NBER'S RECESSION - CONFIRMING THE OBVIOUS
BY JULIANNE MALVEAUX
No one was surprised that the National Bureau of Economic Research
confirmed that our economy has been in a recession since March of this year.
Indeed, the academic economists who comprised NBER’s “business cycle”
committee could have polled people at bus and subway stops, at malls or in
inner cities, to get the same answers they offered with their painstaking
research. The writing has been on the wall for some time – what with news
about increased layoffs, rising unemployment rates, plunging consumer
confidence, and weaker retail sales. Just as records were set during our
nation’s economic peak, now they are being set in the trough. Three years
ago, our highs were higher than they have ever been, but now our lows are
lower, with consumer confidence at a 7 1/2 year low. If our economy were a
patient, we’d have to call it bipolar, given its extremes.
Still, the NBER failed to tell the whole story about the recession, the
story that Americans at the periphery have been feeling for months. When the
overall unemployment rate ticked up by half a percentage point, black
unemployment rose by a full point. When layoffs began, those in the service
sector began to feel the brunt of them. The effects of the recession are
hardly distributed evenly. We are in the same boat of economic downturn, but
some folks are riding, and some folks are rowing. It is no exaggeration to
say that those at the bottom are doing most of the rowing, bearing the brunt
of this recession.
Congress is doing Nero’s equivalent, fiddling while Rome burns. While
there is a need for economic stimulus, the Senate Democrats have it right.
Nothing will come from handing corporations rebates on t heir taxes. On the
other hand, if relief is provided for those who need it most, that is likely
to pump the economy up. In other words, a stimulus package should replace
the income that those who are newly unemployed have lost. We should provide
unemployment insurance benefits for those part-time workers who have been
laid off. And, we should provide health insurance for those who have lost it
when they lost their jobs. If we can quickly implement public works programs
that look like the CETA (Comprehensive Employment and Training
Administration) programs of yesteryear, we should. And the federal
government should provide assistance to cities and states so that they don’t
have to cut essential services when the economy turns down.
Instead of trying to help people, the Senate and the House of
Representatives are at such loggerheads that moderate Olympia Snowe (R-Maine)
has spoken of her “disgust” with the path leading to a stimulus package. NO
wonder. The House of Representatives passed a cushy bill that Treasury
Secretary Paul O’Neill described as “show business:” because it was so
inappropriately generous to corporate interests. President Bush has asked
that some kind of stimulus bill be passed before Congress recesses, but he
seems to have confused his campaign promises to corporations with the real
need for a jump-start for the economy. Few believe that corporate tax cuts
will grow the economy in the short run. Indeed, some feel that these tax
cuts will imperil our nation’s long-term fiscal stability. But because both
sides view stimulus from lenses that are tinted by partisanship, the
possibility of compromise seems difficult.
The NBER declaration of recession would seem to put pressure on the
Congress to act on a stimulus package. But since the average recession lasts
less than a year, and this one seems well underway, there are some who feel
that no stimulus is better than flawed stimulus possibilities offered by the
House or the Senate. I’d be inclined to agree were it not for the plight of
those at the bottom who gained little from a decade of economic expansion,
and who are being pushed into financial instability by this current
recession. If Congress can’t agree about what to do with corporate
incentives, why not agree to extend unemployment benefits, and to raise the
minimum wage? Why not, after 5 years, offer something to the 10 million
Americans whose earnings tick up a few pennies a quarter, but whose work
efforts we all depend on?
Such action would be out of character for Republicans who believe in
trickle down, not trickle up. But just as the statement of recession is
obvious, so is one of recession’s solutions. Put some money in the hands of
people at the bottom, people who will spend. Watch them flock to malls and
department stores, shoring up the retail sector. Watch retail profits rise
with receipts. Watch an economic renaissance, stimulated by government
spending. It’s an obvious solution, but an effective one. Why doesn’t
Congress get it?