We've known for a long time that Republican-dominated states where politicians seem to talk most about "rugged individualism" and "federal meddling" and "government overspending" are likely to get more money back from Washington than they send there in the first place. As a consequence of the recession, that flow of dollars has been even higher than usual, particularly from the food stamp program and jobless benefits. That kind of money is spent immediately, keeping food on the table and a roof over families. And keeping small businesses alive with consumer money that otherwise wouldn't be there.
But as Motoko Rich at The New York Times reported Monday, a big hunk of the flow will be cut off at year's end?extended unemployment benefits. Not because the benefits are no longer needed. Twenty-four months after the recession officially ended, 14.1 million Americans are still officially out of work. The numbers that don't get as many headlines are a good deal worse than that. Some analysts have predicted that there will be as many as 450,000 new layoffs of state and local government workers in fiscal 2012, which would bring the total since January 2008 to more than a million.
Unless hiring picks up sharply to compensate, economists fear that the lost income will further crimp consumer spending and act as a drag on a recovery that is still quite fragile. Among the other supports that are slipping away are federal aid to the states, the Federal Reserve?s program to pump money into the economy and the payroll tax cut, scheduled to expire at the end of the year.
While these reverse-stimulus cuts in government spending by the end of this year will be bad enough, fiscal 2012 will be worse, with federal programs that contribute $310 billion set to expire. For extended unemployment benefits alone, the figure is $50 billion. James C. Cooper of The Fiscal Times points out that the end of those programs will hack 1.5 percentage points off of growth in gross domestic product. And that's before taking into account ongoing talks about further tax cuts. Given the tepid GDP figures we've seen in the first half of 2011, we could again be talking double-dip recession. Or back-to-back recessions. Or a continuation of the current mess. Or whatever else you want to call such a catastrophe.
States such as Florida and Michigan, with their higher-than-average unemployment rates, will be heavily affected. And the tax cuts being touted in Washington will make matters even worse.
As Steve M says:
And when those cuts fail to revive the economy?when, inevitably, the economy gets much worse?you know what the red-staters will blame: Big Government.
Grover Norquist must be all grins these days.
political donations politics and religion latest political polls which political party should i vote for
No comments:
Post a Comment