Here’s today’s dose of economic bad news — and things looked so rosy just last week:
U.S. unemployment will surge to 10 percent this year and the budget deficit will widen to $1.5 trillion next year, reflecting a “deeper recession” than previously expected, White House budget chief Peter Orszag said.
The American economy is an amazing beast. No matter how much crap we pile on top of it, it keeps managing spectacular feats of growth and productivity. I have no doubt it can do so again, and soon. Very soon.
But when you’ve got a Congress starving the private sector of capital with a spending orgy to make President Bush (43) and his crony Republican Congress blush… when you’ve got a cap & tax bill made half into law which threatens to double household energy costs, and when you’ve got a President determined to squash the health and insurance industries (and damn near stamp out small business in the process), then the economy simply can’t recover.
And of course, I haven’t even mentioned the threat of financial regulation over-tightening, which has Wall Street nervous like a fifty dollar hooker waiting for her lab results.
Even if we started to reign in spending, and cap & tax goes down in the Senate, and health reform is defeated, the economy still won’t start generating jobs until all the uncertainty has lifted. In the meantime, everybody is afraid to make a move.
Want to return to growth? Then stop this President and his Congress.
Don’t forget the Bush tax cuts expire in a little over a year, expect a big asset-sell-off in late 2010 if anyone has any profits to show, to avoid higher capital gains rates, and a bunch of inefficient asset-shuffling due to the return of the inheritance tax.
Around the same time, expect some major foreign entities to refuse to accept dollars in payment for goods and services, which will start to topple the whole US economy.
About the same time the Treasury will have to really hike interest rates to float it’s debt, which will have grown hugely and have to be continually rolled over. Beyond soaking capital out of the private sector, this will increase the federal budget deficit even more, and also hurt state and local governments that have to borrow.
This could be ameliorated if Washington got a sudden attack of sanity, but that appears unlikeley, and even if they did, too much damage is already built into the system.
Seems to me that the cap and tax bill will not only raise energy costs, it will raise the cost of EVERYTHING. It is a stealth VAT tax. Everything requires energy to produce (at least that I know of), those increased cost are going to be passed on to – you guessed it – us.
I’ve said it before and I’ll say it again, Obama’s administration is following the same economic principles that made Zimbabwe the international financial powerhouse it is today. Such ignorance of economics has to be willful and deliberate – it’s hard to believe they could be that stupid by accident.
Rising energy costs always do. So do rising labor costs. Both expense categories are pervasive, and thus any change in what they cost will be hugely magnified by the time it reaches the consumer.
That’s why Congress letting the minimum-wage hike take effect during a long recession was more than typically stupid.
If you really want to start feeling depressed, just remember that our “saviors” are the Republican Party.