Washington to the Rescue

With the jobless rate at alarming levels, 10.2% officially but depending upon who you consult unofficially, it is upwards of 20% when the under-employed and discouraged workers are included, the Keynesian economists and others are advocating that Washington spend more to create jobs. Recently the Obama Administration claimed that the stimulus has saved or created 640,00 jobs but unfortunately this falls far short of the numbers required.

Now that the banks are saved and the economy is stabilizing, the private sector has failed to create any jobs as expected. In fact, there has been a net loss in private sector jobs this decade so I don't know what Washington was expecting when they set out to save them. Instead, companies are continually cutting payroll to balance out their bottom line. So, if Corporate America cannot or will not create jobs, the belief is that the government should step in to remedy the situation. Besides, the Democrats have a stake in getting people back to work else their dominance of Congress and the Presidency may likely evaporate as the populace becomes more disgusted.

Meanwhile the government, in the face of declining tax revenues, has ratcheted up its ever burgeoning debt in its efforts to save the economy, save the banks, save current homeowners and encourage future ones among other stimulus efforts. Yet, despite the backlash against continued government spending, given the massive $12,000,000,000,000 debt and the $1,400,000,000,000 annual deficit, the government is being urged to spend more on job creation a la FDR's work programs during the Great Depression. Theoretically, the government could have spent more money on job creation and less on cash for clunkers and homeowner tax credits. After all, if jobs are created people will naturally have money to spend instead of enticing them with perceived "savings."

But there is more to consider when it comes to job creation. I came across a statistic recently that 58% of Americans receive some form of income from the government - public sectors workers, social security & pensions recipients, members of the military and military contractors and so on. Corporations are telling us that cutting costs is the only way to balance the books when revenue falls. If so much of our tax dollars are going back into paying ourselves, how can the government ever balance its books?