Originally Posted by 11Series
This is the absolutely predictable results of firing over half a million state, local, and federal workers since January, passing a debt reduction bill that ensures way more job losses, and the economic uncertainty that comes with the THIRD fabricated near shutdown crisis of the government in less than a year (with at least 3 more coming this year).
We already went through this history after the Great Depression when Budget Hawks demanded austerity and forced a double-dip. Now thanks to the Tea Party, we are repeating history.
Before we can talk about what to do to put us back on the upward path we were on last year, we have to STOP doing what is driving us into the ditch this year.
1) We need to stop having the Tea Party hold the entire country hostage every 3 months, flooding the country with massive uncertainty.
2) We need to understand that cutting jobs in the gov't in the middle of a job crisis is making unemployment worse.
3) Drop the lazy bumper sticker mindless 1980's dogma, and think of REAL solutions.
I am with you in regards to injecting stability into the economy. These uncertainties need to be removed in order to allow for firms to plan for the future.
I don't think increasing the size of government is the solution, however. While laying off that many employees in such a short span was not very far-sighted, the flip-side is that we simply cannot sustain Keynesian policies for much longer. We have essentially 'tapped out' our ability to borrow money, and any more massive stimulus bills would merely delay the issue from short-term to long-term.
I personally think we need more substantial economic reforms. We need to unload government spending that is not driving the economy, eg. reform social security and medicare. Cut our ridiculously over-inflated defense program, and terminate government programs that simply aren't helping (farm subsidies, etc.).
Instead, the government needs to invest in infrastructure, technology and education. Create SEZs (special economic zones) will more lower taxes and looser zoning laws in order to encourage manufacturing to come back to the country. Continue to invest in education, one of the key drivers of any economy and a traditional strongpoint of American society.
Short term, I really have no clue. Anything we attempt to do seems to be a lose-lose situation, whether it be increasing stimulus spending, buying back treasury bonds (quantitative easing), or whatever.