutinized loan. Think your town needs and will support another little home-owned eatery or hair/nail salon? Think you need some more realtors and insurance salesmen?

Republicans actually state, and this article implies, that pro-growth policy means cutting the JOBS that are the end result of all "government spending"----dumping more into the unemployment pool to somehow magically "create" demand for goods and services that would be "new" jobs. Kill the old jobs to get some more folks dreaming about starting that new restaurant. Yeah, we do need another idea. That one's plumb nuts and worn out.

Muser of NM 3:50PM September 18, 2010

Minor quibble with Mary Kate....the Obama team said..."Without the stimulus (the baseline), unemployment was projected to hit about 8.5 percent in 2009 and then continue rising to a peak of about 9 percent in 2010. With the stimulus, they predicted the unemployment rate would peak at just under 8 percent in 2009."

Don't forget the original lies and half truths put forth by this administration.

One of WA 1:53PM September 18, 2010

"Nonetheless, will someone else please explain "life" to this obviously uneducated, dark-side-of-the-moon, skitzophrenic?"

I'll give it a shot.

courtneyd oc CA, you see, life isn't fair. Sometimes the bad guys win. Your description of Republicans applies to Democrats as well. I suspect you know that, given your "i'd like to vote out everyone in office" line.

Now, you are 100% CORRECT that both sides are evil. The lesser evil is still evil, whether you believe it's one side or the other that is the "lesser" evil. They are two sides of the same bad penny.

The Democrats held the House for 40 years before the Republicans took it over for 12. Naturally, anyone coming of age during those 12 years (read: Millenials) doesn't recall just how bad the Democrats were, and falls for lies about the Republicans.

Falling for deception isn't Millenial's fault. How fast they catch on that they were hoodwinked by Democrats, however, is a testament to their intelligence (or lack thereof), and what they do about it is testament to their convictions. The jury is still out on both counts.

Now, maybe you're not a Millenial; I don't know. If not, you should be aware that you're parroting the Democrat party line, and should know better. Most people doing that get paid. Hell, *I* would parrot either party line if they paid me. I still wouldn't vote for them.

I sense that you understand: the country is being destroyed. It's not the Left or the Right doing it, it's both of them, combined with the paralysis of the rest of us in having no viable alternative to (R) or (D).

Now understand this about life: the nation-state hasn't always existed. It won't exist forever. On the day America dies, there will be a great weeping and gnashing of teeth. The next morning, the sun will come up and you'll have to figure out what you want for breakfast.

LIFE moves on. LIFE is greater than politics. So don't feed the hate.

Rich of CO 12:09PM September 18, 2010