Political Animal


July 11, 2011 9:25 AM Anti-stimulative policies to intensify

By Steve Benen

Towards the end of the year, a whole lot of Americans are going to start losing their buying power, which necessarily means less economic activity and a weaker overall economy.

An extraordinary amount of personal income is coming directly from the government.

Close to $2 of every $10 that went into Americans’ wallets last year were payments like jobless benefits, food stamps, Social Security and disability, according to an analysis by Moody’s Analytics. In states hit hard by the downturn, like Arizona, Florida, Michigan and Ohio, residents derived even more of their income from the government.

By the end of this year, however, many of those dollars are going to disappear, with the expiration of extended benefits intended to help people cope with the lingering effects of the recession. Moody’s Analytics estimates $37 billion will be drained from the nation’s pocketbooks this year.

So, to review, the economy is already weak. Since the rules of supply and demand still exist, economic conditions improve when more people have more money to spend. Later this year, millions of Americans will have less money to spend, hurting economic demand when we need more demand, taking money out of the economy when we need to put more money into the economy.

“If we don’t get more job growth and gains in wages and salaries, then consumers just aren’t going to have the firepower to spend, and the economy is going to weaken,” said Mark Zandi, Moody’s Analytics chief economist.

This problem, of course, is easily preventable. Congress can extend these payments — jobless aid, food stamps, etc. — that would benefit the individuals and their families, while also helping the larger economy. But Congress can’t do this, because Republicans don’t want to.

This comes up quite a bit doesn’t it? It would help the economy if Congress extended these benefits, but Republicans refuse.

It would help the economy if Congress invested in infrastructure, but Republicans are against this, too.

It would help the economy if Congress sent aid to states to prevent public-sector layoffs, but Republicans are against this, too.

It would probably help the economy if there were another payroll tax cut, but Republicans are against this, too.

It would help the economy if the Federal Reserve pumped more money into the economy, but Republicans are against this, too.

It would have helped the economy if Congress extended the TANF Emergency Fund last year, but Republicans killed it.

One might start to wonder if maybe helping the economy isn’t really the GOP’s top goal.

Every day, the right cries, “We have to move away from efforts to stimulate the economy, and begin to embrace austerity measures.”

If only conservatives realized they’re already getting their way.

Steve Benen is a contributing writer to the Washington Monthly, joining the publication in August, 2008 as chief blogger for the Washington Monthly blog, Political Animal.


Post a comment
  • Dennis on July 11, 2011 9:33 AM:

    Recent history indicates that the GOP only supports austerity when there is a Democratic President. Once we get a Republican President, nelly bar the door! Spending and borrowing takes off!

  • c u n d gulag on July 11, 2011 9:39 AM:

    Their only goal is to get Obama and the Democrats out of power.

    Dead, or alive.

    The ol' rule in Hell than serve in Heaven that they believe in.

  • Texas Aggie on July 11, 2011 9:40 AM:

    So much for the argument that excessive borrowing has resulted in the recent job downturn. Some of these measures to get tax money into the economy have already been shut down, and with more to come, things will really go to hell.

    I doubt very much that the average American voter will make the connection at the next election. All they will know is that Democrats are "in power" and things are going poorly. Too many people can't think at a higher level than a bumper sticker.

  • efgoldman on July 11, 2011 9:41 AM:

    We talk an awful lot about how we should be pushing actual policies rather than trying to win (or at least compete in) the messaging war.
    But Dems in general, and the WH and leaders in Congress in particular, need to be out there, repeating exactly what Steve says, in short, pithy sentences, over and over.
    Conventional wisdom used to be that nobody paid attention in July and August. Well, anybody notice what happened the last two summers, first with the health-care bullsnit ("Death Panels!") and last year with the Teabaggers?

  • dj spellchecka on July 11, 2011 9:50 AM:

    "In states hit hard by the downturn, like Arizona, Florida, Michigan and Ohio, residents derived even more of their income from the government."

    guess what, arizona rejected fed unemployment money and 20,000 people had their benefits cut off last month

    Dennis Hoffman, a professor of economics at Arizona State University, says these benefits stimulate the economy. The governor's office asked him to look at the impact of continuing unemployment benefits and he determined it would bring nearly $200 million of direct and indirect spending to the state.

    But, Republicans like State Rep. Olson say reducing government spending on things like unemployment benefits will strengthen the state's economy.

    "This is the one issue where as a state Legislature we had input on spending at the federal level," he says. "And we sent that message to Washington, D.C., that we have to put a stop to the spending."


  • dj spellchecka on July 11, 2011 9:55 AM:

    Republican State Rep. Justin Olson says "My heart goes out to these individuals that have found themselves in difficult circumstances because of this recession but the reality is after a year and a half, one has to look at their individual circumstances, and evaluate what they're going to do in order to live within their means."

    The maximum amount unemployed Arizonans can get is $240 a week.

  • dr2chase on July 11, 2011 10:08 AM:

    I like the idea of "strengthening the economy" (Republican-style) of those states that send mostly Republicans to the House (or two Republicans to the Senate).

  • FRP on July 11, 2011 10:12 AM:

    Ordinarily I am not a fan of people who mimic me . Eddie Murphy though , is not to be trifled with ordinary home grown like and dislikes . In his brilliant portrayal of me , circa 1955 , where he displayed his raw locker room talent for mime I have only one itty bitty complaint . Of course it was the song he chose . Once , a long long time ago , it even made me think perhaps it was some other worthy he caricatured . However sense and caution rule the day , as always, and it was Earth that I landed on . As sure as I am of the source of mockery that moderately validates my existence , I also weigh in with confidence that the endless litany of proof that economic one oh one rock ribbed ground floor observations of DOOM , are just a cheeky way of providing hope .
    Hope perhaps best demonstrated in the perspective of Bing Crosby and Danny Kaye (and please do not forget Rosemary Clooney , thank you) . Remembering their former commanding general who has invested all his savings and pension into his very own vacation lodge , just to be crushed by dim economic times (started no doubt by liberals) , or poor judgment from the heights of prudence .

