April 04, 2008
by: jovial_cynic

image: Queue for job (cc) le Haricot

A report today came out stating that the Labor Department dropped another 80,000 jobs during the month of March, bringing the unemployment rate up to 5.1%. It seems that we should no longer be asking whether or not we're in a recession -- we should be asking how we can get out of it.

When you have a decrease in available jobs, you naturally have an increase in people looking to the government for assistance. Food-stamp recipients are at an all-time high right now, and it doesn't look like it's going to decrease any time soon.

Driven by a painful mix of layoffs and rising food and fuel prices, the number of Americans receiving food stamps is projected to reach 28 million in the coming year, the highest level since the aid program began in the 1960s.


Citing expected growth in unemployment, the Congressional Budget Office this month projected a continued increase in the monthly number of recipients in the next fiscal year, starting Oct. 1 -- to 28 million, up from 27.8 million in 2008, and 26.5 million in 2007.

I've been debating with a friend on the issue of which segment of the population benefits the most from taxes, and who is impacted financially the most by taxes. Regarding Obama's tax plan, I stated that "I just happen to prefer the way Obama wants to spend my tax dollars. I think that it is better for society." And I say this because I'm concerned about the massive layoffs, the increase in inflation, and because caring for the poor seems like a good use of resources. Decreasing taxes on major corporations who give their CEOs $21.7-million-dollar bonus checks seems a little backwards.

In regards to my support of Obama's tax plan (which, in fact, increases taxes on households who make more than $75,000), another commenter on the blog replied:

Are you kidding????? Entitlement programs are better for society than national security?

Are you aware that the Obama Tax Plan includes a giant tax increase for the nation's "wealthy"?


Sorry, but I'm sick of politicians reaching into my pocket to pay for people who won't work. (emphasis mine)

How the cognitive dissonance doesn't make some people's brains explode, I have no clue.

With the downturn of the economy, a sharp rise in inflation, and the decrease in available US jobs, do people really think that the issue here is people who just won't work? Are we supposed to ignore the predatory loan practices that led us to the sub-prime mortgage crisis that's causing the economic downturn? And in the midst of all this, the US government is going to bet $29 billion dollars of tax payer money to bail out Bear Stearns, while 3 million homeowners are going to default on their mortages. And that makes my brain want to explode.


Byron said:
Yes I do think it is about people who dont want to work. I work my ass off and I still have my house, two cars, and money in the bank. That is because I chose to keep the house and low payment I have instead of buying a $300,00 to $400,000 that I would have loved to have. However, I am smart and not a speculator. 90% of the mortgage problem is not the lenders (however they should not have just given money away regardless of the person walking in thusly they should lose their business for doing it) but the people expecting their house value going up and making a killing on the market and then not refinancing before their mortgage went up as is written in the contract and no one held a gun to their head deserve to lose their home and let the market readjust itself as the realtors have overvalued and overinflated home prices for years. These realtors now will take their profits like they did in the mid-80's and run until the market gets better instead of sticking around and helping with the crisis they helped create. We should not bail out the companies or the people. My tax dollars should not be spent to help someone making 6 figures and hoping their house goes up in value and to then sell it for a profit. Real Estate is just like the stock market, if someone invests 300,000 on the stock market stupidly and then loses it are then going to bail that moron out?
April 04, 2008

jovial_cynic said:
Byron - working hard doesn't seem to make much of a difference when your job suddenly goes away.

The Bear Stearn bailout and predatory lending issue was a side issue based around the government's tendancy to help the people who need help the least. That wasn't really the main point of my argument.

But I don't know how you can argue that it's about people who don't want to work when the number of available jobs keeps diminishing. If you get laid off, is it because you didn't work hard enough? When your job gets outsourced to China because free-trade agreements allow corporations to leverage cheap labor instead of paying you your wage, is it your fault?

April 04, 2008

The Conservative Manifesto said:
"It seems that we should no longer be asking whether or not we're in a recession -- we should be asking how we can get out of it."

While we should certainly be talking about how to reverse the economy's directions, your assertion that we are currently in a recession is unfounded.

As I'm sure you know, a recession is declared after two consecutive quarters of negative economic growth We have had no such consecutive quarters.

I'm not saying the economy isn't headed in that direction, as most indicators show. However, we are not yet in a recession.

If Q2 2008 is similar to Q1 2008 (and assuming it coincides with the GDP numbers we probably won't see for another few week), then yes, a recession will be declared. However, we're not there yet, and hopefully last week's bear market rally is an indicator that we can avoid a true recession.

On a more partisan note, it's curious that the same people prematurely screaming about "Bush's recession" are the same people who were trying to convince us that the economy has been in ruin for years. If we're just now to be worried about a true recession, it seems appropriate to point out that the economy has been doing quite well until recently.

April 05, 2008

jovial_cynic said:
TCM - technically, you're correct. We're not officially in a recession, but I think it's "in the bag," as it were. My emphasis was really to point out that we should spend less time debating whether or not we're in one and more time directing our energy towards a solution to the existing problem.

But yeah - I understand people are blaming Bush for the recession. The thing is, different people are feeling different impacts of the economic downturn, and there's a number of ways to look at it. You've got the neo-cons running up quite a costly war, and I'm sure that foreign investors see the national debt as a high risk. So you've got the drop in the value of the US market, and then the drop in the stock market, the loss of jobs, the increase in food-stamp usage, etc., etc., and in this case, the neo-con push for a more complete open market seems to have helped excacerbate the problem. I think a little bit of protectionism would have buffered some of the impact. And while I generally lean free-market because of the benefit it provides to the economy, I also think that the economy must come secondary to the citizens who make up that economy.

With that in mind, I think that the Bush administration can be blamed for some short-sightedness, and that last several years of success can be likened to a get-rich-quick scheme that's coming back to bite us in the rear. Us, being the tax payers, that is; not the neo-cons. They've certainly made their money on this get-rich-quick scheme.

April 05, 2008

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