If the new stimulus package and parts of the budget aimed at creating new jobs do not begin to take hold soon, the Congress and Administration may be faced with having to put hundreds of billions of more dollars into the credit system and creating novel ways to boost consumer spending. This could involved dropping tax rates even further thereby cutting the money going to the IRS which, in turn, will result in even larger deficits.
According to Reuters, economist Paul Krugman says, “A second stimulus is becoming clearly urgent. They need a very, very strong stimulus.”
At this point, rising unemployment appears to be the most likely culprit for undermining the government’s efforts to bring the economy out of a recession. More than two million jobs have been lost this year. That number could easily be three million by mid-year, killing the chances that the Administration’s goal of creating or saving three million to three-and-a-half million jobs is remotely possible.
The problem of raising more money to help the jobless and improve consumer and business spending though more access to credit is already on the table. There may be small signs that the economy has bottomed, but they are hardly signals of a robust recovery. That leaves open the question as to whether Congress has the will to create another massive set of programs using taxpayer money, making it almost certain the the next decade may be unrivaled as a period when workers have to pay increasing taxes to foot the government’s record setting obligations.
Douglas A. McIntyre
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