    Foregoing any kind of earthly sense it is decided that Generals have it tooo durned tough . Discovering , quite by accident (no cell phones) , the poor doomed General's rejected attempt at rejoining the army , the throbbing heart of sentiment of the entire troupe is engaged to show the poor poor General that he isn't forgotten , or even broke .
    I hold that if we can show as nation , with song and dance , our commitment to millionaires and billionaires the same love and devotion Rosemary Clooney , Bing Crosby , and Danny Kaye so ably and forcibly demonstrated to the neediest service men and women after the big war , (da generalissimo's) , that there is an Easter Bunny and no need to worry about those , "Supposedly" , worrisome details that overlook the travails of our poor under served millionaires and billionaires .
    Thank you veddy much .

  • foosion on July 11, 2011 10:26 AM:

    Every day, the right cries, “We have to move away from efforts to stimulate the economy, and begin to embrace austerity measures.”

    Didn't I read in the papers that we have a president who wants to cut $4 trillion and is not arguing for any meaningful stimulus?

    Remind me of the national politicians arguing against austerity

  • Josef K on July 11, 2011 10:30 AM:

    One is left to wonder if the freshmen who're driving the GOP off a cliff that they're as chained to the national economy as the rest of us, and will go down just as quickly when they push it off the rails in 21 days time.

    That is, provided they don't end up spooking the markets into an early panic and the chaos hits earlier than August 3rd.

  • SteveT on July 11, 2011 10:48 AM:

    All this is going on with nary a whimper from either Congressional Democrats or the White House. For all his supposed political genius, Obama seems to be remarkably tone deaf --in a way that remind me uncomfortably of George Herbert Hoover Bush.

  • Bo on July 11, 2011 11:00 AM:

    Throughout the GDumbya/Darth Cheney years, the tax cut hysteria never really panned out. That's because it's an empty ideology; not a valid economic theory.

    Instead, the economy headed south in fits and starts while the market kept its eye on "the consumer" because it understood that demand drives our financial system and markets.

    Then, came 2007 and the truth began to emerge. The "consumer" had been fueling the economy through increases in personal debt, liar loans, over-leverage and tapping the value of their homes while prices sank.

    All this happened while Chinless Mitch was supporting to unpaid-for wars, de-regulation of our financial institutions and an unpaid-for new Medicare benefit.

    And please tell me just why is it that I should take anything or any of his tea-baggin' fellow republicans say seriously.

  • bdop4 on July 11, 2011 11:53 AM:

    NYT: "In states hit hard by the downturn, like Arizona, Florida, Michigan and Ohio, residents derived even more of their income from the government."

    Wow, and each state elected a complete asshole as governor. They are really going to be hating themselves come December.

    Hopefully, maybe even they will get it through their thick skulls that conservatives don't give a shit about them and do the right thing in 2012.

    A little aggressive messaging by Dems would go a long way to realizing that possibility.

  • PTate in MN on July 11, 2011 12:05 PM:

    Good post, Steve. Krugman has been saying this forever, not that anyone in DC listens to him. He has been right too often for them.

    We need to start using the adjective "jobs-killing" whenever we refer to conservative policies and Republicans. As in, "jobs-killing" conservative policies, "jobs-killing" austerity measures, "jobs-killing" conservative politicians, "jobs-killing" tax cuts and so on.

    Eventually, after many repetitions, it might start to penetrate the thick skulls of the voters who still imagine that that Republicans (that should be "jobs-killing" Republicans) have any interest in actions that would help 98% of their fellow Americans.

  • Marko on July 11, 2011 2:26 PM:

    Shorter GOP: The beatings will continue until morale improves.

  • Mike on July 12, 2011 12:49 PM:

    Texas Aggie are you saying that the average American is too stupid or too uneducated to vote Liberal. I would ask you folks where all this money is gonna come from. Wait lets just tax the rich and corporations more. When is the last time any of you got a job from an unemployed poor person getting as govt check? You folks are living the greek/european dream/nightmare, you just dont know it yet. Welcome to austerity land.

  • Crazy guy on July 12, 2011 3:58 PM:

    I don't know why the US government doesn't just give everyone a million dollars, "that would benefit the individuals and their families, while also helping the larger economy", right?

    Those awful republicans don't want us to have a million dollars, vote them out! Who cares how high the debt goes, it's some rich guy's fault. Hey, let's take their money and distribute it amongst ourselves, god knows I don't want to work harder and I would prefer it if someone else works harder and sends me a check. Make it so, fearless democrats.

  • Big Z on July 12, 2011 4:36 PM:

    Bottom line: we've had 8 years of corporate welfare and tax cuts for the rich that the Job-killing Republicans (kudoes to PTate in MN) insist will stimulate the economy and it hasn't worked.
    Didn't work when Hoover tried it in the late 20's. We came out of that Depression in part because Roosevelt put people to work fixing our infrastructure. Didn't work when Reagan tried this "voodoo economics" either. We came out of that recession when Clinton raised taxes on the rich and increased public spending.
    That's why Republicans are rewriting and de-emphasising history in school; they don't want us to remember their failures.