It’s not suprising that as we head into the 2012 election season how fast President Obama’s ideological opponents want to tie him to the 512 point slide in the Dow yesterday but not give him credit for bringing the market back over the last 2.5 years.
The market slide was partly driven by an investor base more concerned with the fiscal policies of Congress and not the leadership of the president. The debt deal debate caused a crisis of confidence and the compromise hasn’t pleased anyone with its deep cuts which by the way most economists insist is a very bad idea in the short-term (thank you GOP and Tea Party for austerity measures as we are on a verge of a double dip recession). Clearly this significant pullback in the markets wasn’t only a reaction to what is happening in the U.S. Markets are also very concerned with the crisis in Europe spreading to larger countries like Spain and Italy. We have had a series of short-term blows against the market, starting with the Japanese crisis, rising energy prices followed by the crisis in the Middle East, and then the Eurozone crisis.
Investors are still jittery from the wipe-out of their 401ks as a result of George Bush and his reckless policies. Now the Tea party freshman come along and investors are hearing things like “one dollar of debt ceiling for every dollar of cuts” instead of the federal government investing in the economy and taking a lead role in job creation. With an unemployment rate that’s stuck at or near 10% there has never been more of a need for the federal government to invest in infrastructure jobs programs and green jobs programs. Schools, roads and bridges throughout the country need maintenance and repair. There was a bridge in Minneapolis that crumbled beneath the weight of the cars it was built to support. We need to put people back to work and money back in the pockets of those who spend it. The first stimulus package was clearly only enough to keep us from going into a depression but not enough of a jolt to spur economic growth.
Moody’s Analytics found that one in five dollars in American consumers’ wallets came from one government program or another. The public sector has already seen deep cuts, and that trend will only worsen as the GOP focuses soley on cutting programs and no tax revenue growth or closure of tax loopholes for big business. Without investing in job programs there will be fewer consumer spenders demanding goods and services and the private sector will not create jobs. The debt argument advanced by the right is absurd and is purely a matter of ideological resistance along with a sinister effort to see the economy tank heading into an election season.
Our economy may be heading into a second “austerity recession” driven by a the efforts of a small group of extreme conservative ideologues bent on cuts, cuts, cuts. They want to dismantle everything from education programs to the social safety nets and everything this country has worked so hard for since FDR and the new deal. President Obama needs to keep making the case to the American people that the “no we cannot” Republican House taken over by this Tea Party fringe is ultimately responsible for the stagnation in the U.S. economy and as well as the latest pullback in the markets. Economists and investors realize that the Tea Party policies of “total economic austerity” is dangerous and do not bode well for an economic recovery particularly in the short-term when the country needs jobs.
In fact, it’s about time to change the Tea Party logo from “Taxed Enough Already” to “Total Economic Austerity”. The shoe fits after all.