Washington's Stimulus-Based Life Forms
Tell that to the economy in which we phosphorous-dependent life forms actually live. In the real world, this move won't do much if anything to stimulate demand, but will instead induce deliberate and inadvertent dependency:
• Those who have figured out how to game the system while pretending to look for work will continue to do so. Additional others who are so inclined will learn the necessary tricks.
• Those who need a little nudge in the form of imminently ending benefits to get cracking and find an alternative line of work won't have any incentive to do so. I have heard enough stories of employers who need people right now getting turned down by prospective employees who tell them that they would rather wait a few weeks until their benefits run out before they start -- and, without saying so, gamble on whether Congress will further extend benefits -- to believe that this is a sadly widespread phenomenon.
• Employers saddled with funding "their share" of the exorbitant costs of funding the unemployment comp system will continue to find their related tax bills shooting through the roof. That's not a recipe for more hiring.
• Taking on new, unproven employees is the last-resort response of employers facing the brief increases in demand that stimulus-based economic efforts represent, simply because doing so is a very expensive proposition. As we have seen since the POR economy began, companies first attempt to get by with their existing, already-trained staff, whose overtime hours if needed will normally be more productive per dollar spent than those put in by newbies. If that's not enough, they'll try the temporary help market; it's not a coincidence that temp agencies have represented a disproportionate share of new private-sector jobs created since the recession as normal people define it ended.
• Finally, stimulus-based life forms seem to either not understand or not care about the concept of uncertainty. During the POR economy, they have, in so many areas -- energy, banking, health care, and taxation, to name just a few -- left employers unable to determine what their costs will be even a short time down the road.
Conversely, employers who believe that they are dealing with a long-term, sustained increase in demand will recognize the need to hire good people to serve their customers. Such sustained increases in demand often occur because of wise government policies that create an atmosphere of reduced uncertainty, lower taxes over the long-term (the proposed two-year extension of the current system doesn't qualify), and less onerous, non-whimsical regulations. The 1980s Reagan recovery, during which post-recession growth was more than double what it has been thus far during the current alleged recovery, is one such example.
Then there's Fed Chairman and Chief Stimulator Ben Bernanke.
Left to face the economy alone by a Congress and White House which abandoned him this summer, the formerly phosphorescent Bernanke has been transformed into a politically driven, stimulus-based stooge. His program of "quantitative easing" (QE), known to the rest of us as "creating money out of nothing," was supposed to lower interest rates, create corporate demand for loans to expand, and lead to greater employment. Round One of QE didn't accomplish much. The pressure on interest rates since "QE2" officially began has clearly been upward, as legitimate fears of inflation and even of ultimate government default have arisen.
Washington's stimulus-based life forms are feeding economic arsenic to the rest of us. Though it may be the best they can do politically until they officially take control of the House in January, Republicans and the few phosphorous-based Democrats who remain must put a stop to the poisoning before it becomes permanent.