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Author: Raine    Date: 06/06/2011 13:13:03

Schieffer: The fact is, the Congress has been in session since January and it's done basically nothing.

Pelosi: Well you can talk to Mr. Boehner about that.

Schieffer: So it's all their fault. It's not your fault.

Pelosi: Well no, they set the agenda. We have said every day that they're there another day goes by and there's no jobs agenda or jobs bill that has come to the floor. But again, it's about how we can work together to go forward. These issues are bigger than politics, they're bigger than elections. They're about the country that we will live in. And what we will see as we go forward is one vision of America that's encompassed in the Republican budget plan that abolishes Medicare, that makes college unaffordable for nearly ten million young people in our country, that takes us deeper into debt and does not create jobs, or you can talk about an agenda that talks about making it in America, investing in American education, innovation and that's what campaigns are about.
Karoli at Crooks & Liars managed to catch the video of this exchange from Face the Nation yesterday. I concur with Karoli when she says "...Bothered about the jobs report? Talk to Mr. Boehner, because he's the guy who has set the agenda for this session of Congress. Democrats should be running with this message and asking Americans whether or not they understand Congress' role in the economy and what this crazy Republican House of Representatives is doing to tank it."

The jobs report last week wasn't great, and the higher unemployment numbers weren't helpful either, but the reality is that we still had jobs created, not lost. What I find interesting is that in 5 months, we have had NOTHING in the way of promoting economic recovery from the GOP-led House. Back in September, The Christian Science Monitor wrote the following: Republicans in Congress are urging two simple steps they say will help put Americans back to work: Freeze all tax rates at current levels and reduce federal spending. Interesting. In their ongoing attempt to do so, an already slow -- but growing economy, has slowed down even more.

What we are seeing right in front of our very eyes is the failure of of the GOP platform to get Americans back to work. They not only have set this as their financial agenda, they have set it as a psychological one as well. Businesses that have the ability to hire aren't. They can't plan if they don't know what's going to happen. Sometimes doing nothing - as this GOP-led House has done - can cause the kind of instability that can hurt an economy. The private sector actually needs government to help spur its growth. This article from Forbes is a bit complicated, but this part gets to the point:
Aggregate private sector balance sheet contraction makes it impossible for the private economy to generate profits on its own. This point isn’t taught in economics 101, but it’s a fact. To sustain profits (essentially, businesses’ rise in wealth) the economy as a whole has to keep increasing its wealth, which is impossible if private balance sheets aren’t expanding. Total assets must be increasing solidly, and liabilities must be rising to finance these increases: no debt creation, no asset creation, no wealth creation, and no profits. The last time the private sector deleveraged was in the early 1930s: wealth creation turned negative, the entire business sector suffered an operating loss and the economy crashed. In the present, milder episode, the rate of wealth creation is the weakest since the second world war.

But there is a way to support profits during private sector deleveraging. This is through very large government deficits, which pump wealth from the public sector into the private economy. Profits have roared back over the past two years because the federal government is using debt to supplement private purchasing power, boosting businesses’ revenues relative to expenses.
So basically, while the GOP has set an agenda as Mr Boehner once put it:
“Over the last two years since President Obama has taken office, the federal government has added 200,000 new federal jobs and if some of those jobs are lost in this, so be it. We’re broke!” Boehner exclaimed. “It’s time for us to get serious about how we’re spending the nation’s money.”
They're also the ones destabilizing our economy over a false claim that we are broke. We are not. What people, investors and businesses are waiting for is for Congress to get something done. Here is why:
We can’t really do much more to realistically lower firms’ costs, and that’s not the problem anyway–businesses know damn well that investing right now would be a complete waste of time (as were QEI and QEII, incidentally, because they were aimed at lowering borrowing costs–that was never the problem). Sales aren’t going to be brisk when 13.5 million of your customers are unemployed and many more underemployed or discouraged. That is the major obstacle to economic recovery.

The government’s plan? More layoffs and wage reductions. This is supposed to encourage entrepreneurs to take the risks about which they are reluctant at the moment. If that seems illogical to you, it’s because it is. It’s sheer lunacy.

What we saw from 2011Q1 is just a taste. It’s going to get much worse. The private sector needs the injections of income that will create profits for those entrepreneurs and induce them to invest. Instead, we are about to further impoverish their potential customers.
Cutting taxes and slashing budgets just isn't going to do it, and for Bob Shiefer to accuse the Dems of being guilty of doing nothing is incredible disingenuous. I'm wondering if he will ask John Boenher the same question he asked Nancy Pelosi.

It's also a good way to head back to 2008. The President can't do it all -- actually, there is very little he can do until Congress does their job. Someone ought to talk to Mr. Boehner about that. This is his job now, and he isn't doing it.


68 comments (Latest Comment: 06/07/2011 02:44:12 by Raine)
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