Yesterday's
terrible economic newsshows the economy taking two steps back for every step it haltingly takes forward.
Unfortunately, few remedies remain as economy lags.
Two bright spots over the past few months — manufacturing
and job creation by private companies — both slowed in May, according to new reports
Wednesday. The data come amid other reports of falling home prices, declining auto sales, weaker consumer spending and a rising pace of layoffs.
Unfortunately, there just doesn't seem to be anything else the government can do to create jobs or fix the economy.
The economic recovery is faltering, and Washington is running out of ways to get it back on track.
Because, you know, they have already tried just about every possible remedy. The government alaready 'swung into action' last summer:
Last summer, as growth slowed and analysts began to fear a dip back into recession, the government swung into action. The Fed began discussing
what would become known as QE2, or the second round of quantitative
easing — a $600 billion bond-purchase program aimed at fueling growth.
The exercising of an obscure monetary policy, dumping $600 billion into the bond market, is the Washington Post's version of a governmental white knight riding to the rescue. Yet curiously and inexplicably, this bold move seems to have been disappointing in producing results in the form of jobs.
And by the end of the year, the Obama administration had reached an accord with Congress to temporarily cut payroll taxes to boost growth.
Another bold move, sure to spur the economy and create jobs, yet - there are no results.
Last year's last minute tax cut dealwas hailed as a big win, with upper income tax cuts a small price to pay for increasing unemployment benefits and extending a payroll tax holiday to workers, which would have the effect of stimulating the economy (while shorting the Social Security trust fund).
Congress Passes Tax Cut DealProving throngs of skeptics wrong, Congress approved an $801 billion package of tax cuts and $57 billion for extended unemployment benefits on Thursday, a huge victory for President Obama. The deal had been met with opposition from both Democrats, who claimed Obama had bowed too much to the GOP, and Republicans, who didn’t believe the bill went far enough. The House approved the tax cut deal, 277 to 148, late Thursday, after a tense night during which liberal Democrats fought with party leaders over the inclusion of an estate tax provision. Meanwhile, over in the Senate, Dems abandoned efforts to push forward a $1.2 trillion spending bill to finance the federal government through the first nine months of 2011, and said they would instead support a short-term stop-gap measure instead. Republicans had demanded on the short-term solution since they’ll be in the majority in the House in January and have more seats in the Senate, and will be able to create their own spending plan.
While this may have been a huge win for President Obama (though not reflected in the polls incidentally) it was
not, unfortunately, any kind of win for Americans. And equally unfortunately, there just are no other remedies the government can try.
But the prospects for another round of government help are slim. The Fed had undertaken its massive bond-buying program last year in large part because leaders of the central bank were worried about the risk of deflation, or falling prices. By contrast,
prices today are edging up. The bond market is pricing in inflation of just under 2 percent a year over the coming five years, exactly the level the Fed seeks. Moreover, Fed officials believe that further efforts could have less bang for the buck than previous ones. The administration and Congress, meanwhile, are now more
concerned with cutting the federal budget deficit than with supporting the recovery through government spending and tax breaks.
For some reason, the administration and Congress are now more concerned with cutting the federal budget deficit.
Today, John Boehner said talks on the debt ceiling were proceeding well, but there was more work to be done on spending cuts.
I mean, I can't think of another thing the government could possibly do.