Despite being dispirited by the one-sided nature of the debt ceiling deal, most of us were looking forward to reaping the rewards from its only ancillary benefit; the impending stock market rally. Much to our chagrin, the Dow dropped precipitously, losing over 800 points since the opening bell on Monday. After the initial euphoria from the debt ceiling hangover began to subside, people have been forced to confront an inconvenient reality. The problem with the economy is not the debt ceiling; it is the debt – and all that it represents; overbearing and job-killing government.Let me say this nice and slow: The debt "crisis" is not the cause of the jobs crisis. It is the other way around.
It. Is. The. Other. Way. Around.
The reason we have an historically high budget deficit is that we have an historically high unemployment rate. Fourteen million people are out of work, and those people are not paying taxes to the federal government. Nor are they going out to restaurants or furniture stores. As a result, businesses, with their customer base decimated, are not paying much in taxes to state and local governments, either.
So those governments, in the grip of austerity budgeting, are laying off workers by the hundreds of thousands, and all the teachers, park rangers, pothole fillers and cops who used to have jobs are also not paying much in taxes, nor visiting their local restaurants and furniture stores.
Lather, rinse, repeat.
Then we have George Will, who would make me spit up my coffee if I had any, perseverating over the number of people on government assistance:
Regarding the federal regime: Before this debate, who knew that the government sends more than 100 million checks or electronic transfers a month to employees, vendors and — much the largest group — entitlement beneficiaries, including 21 million households receiving food stamps?O Flying Spaghetti Monster, please grant me patience. Again, nice and slow. Why do we have record numbers of people on food stamps, forcing higher government expenditures and thus increasing the deficit? No, not because big-government liberals want to create slavish dependency so they can maintain their dictatorial grip on the nation's lifeblood.
You in the back? That's right, because conservative dogma crashed the economy. Enormous housing bubble, not only ignored but encouraged. Record income inequality, exacerbated by regressive tax policies. Businesses and households leveraged to the hilt, squeezed by anemic job growth. Reckless deregulation and lax oversight, encouraging Enron-style accounting across the financial sector. An accident waiting to happen. And then it happened.
Now, what has happened since then, we can argue about until the cows come home, and they ain't coming home for quite some time. But the economy has not recovered and is teetering on the brink again. The initial plunge in GDP was much worse than anyone knew at the time, and hence we had inadequate stimulus, which has since petered out. Then we fell into the grip of austerity budgeting, which has only made the problem worse, a la 1937. The Europeans, too, have been in the grip of austerity budgeting, and so they, too, are teetering on the brink.
And while I was typing all this, the new jobs data came out. Once again, private sector added jobs, though not nearly enough – while public sector continues to shed jobs, creating further drag on the economy. What a surprise.
As the global markets freak out, conservative dogma doubles down, insisting that even greater austerity budgeting is the only answer, and that government must cut spending still further, thus shedding even more jobs. Makes one want to rhythmically tap one's cranium against the nearest vertical masonry edifice.