Distractions and the Economy

by Errington C. Thompson, MD

Last week, the new economic numbers came out and they were depressing. The economy made 54,000 new jobs. Almost all of them were in the private sector, as state and local governments continued to shed jobs.

When you think of the size of Asheville, 54,000 jobs sounds wonderful. But consider the fact that the economy needs to make 130,000 jobs—per month!—just to keep up with new graduates entering the workforce; now 54,000 sounds relatively puny.

Our economy is in a hole of approximate 11 million jobs. If the economy could create 11 million jobs next month, our unemployment rate would drop to the pre-Great Recession level of five percent.

For the past several days, I’ve been scanning my radio, television, and
the Internet trying to find someone who has an answer for our economic
woes. CBS’s 60 Minutes was running a really nice story on Lady Gaga. I
like her music; I think she might be the next Madonna—but I don’t think
that she’s gonna give you or me a job.

Former Senator and presidential hopeful John Edwards has been indicted
for diverting campaign funds to help conceal his mistress. I look at him
and Arnold Schwarzenegger with the same side eye. Both of them packaged
themselves as family men, devoted to their wives, when nothing could be
further from the truth. Thinking about these powerful philanderers
makes my head hurt. If they’ve broken the law they should be punished to
the full extent of the law.

The other thing that I find is nonstop coverage of New York
Representative Anthony Wiener, a shining light for liberals throughout
this country. He spoke articulately during the health-care debate in
unflinching support for a single-payer plan. He was almost the only
liberal in Congress who would go on national TV and not sound like a
moron. Now, he’s embroiled in a Twitter scandal. He sent pictures of
himself to some college coed. He also has admitted lying about it to his
constituents; I think he should resign.

But the bottom line is that the nonstop coverage of these circus
sideshows leaves no room to cover real issues like what to do with our
ailing economy. And there are really only two major schools of thought
on that subject.

Conservatives believe all we need to do is cut federal spending. If the
government simply quit spending money, our multitrillion-dollar deficit
would evaporate, they say. Simple, and simplistic.

What conservatives don’t mention is that government spending makes up
20-25% of our economy. So if the government simply quit spending money,
our economy would grind to a halt.

Also—and conservatives hate this—Herbert Hoover did drastically cut
fiscal spending to combat the economic downturn in 1929 (the start of
the Great Depression). What happened? Unemployment rose to 24 percent,
and average income fell by 38 percent. The gross domestic product also
fell dramatically.

Is this the kind of economic recovery that you want? Where everyone
except millionaires is expected to tighten their belts? Because this is
the plan for economic recovery that conservatives are selling.

The other school of thought wants the government to take a central role
in stimulating the economy. When the economy collapsed in 2008,
economists such as Nobel Prize-winning Paul Krugman—and many others—said
we needed an economic stimulus of approximately 8-10 percent of our
gross domestic product. The GDP is approximately $15 trillion, so we
needed a stimulus of something between $1.2 – $1.5 trillion dollars.

A fairly complex economic formula states that for an economy the size of
ours, a stimulus of $300-$350 billion in spending would lower the
unemployment rate by one percent. Wouldn’t we all like to see our
10-percent unemployment rate below five percent, its historic average? A
stimulus of $1.2 or $1.5 trillion would do it.

But conservatives and Blue Dog Democrats would never go for such a huge
price tag. Therefore, the White House and other Democrats got as much as
they could: about $780 billion, of which $200 billion was in the form
of tax cuts, much of which went to the wealthy rather than putting
people to work. So actual stimulus spending was about half to a third of
what was needed.

We need another trillion dollars in stimulus spending to put people back
to work and get the economy back on its feet. So the question is, will
Democrats fight to get a second stimulus? I think the answer is no. I
truly despise the fact that Democrats won’t fight for what we believe
in. It is time for Democrats to stand up and fight for the average
American. Middle-class America can’t wait two or three years for the
economy to heat up.

Middle-class America needs help now. We need a
second stimulus, now.