Fragile economic recovery at risk due to midterm election politics
03 July 2010
The most recent economic reports reveal some troubling signs for the recovery effort. Unemployment is still at over 9.7%. Over the last month more Americans have filed for jobless benefits, the housing market is trending downward, and consumer confidence is starting to suffer. Under the best case scenario, the economy has hit a speed bump and we are in danger of suffering from another recession. Under the worst case scenario, we are in serious trouble on the edge of a more serious economic free-fall like a depression.
It is at this time that the country needs some kind of preventive measures from the federal government. It is much more costly to avoid an economic disaster than to try to react to one. Despite this reality, politicians seem perfectly content to sit back and watch as the country suffers.
There are two varying explanations for the current situation. Fiscal conservatives argue that the government has spent too much money. They say the stimulus was ineffective in creating jobs and lower taxes are needed to create real growth. Fiscal liberals argue the stimulus did stave off a depression, temporarily, and create some jobs. They point to better GDP numbers and a graph showing job growth under the Obama administration, as opposed to job loss under President Bush. For liberals, the problem is not too much spending, but too little spending. They argue the stimulus was actually made up of mostly tax breaks, and that more government spending is needed to create more jobs in the absence of private sector spending.
Regardless of which argument one agrees with most everyone agrees something needs to be done.
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