Am I being insufficently supportive of Obama if I post this? Oh well! Leo Hindery:
Almost every day, Mr. Geithner gilds the economy’s lily in inappropriate attempts to delude American workers into believing that: business investment is in fine shape when in fact businesses are sitting on an unprecedented $2 trillion of cash precisely because of ‘uncertainty’; the “surge in imports” is “healthy” when in fact it is an ongoing nightmare (i.e., just in June the overall U.S. trade deficit in goods and services surged 19% to a 21-month high of $49.9 billion); income inequality is not so unequal when in fact it is at its highest level since 1928; the “auto industry is coming back” when in fact most of its vigor is coming from cutting domestic employment in favor of offshoring; and “8.5 million” jobs have been saved by the White House when just a few weeks ago Geithner himself used the figure of “3 million” for jobs created and saved.
These several assertions of Geithner’s aren’t just disingenuous and disrespectful — they’re also dangerous, especially his implicit suggestion that consumers should once again feel comfortable ‘borrowing and spending’. If they become commonly embraced by the American people before there are significant economic reforms and successful major job creation initiatives, then that double-dip recession that many of us fear may be coming will arrive in a very big way and it could turn into the second longest L-shaped recession in our country’s history.
Here are some additional truths about our economy, over and above the sad income inequality truths that now hang over our nation like a plague:
- The real unemployment rate is 18.3%, not the 9.5% official rate the administration uses.
- The number of real unemployed workers in all four categories of unemployment is 29.3 million, not the administration’s one-category-only figure of 14.6 million.
- Since the start of the Obama administration, the number of real unemployed workers has increased by 4.6 million. By contrast, the economy needs to add around 150,000 new jobs each month simply to keep up with population growth.
- In real terms the all-important “jobs gap” is 21.3 million new jobs.
- The average number of weeks unemployed is at least 34.2, and the number of workers unemployed a half year or longer is at least 10.1 million.
Mr. Geithner’s rhetorical deceptions mask the ineffectiveness of the only two potentially meaningful job-creation initiatives — aid to the states and the bailout of Detroit — that he and Summers largely put together, while letting him ignore the several initiatives, including trade reform, which could actually create, relatively quickly, millions of jobs.
In early 2009, Geithner and his colleagues promised that the stimulus package would materially help turn around the states’ crushing budget woes, which is critical because the states remain the foundation of much of America’s job stability and significant job creation. Yet even with the $26 billion of emergency aid just approved by Congress, for the years 2009 to 2012 the states will have had to confront around $275 billion in budget deficits. For the fiscal year ending next June, 46 of them will have to close budget shortfalls aggregating $100 billion or so. Without significant further federal intervention, in the amounts originally contemplated, the states’ bleak fiscal and unemployment positions will “continue to erode and hurt the U.S. economy through 2060“, according to a recent report by the U.S. Government Accountability Office.
A much needed promise, yes, but actual, meaningful assistance, not so much.
Then there is Treasury’s bailout of Detroit. Or better said, its bailout of ‘Detroit-cum-Mexico’.
The bailout of the U.S. auto industry by Treasury was indisputably appropriate. But what was indisputably inappropriate was the almost complete absence of any meaningful “quid” for the massive financial “quo” we gave the industry. Despite the staggering $85 billion bailout of General Motors and Chrysler, U.S. automobile production will actually decline over the next decade because of further offshoring, mostly to Mexico, by the two rescued automakers and by Ford — even now, the three U.S. automakers and their associated parts manufacturers have a $46 billion trade deficit with the rest of the world.