Thank the centrists in the Senate for all those cuts in the stimulus package that have made the plan a good deal smaller and more focused on tax cuts. Paul Krugman noted this evening that, “according to the CBO’s estimates, we’re facing an output shortfall of almost 14% of GDP over the next two years, or around $2 trillion,” and others including “Goldman Sachs, are even more pessimistic.”
Krugman also points out that his feeling was the “original $800 billion plan” was already “too small, especially because a substantial share consisted of tax cuts that probably would have added little to demand.” And he said, “The plan should have been at least 50% larger.”
Now the centrists have shaved off $86 billion in spending — much of it among the most effective and most needed parts of the plan. In particular, aid to state governments, which are in desperate straits, is both fast — because it prevents spending cuts rather than having to start up new projects — and effective, because it would in fact be spent; plus state and local governments are cutting back on essentials, so the social value of this spending would be high. But in the name of mighty centrism, $40 billion of that aid has been cut out.
The bottom line on the cuts to the plan, thanks to the Senate centrists, Krugman says, “the Senate bill will ensure that we have at least 600,000 fewer Americans employed over the next two years.”
Wasn’t the goal to put folks back to work? The editorial board of the NY Times puts the “disappearing jobs” situation into an even bleaker perspective:
The unemployment rate rose from 7.2 percent in December to 7.6 percent, which works out to 11.6 million unemployed workers. The larger the ranks of the unemployed, the harder it becomes to find a job, leading to longer stretches of unemployment and a bigger hit to families’ finances.
Those are not the only manifestation of deepening job gloom. The underemployment rate, which includes part-time workers who need full-time jobs and jobless workers who have given up looking because their prospects are so dim, plunged deeper into double-digit territory in January, reaching 13.9 percent — or 21.7 million workers — up from 13.5 percent in December.
Rising unemployment and underemployment means that the need for unemployment benefits and income support — such as help in paying for health care — are rising faster than Congress can get its act together to provide relief.
The Stimulus package as it stands now is a band-aid, not relief. The “time for action” may be “now,” however many of us believe that action should be broader and not filled with compromise particularly when it comes to the issue of jobs. The view of what 3.6 million jobs lost over 13 months is not a pretty sight, when you put it in perspective with other recent recessions.
Thank the centrists. They are the ones that supported all the failed Bush administration policies and now they are the ones gumming up the works in fixing the mess that Bush left behind.
[Originally published at TaylorMarsh.com]