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.
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