Good News: Short Term Economic Recovery Looks Possible
Here's the bad news: It says nothing of the long term recovery, and spending is out of control.
12:00 AM, Mar 6, 2010 • By IRWIN M. STELZER
Of course, a significant increase in job creation would change the outlook. Data released yesterday provide at least a slim hope that the employment picture might be about to brighten. The unemployment rate stabilized at 9.7 percent, and job losses was relatively limited, at least by the standards of last year. But one month does not make a trend, and we have to assume that it will take a sizable increase in economic activity before the recent increase in temporary hires converts into offers of permanent, full time employment.
The outlook is worsened by the sorry state of the public finances, both at the state and federal levels. California and New York are only the most publicized examples of the many states that are in no better shape than Greece, and being forced to cut back on jobs and capital projects. And the condition of the federal books would be even worse were it not for the fact that in the end the federal government can print its way out of the problem. Deficits are high and rising, the congress is readying still more spending bills, and the president is insisting that congress enact his trillion dollar health care bill. Damn the red ink, full speed ahead.
Being unwilling to rein in spending, the president will soon be proposing further tax increases of a size that will dwarf the few tax breaks he is offering to small businesses that take on new workers. No one doubts that the commission the president is appointing to find a way out of the fiscal mess into which the nation has descended will recommend tax increases now, and spending cuts, if any, much later. Or that Congress might well decide to do neither, and Micawber-like, simply hope that something turns up.
That means we have an odd situation. We are to have jam today, this year, and perhaps even next, with the bill to come due shortly thereafter. If Obama has his way, that won’t happen until after his reelection in 2012.
Irwin M. Stelzer is a contributing editor to The Weekly Standard, director of -economic policy studies at the Hudson Institute, and a columnist for the Sunday Times (London).
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