President Obama's Council of Economic Advisors released there first quarterly report on the American Recovery and Reinvestment Acttoday, and their prognoses for the success Government intervention is not bad. While we have a long way to go, and most of the money is yet to be spent, to council defends the idea of government stimulus:
Fiscal stimulus appears to be effective in mitigating the worldwide recession. Nearly every industrialized country and many emerging economies responded to the severe financial crisis and recession by enacting fiscal stimulus
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Adding
We find that countries that adopted larger fiscal stimulus packages have outperformed expectations relative to those adopting smaller packages.
An obvious case for a second round of stimulus, something economist like Paul Krugman have been advocating for:
the purpose of stimulus is, first and foremost, to mitigate unemployment. The fact that the economy may be technically in recovery is irrelevant.
Here is the Problem. The Stimulus was clearly not big enough. Unemployment remains high rising to 9.7 percent.
I am not an Economist, but it seems clear to me that America is on the verge of a true, not jobless, recovery. It seems to me that we have a window were a little more stimulus could push us into a full fledged economic roar.
More on that later.
First, some success from the current stimulus bill that should be highlighted. From Obama's Council of Economic Advisors:
There is broad agreement that the ARRA has added between 2 and 3 percentage points to baseline real GDP growth in the second quarter of 2009 and around 3 percentage points in the third quarter.
Very good news. Increases in GDP will provided our already badly strapped State, Local, and Federal Governments with badly needed revenue. It also means that the economy is showing signs of life. Money is moving more freely, and we have hit bottom.
There is also broad agreement that it has likely added between 600,000 and 1.1 million to employment (again, relative to what would have happened without stimulus) as of the third quarter.
This is not some much good news, as it is a sigh of relief. There is about One Million workers who are still employed thanks to the actions of our President.
We estimate that the Act has had particularly strong effects in manufacturing, construction, retail trade, and temporary employment services.
This is particularly good news for the Unions. As the last thing out organized labor force needed was a serve hit to manufacturing.
Following implementation of the ARRA, the trajectory of the economy changed materially toward moderating output decline and job loss. The decomposition of the GDP and employment change by components or sector suggests that the ARRA has played a key role in this change of trajectory.
To me this quote says it all. No matter what a winger tells you, the ARRA helped Americas struggling economy. We might not be soaring yet, but we can get there thanks to Big Government intervention and the Stimulus Package.
Now to more stimulus. I am a political realist. I understand that now is a rough time to pass anything through the House, much less the Senate. I realize that Health Care, Cap-and -trade, EFCA, Wall Street regulation and a whole host of other important Progressive Agenda items are being introduced. I realize that the mood on Capitol Hill is not about moving swiftly to react to a problem, but, I do believe there is serious political cost to not passing a second round of stimulus.
Voter weariness on the economy.
According to The Washington Post's Chris Cilizza Republicans have closed the gap on the Congressional Generic Ballot:
36% would vote for the Republican candidate for Congress, 36% for the Democratic candidate and 28% undecided who they would choose.
A similar poll in June found Democrats leading 38% to 33%.
Granted this poll was done for the RNC, but there is no reason not to trust it.
Do we think this is because Americans just oh so love the antics of the GOP?
I highly doubt that.
No this Generic Ballot slide and Obama's approval dip is probably because the lack of a health care bill, and, most importantly, a continuing of economic hardships.
Now, the President went a long, long way last night in remedying health care, but he has had a more "stay the course" approach to economics. If he is wrong, and the Recovery Package is not big enough, we could stand to lose a serious number of seats in 2010.
The important point to take form that is, can you imagine passing a second round of stimulus with more Republicans and less Democrats in the House and Senate?
And that brings us full circle.
The reason we have to pass a second stimulus package now is that there might not be a tomorrow.
Democrats were not sent to office to make very good arguments for half ass policy. The real problem with the economy is of course not that it is bad politics for Democrats, it is that it's hurting Americans. Nearly 7 Million people have lost there jobs since this recession started. We might not have started it, but we were sent to Washington to fix it. The republicans sure ass hell arn't going to go for it, so it is time we drag them there.
Man up Democrats, show some spine for once, and fix this economy!