A Government Bailout for the Average American

As the Senate dickers over the economic stimulus package, another nearly 600,000 Americans lost their jobs in January. A total of 11.6 million are now unemployed, a rate of 7.6 percent. January's job losses were spread out among the manufacturing, service, and construction sectors indicating continued broad-based weakness in the US economy. Only health care and education showed employment gains for the month.

Unfortunately, education is headed for a downturn in the coming months. With almost every state and many municipalities running severe budget deficits, school budgets are under strong pressure. Boston alone, says the Boston's Globe, is planning to cut 900 education jobs to deal with the city's expected deficit of as much as $140 million for the coming year. Expect that scenario to be repeated around the country as city after city is forced to make cuts. With taxpayers unable and unwilling to pay higher taxes on property that is falling in value, and income taxes falling as the unemployment numbers rise, there are few alternatives.

Most economists agree that unemployment will continue to rise throughout most, if not all of 2009. Not even quick passage of the President's economic stimulus can forestall the job losses completely at this point. Perhaps if it had been enacted earlier, but that's water under the bridge. Now, those same economists agree that the stimulus plan can only limit the damage and save a few million of the many jobs that will go away this year.

For a few million Americans, and the companies that make the goods they will still be able to buy, or the companies that loaned them money that they will still be able to pay back, that's a very good reason for Congress to stop their political gamesmanship and pass the bill. The bill has hundreds of billions in tax cuts that will put more cash into the pockets of the working Americans who need it. It has hundreds of billions designated for programs like infrastructure improvements that will create or save those extra 3 million or so jobs. And it has a relatively small percentage of the usual add-ons that get attached to every bill that been passed through congress in the last 30 years or more. The economic stimulus plan is the government bailout for the average citizen. Yet, it receives more opposition than bailouts of roughly the same size that were intended for Wall Street banks, and failed corporate giants.

Disclosure: None

Comments

[Dave Wrixon:]

Unemployment is a lagging indicator.

It will continue to fall throughout 2010 although hopefully the rate of increase will show signs of leveling off by the end of the year. But don't count on it. It could be that there is no net improvement until 2012 and beyond.

Feb 09 08:32 AM

[AndrewBaker:]

The economic stimulas plan is as important as the bail-outs to the financial sector: at least Main Street will get a boost through hopefully plans to improve infrastructure and alternative energy production, for example. It's no good Wall Street getting our bucks if they've nothing concrete like real production to lend it out to.

Feb 09 08:59 AM

[Firat Ünlü:]

"Boston alone, says the Boston's Globe, is planning to cut 900 education jobs"

So the teachers that have been fired will be renewing the classrooms they no longer work in with modern equipment and make sure they're energy-efficient.
Wonderful. Ayn Rand couldn't make that up.

Feb 09 09:34 AM

[kelm:]

The bill may do something in the short run but will do little in the long run to put the economy on a sustained path towards greater competitiveness, productivity, and industrial power. Failing to structure the bill with a long term strategic focus means that we are effectively just keeping the lights on for people in the hope that things fundamentally improve. That can't happen till the banking system is fixed.

Interestingly the administration is silent on what the cost of the bank bailout is going to be. Why is this? It is because it is recognized that the stimulus bill will only have a short term impact and that a longer term recovery must include getting the banks fixed. That is, the $800 billion in stimulus does little without the additional $1 - $4 trillion needed for the banks which congress has not been asked to fund yet. If congress does not authorize that bailout spending - and there is an increasing chance they won't given the flack the TARP and this stimulus have run into - then the $800 billion stimulus will be simply a blip in a downward spiral.

Feb 09 10:09 AM

[jrheintz:]

There is a large amount of time and effort spent on the stimulus package, which is loaded with to much pork and not enough substance for job creation.

The impact needed to get the economy moving is to eliminate all interest income from taxation for one year, this will put more impact into consumer hands than any move the govn could take now. Then play it by ear, taking the same action after the year , if required.

There would also be major deposits by consumers because of the excluded tax.

Think about it.

Feb 09 11:47 AM

[henarl:]

Main Street and the average American will benefit very little from any bailout plan because they are not part of the good old boys club.

Feb 09 12:37 PM

[fran:]

the upgrades won't occur until late 2009/mostly 2010 and 2011. the teachers et al won't participate as theirs are the wrong union/skills. perhaps unemployment insurance and temp work on "shovel ready" work crws are more likely.


On Feb 09 09:34 AM Yamu wrote:

> "Boston alone, says the Boston's Globe, is planning to cut 900 education
> jobs"
>
> So the teachers that have been fired will be renewing the classrooms
> they no longer work in with modern equipment and make sure they're
> energy-efficient.
> Wonderful. Ayn Rand couldn't make that up.

Feb 09 01:25 PM