Nero’s fiddling while Rome burned may be nothing compared to the folly of Washington and Wall Street’s inaction while the world economy teeters on the verge of global depression. No wonder the Occupy Wall Street demonstrators have spread across the world. By raising a din, they might wake folks up.
Last week, yet another filibuster by Republican senators blocked even a debate on President Obama’s jobs bill, which is already modest in the extreme. More than half of the bill would simply avoid making things worse — extending the payroll tax cut and unemployment insurance, and trying to limit layoffs of teachers and police officers next year. Without the extensions, the cuts in government spending and hikes in taxes would reduce an estimated 2 percent of GDP from growth next year — at a time when the economy is already near a standstill.
A good portion of the bill would provide tax breaks for businesses. And a far-too-small part would provide money for building schools, roads, sewers and other infrastructure projects that will put some people to work.
Feeling some heat, Republican senators released their version of a jobs act, which offers up sacrifices to the business gods. It would repeal financial and health-care reform, suspend regulations across the board, and advance a balanced budget amendment to the Constitution. And Sen. Rand Paul (R-Ky.) promises, with some Kentucky magic, that it would produce 5 million jobs.
Worse, the bipartisan gang of 12 legislators in Congress’s “supercommittee” continues to meet in closed sessions to decide how to cut another $1.2 trillion from deficits over 10 years. If the members fail to agree, deep cuts in defense and domestic spending begin in fiscal year 2013.
Newt Gingrich got this right for once: “It’s like saying we’re going to shoot you in the head or cut off your leg, which do you prefer?” And with the committee tasked to report before Thanksgiving, we are virtually guaranteed to spend the winter arguing about how to mutilate the economy, not about how to get it going.
Europe is already feeling the effects of premature austerity. Britain’s conservative coalition seems intent on driving the country into recession. Germany’s economy is stagnant and slowing. Greece, Spain, Portugal and Italy are on a forced march to decline.
No wonder people are in the streets. We need bold and sustained action to restart this economy, with all of the G-20, the world’s major economies, cooperating.
In Washington, only the Congressional Progressive Caucus seems to have a clue. After touring the country this summer listening to citizens talk about jobs, its members put forth a big jobs agenda — including not only major investment in infrastructure but, among other things, direct public employment, making the government the employer of last resort for everyone under 25.
(About the worst thing we could do is have the millennial generation idled at the beginning of their work lives.) Last week, the caucus’s leaders called on the supercommittee to make Wall Street and the rich pay their fair share, and to cut the defense budget to invest at home. Their People’s Budget offers a serious jobs agenda in the short run, while getting our books in order in the longer term without dismantling Medicare or savaging Medicaid and Social Security.
But the caucus is a lone voice of sanity in a cacophony of nonsense. The Republican position is that the poverty lobby, not Wall Street, blew up the economy. That the recovery plan that stanched the free-fall of the economy did nothing. That business lacks confidence, not customers. That cutting spending and hiking taxes won’t hurt if we promise regulatory reform. More probably, the GOP assumes the economy will limp along, Obama will be blamed, and it will reap the benefits in the 2012 elections. The president, meanwhile, is rightly talking about jobs, getting out of Washington to mobilize people and deploying anger at Wall Street to build public pressure to pass his jobs agenda. Yet the modesty of his program suggests that he, too, thinks the economy needs just a little “jolt” to get going.
But if the economy slows — and there is no reason to think it won’t — banks will be in more trouble, the housing crisis will worsen and unemployment will rise, not just here but across Europe and the world. The chances of a descent into depression are growing, yet most of Washington remains clueless, and the silence of the financial elites is deafening. Wall Street traders, we’re told, can clean up whether the economy rises or whether it craters. Perhaps they are too busy hedging their bets to raise the alarm. Isn’t it a stark indicator of our times that those raising the alarm are the men and women either on the left of Congress or encamping in occupations across our country?