Let me begin by saying that although Democrats deserve to lose, Republicans certainly don’t deserve to win.
1) The economy is in terrible shape. Unemployment is dismal. Long-term unemployment in particular is dramatically worse than it’s ever been.
The long-term unemployment situation continued to deteriorate in May, as an additional 47,000 unemployed workers crossed the six-months-unemployed threshold. There are now 6.8 million workers who have been unemployed for longer than six months, which is unsurprising given that there are now well over five unemployed workers per job opening. The median, or typical, unemployment spell was 23.2 weeks (5.4 months), and nearly half (46.0%) of all unemployed workers had been unemployed for over six months, both record highs.
Click through and scroll down to look at the graph, which is one of the more scary-ass trend lines I’ve ever seen.
2) We know how to fix the economy; what’s needed is a truly gigantic, short-term injection of stimulus from the government, to get the economy moving and people working. Unfortunately, there has not been any net fiscal stimulus.
The proper measure for fiscal stimulus is not spending by the federal government; it is spending by all levels of governmeTnt. And when you look at the contributions to US GDP growth (Table 1.1.2 at the BEA site), total government spending has been a drag on growth over the past two quarters. The increases at the federal level have not been enough to compensate for the spending cuts at the local and state levels.
3) The long-term damage caused by high levels of unemployment will be a drag on the US economy (and on Americans individually) for many years to come, maybe decades.
Taken as a whole, the results suggest that the labor market consequences of graduating from college in a bad economy are large, negative, and persistent. [...] There is a growing body of evidence on the deleterious effects of long-term unemployment on individual well-being, including lowered earnings, which can persist for many years after re-employment, as well as increased mortality, poorer health outcomes, greater probability of depression and other mental health issues, and marital instability.
4) Many Americans seem to believe that we can address the long-term deficit problem, or we can address unemployment, but we can’t address both. That’s not true.
If we spend an extra $1 trillion over the next three years in unemployment-reducing stimulative fiscal policies, we raise–at current interest rates–real government debt service in 2030 by $7 billion a year. [...] Whatever we do (defined as spending up to an extra $1 trillion) in the short run (defined as the next three years or so) is rounding error in the context of our long-run fiscal stability problems. [...]
Think of it this way: our natural gas pipes are corroding, and there is a good chance that
tomorrowten years from now we will have a gas leak and if we do not fix it the house will explode. And Henry Blodget is using that danger to argue that we shouldn’t turn on the heat tonight even though it is snowing outside…
In fact, unaddressed long-term unemployment makes it harder to deal with the deficit.
In the US, there are two political parties that matter. Republicans are obviously hopeless on this issue; the average Republican Senator is considerably more likely to pound iron nails into Superman’s skull using only a hammer made of cotton balls, than to support a really good fiscal stimulus bill.
What’s horrible is that the Democrats have been only marginally better. I don’t think the Democrats are saints — far from it — but I would have imagined, once, that self-interest would motivate the Democrats in Congress and in the White House to do everything they possibly can to bring unemployment numbers down, because that is the single factor that will make the most difference in the next election. But instead, Democrats have continually settled for quarter-measures and half-measures.
I think the Democrats will pay for their tepid response to unemployment in November — and they’ll deserve to lose. A majority party that doesn’t treat our current levels of unemployment as an urgent crisis does not deserve to retain power. Unfortunately, the Democrats losing equals Republicans winning, and they don’t deserve to win, either.