When China slows, the world economy will stutter
Say no to $3.5 trillion government takeover, yes to jobs
Something isn't right in America's economy. And it's not just COVID-19.
As of late July, there were 10 million available jobs across the country, according to the latest Bureau of Labor Statistics jobs report. At the same time, in July, approximately 32 percent of respondents to the U.S. Census Bureau's Household Pulse Survey said they relied on some form of government assistance to cover usual household expenses. Nearly the same number reported needing government assistance in June, meaning an unacceptable portion of Americans are unable to sustain themselves economically with or without the Delta variant surge.
Yet, in August, only 235,000 of those more than 10 million open jobs were filled while wholesale inflation climbed at a breakneck 8.3 percent. That means those having trouble affording their normal expenses are seeing their dollar buy even less.
What's going on? If so many Americans are having trouble meeting their usual expenses, why are they not taking up open jobs, especially when wages are rising?
A new report from Merrill Lynch provides an important clue. It shows that for the 12-month period between April 2020 and April 2021, an unemployed family of four with two children received an average of $108,800 in unemployment compensation, stimulus checks, and other government assistance. Workers likely have been doing an easy cost-benefit analysis in favor of unemployment, leaving America's economic comeback lagging.
Unfortunately, President Biden and Democrats in Congress want to respond to this crisis by continuing our printing, spending and inflation splurge. Not content with the more than $6 trillion in pandemic spending since last spring, they're pushing a massive $3.5 trillion budget reconciliation bill that hands lump sums to special interests and expands federal welfare programs to influence every facet of our lives - not to mention the proposed hikes in taxes.
The pandemic lockdowns may be over, but if this reconciliation bill is enacted, the government-caused crisis of persistent unemployment and inflation may be here to stay for quite some time. As long as politicians think unsustainable spending is a solution, not a problem, America won't be "back."
America will only be back when businesses that create jobs can also fill those jobs, and when government policy favors long-term growth rather than short-term consumer stimulus. As a National Bureau of Economic Research analysis found, "Increases in taxes and increases in government spending have a strong negative effect on investment spending." If multiple economic factors are considered simultaneously, it becomes clear that government spending hurts job creation in the intermediate term. And, as we're seeing now, extreme government stimulus spending keeps workers on the sidelines even when jobs are available.
This is not to say that a safety net is not helpful in times of emergency - but welfare can't replace work. Studies show that poverty itself is only marginally alleviated by government assistance. For example, a recent American Enterprise Institute study demonstrated that Americans in poverty historically have experienced less financial and food insecurity during periods when welfare offerings were lowest and least used. The reason? A strong economy opens opportunities for work and wealth creation. The authors concluded: "While a strong social safety net is vital to protect workers from negative shocks, especially during recessions, it is not a replacement for a strong economy."
Our economic recovery from the COVID shutdowns is still in its infancy and, as recent downgrades of GDP growth forecasts by economists indicate, it's also fragile. Righting the ship would not take much. Policies that incentivize gainful employment, reduce regulatory barriers, let innovators fairly compete, and rein in government overreach are not genius ideas; they're basic principles. Not spending money you don't have is something every American family has to learn - so why not the government, too?
It's time for our nation's leaders to ditch the tax-and-spend fantasy and get real. Real economic growth will come from a strong business community and a robust workforce that isn't lured onto the sidelines by the short-term thinking of left-wing politics.