If this proves to be true, the Republicans may have maneuvered the Obama White House into an agreement that will make it a one-term administration.
http://thinkprogress.org/...
The agreement would reduce spending by at least $1 trillion over 10 years, but even the near-term cuts could shrink already sluggish GDP growth by 0.3% in 2012. According to EPI, the plan "not only erodes funding for public investments and safety-net spending, but also misses an important opportunity to address the lack of jobs." In particular, the immediate spending cuts and the "failure to continue two key supports to the economy (the payroll tax holiday and emergency unemployment benefits for the long term unemployed) could lead to roughly 1.8 million fewer jobs in 2012."
Now, combine that bit of news with this:
http://www.huffingtonpost.com/...
The unemployment rate has ticked steadily upward for three straight months, reaching 9.2 percent in June. And with more companies planning to lay off workers, economists expect July's reading to be similarly gloomy.
When fewer members of the workforce have jobs, less money circulates through the economy, and general economic progress slows. A job loss can cause a person to default on their mortgage, which can lead to a foreclosure. That in turn can further depress home prices, again weakening the broader economy.
In a widely circulated research note this week, Goldman Sachs economist Andrew Tilton described a formula for predicting recession. If the unemployment rate rises to 9.3 percent in July and stays that high in August, that means the economy has either already entered recession, or will do so within six months, Tilton said.
Yeah, I know. I see "Goldman Sachs" and wonder what his angle is, too. But what if he's right?
If we're teetering on the edge of another official recession--as opposed to the unofficial one that has lowered the standard of living for most Americans nonstop since 2008--can we afford to lose 1.8 million jobs over the next year and half thanks to the debt ceiling deal?
Those who will lose the jobs sure as hell can't afford to lose them, but they won't be the only losers.
"It's the economy, stupid," as James Carville famously said. It's always the economy. Most people base their votes on their bank accounts.
But Obama was maneuvered this past week into signing on to an austerity program, the kind that has made things worse in countries like Ireland because it reduces demand significantly--and right when demand needs to be boosted.
And if we are in a recession in 2012, or even if we're stuck where we are--in a teetering, doubtful place--it will be very hard for President Obama to win re-election. I'd like to think the country is sane enough not to vote for a nut, but I've sort of lost faith in the judgment of my fellow Americans. If Obama seems "wishy-washy" in the face of continued economic downturn in 2012, they'll do what they did in 2010: vote in someone, anyone, new.
So, as angry as many of us progressives are at President Obama right now, he may end up being angry at himself and those in his circle who keep advising him to capitulate to the Republicans rather than fight them.
He may have agreed to take 1.8 million jobs out of an economy that can ill afford to lose them at this time, much less in an election year.