Wednesday, June 19, 2013

What Should We Do About Congress and the Economy?

The 113th Congress is not a productive organization. Members of Congress are so far apart ideologically after an election where both sides agreed the economy was the central issue. However little legislation relating to that has passed Congress and been signed into law since the Fiscal Cliff deal in January.

The main problem is unemployment which stands at 7.6%. People without jobs cannot buy the good or services that would lead to other people being hiring, which leads to a snowball effect of an improving economy. Without good jobs, young people can’t accumulate savings to pay off loans, buy houses, and otherwise buy the trinkets that fuel our post-industrial economy.

The Great Recession exposed all the small issues that were festering under the surface of the boom economy of the mid 2000’s which consisted of too many houses being sold shadily and rampant speculation on Wall Street.

None of that resulted in solid middle class jobs an individual can use to afford the fix the many little problems that come down to money. These problems include an unhealthy population, a poor educational system, and many desperately poor individuals, among other problems.

How long has the economy been this bad?

These issues have to the fore since that bit of prosperity is gone. Baby Boomers have a crippling fear of inflation that arose from their own coming of age in the 1970’s. Some say the fear of inflation has restraining efforts to increase government expenditures to boost economy. To make matters worse, austerity seems to be in vogue among Republicans. This in part because the establishment wing of the Republicans under W. ran the deficit up.

The 70’s were a time of transition when decrepit factories or revitalized loft apartments started to be abandoned. This is due to globalization, along with the recovery of many countries from World War II, and thus the shrinking of global markets.

Decent blue collar jobs are now gone. What’s in their place? Warehouse jobs, some clerical jobs, Wal Mart, and McDonald’s. These jobs come with no benefits, salaries that leave no room to save, and little room for advancement. It’s enough to make one feel like there’s no such thing as society and that everyone is out for themselves.

But none of this matter if you have a good job, if your mortgage is paid off and your children are secure. For those not suffering, what’s the problem? Some lazy liberal arts majors don’t have jobs? Well that’s what they get then! Minorities? Well you know about them…

Government revenue from middle class income taxes could relieve the 7.6% unemployment. During the New Deal, the Works Progress Administration provided employment for a massive amount of people not only in blue collar jobs but also in projects for writers and artists for different community services.

While many of those jobs provided services that we don’t need now, there is a massive infrastructure problem. Some rails are so rickety that trains derail. The problem is that the amount needed to fully the address the infrastructure is substantial at some $170 billion for roads. And that’s just roads, not including trains, ships, and other transportation options.

Breakdown of the FY 2010 federal budget by category
Breakdown of the FY 2010 federal budget by category

How does Congress come into the story?

What do the Republicans want to do? Cut the budget, lay off government workers, and let the invisible hand of the market work its magic. But the invisible hand has arthritis!

The real problem with Congress is the old “what’s in it for me?” What used to be in it for them were earmarks or pork-barrel spending. This was denounced most famously in 2005 when then Senator Ted Stevens (R-AK) wanted to spend millions of dollars on a bridge to an island with a population of a few hundred.

Plenty of politicians have used pork to bring home millions of dollars to projects that were more about building loyalty than efficient economic development. At a time of massive deficits, these things seemed easy to cut once the Republicans took power. But the federal deficit didn’t grow to its current size due to earmarks.

The point of earmarks was to persuade opposition to support legislation, which was far more important than the legislation’s effect on the deficit. Earmarks helped passed the Civil Rights Act and NAFTA. Give a difficult man money and soon he’ll be your best friend. While things were not perfect in the past using earmarks, it beats gridlock and 7.6% unemployment.


Earmarks were banned following the Republican takeover of the House in 2011 led by Speaker John Boehner and House Majority Leader Eric Cantor. Boehner though might miss earmarks. Bringing back rebranded earmarks would be a great way to address the economy and Congress.