Political Muscle-Men Weak-Kneed
by Hiland Doolittle
Riding a wave of seasonal improvement at manufacturing facilities, the weekly U.S. Unemployment settled at it lowest level in two years. The fall in unemployment claims was aided by GM’s determination to continue working through the summer months and a trend among states to try to avoid seasonal layoffs. New York State was not one of those states.
The New York Federal Reserve published its “Empire State” summary. The report indicated that a state composite of business factors dropped a whopping 15 points in June to 5.08.
Most importantly, the American consumer and American business are both running scared. American business is hoarding cash like never before. The American consumer is in a “necessities only” only state of mind.
The U.S. Labor Department reports that seasonally adjusted farm prices fell 0.5 percent in June on top of 0.3 percent in May. The lack of consumer confidence has caused analysts to lower their projections for the second quarter and to lift projections for a double dip recession.
For the week ending July 3, 2010, 4.68 million persons received unemployment benefits after the one-week waiting period. The projected unemployment figure had been 4.41 million.
Budget concerns and political jousting have caused millions of Americans to see their benefits expire. The number of persons either dropping unemployment benefits or politically prevented from collecting benefits another 236,162 to 3.91 million in the week ended Junes 26.
The Labor Department indicates that 45 percent of the 14.6 million persons unemployed in June have been out of work for six months or more. Unemployment benefits are administered by state in cooperation with the federal government.
The Senate Impasse
Like much of today’s significant legislation, an impasse on a bill extending benefits to workers is mired in political bickering. Originally, Congress voted to extend benefits from 26 to 53 weeks. The new legislation would extend benefits to 99 weeks.
Current legislation to extend the benefits longer has passed in the House but is stalled in the Senate. The original bill called for release of $34 billion more beginning on July 1, 2010. When the bill hit the Senate, 11 Democrats opposed the legislation. Senate Majority Leader Harry Reid promised another vote on Tuesday the 20th.
At issue is the federal deficit. Fiscal conservatives believe the government cannot afford another $34 billion stimulus-type spending package. Additionally, conservatives have suggested that extending the benefits relaxes the recipient’s desire to find work. Liberals disagree; stating that extending the benefits puts the American consumer back in the marketplace.
Due to the impasse, more than 2.1 million Americans lost their unemployment benefits from June 5 to June 10. If benefits are not extended by July 31st, another one million persons will follow suit.
Outside Washington, Main Street understands that no progress and no plan is a dangerous path. In Ohio, unemployment was 10.7 percent in May and 83,000 new applications were processed in June.
Democrats argue that Republicans want people to suffer so as to influence the November elections. Republicans suggest that Democrats cannot make difficult decisions. Main Street residents see Washington politicians pointing fingers and blaming the other guy when what is needed is someone to step up to the plate and fight for the voters.
Unemployment and Infrastructure May Be The Answer
Conservatives suggest that every dollar spent on unemployment or aiding state governments helps increase the GDP more than the act of extending benefits which merely increases the deficit. For example, if schools are forced to cut back on educators or even their own staff, those employees become an immediate liability of the state and the federal government.
If the government is going to adopt another stimulus package, the proceeds must be spent on infrastructure. These necessary expenditures increase jobs, increase manufacturing and increase consumption; all good things.
Washington needs to take action, now! We have waited while they jockey for position long enough.
Tags: 2009 Stimulus Package, Consumer Confidence, depression, GDP, recession, Retail Sales, US GDP
About the Author - Hiland Doolittle
Hiland is a professional writer with extensive entrepreneurial experience. He is a graduate of St. George’s School Newport, RI and the State University of New York at Albany where he majored in history. He has been active in the real estate business for 30 years and has founded and sold several businesses.
Hiland currently writes for several financial sites and is a published author of the novel The Last Parade. He has recently completed a manuscript for a children’s book entitled Sami and The Minnow Man.
