Austerity Hastens Economic Decline
Austerity Hastens Economic Decline
by Stephen Lendman
Obama and other Western leaders face Depression conditions. Roosevelt addressed them in the 1930s. Imagine how austerity then would have imposed greater hardships.
Instead Americans got Social Security, homeowners loan refinancing, and moratoriums on foreclosures. Small farmers were helped unlike current subsidies earmarked for agribusiness.
Farm credit provided refinancing help. Doing so let many stay solvent and survive.
Unemployment insurance was established in partnership with states. Jobless workers got help. Now they're being told go find a job. We won't help you. More on that below.
FDR's alphabet soup of programs created jobs. Civilian Conservation Corps (CCC) workers built public infrastructure and worked on other projects.
Civilian Works Administration (CWA), National Industrial Recovery Act (NIRA), Public Works Administration (PWA), Works Progress Administration (WPA), Tennessee Valley Authority (TVA), and other federal initiatives put millions back to work.
Despite hard times, people got help. So did America. Accomplishments were impressive.
They included building or renovating 700,000 miles of roads, 7,800 bridges, 45,000 schools, 2,500 hospitals, 13,000 parks and playgrounds, 1,000 airfields, and other infrastructure projects.
Much of Chicago's lakefront was built. Unemployment dropped from 25% in May 1933 to 11% in 1937. It then spiked when victory was declared too early. War production revived economic growth. Full employment followed. Mirror opposite conditions exist today.
Over three years after the National Bureau of Economic Research (NBER) declared America's recession over in June 2009, unemployment, based on how calculated in the 1980s, approaches 23%.
Poverty is at Depression levels and rising. Stimulus and job creation programs are absent. Austerity is policy. So is directing America's resources for militarism, wars, banker bailouts, and other corporate handouts.
Growing public needs go begging. Instead of New Deal help, anti-New Dealism is policy. Increasingly people are on their own sink or swim.
On accepting his party's 1932 presidential nomination, Roosevelt pledged "a new deal for the American people" and delivered.
Obama promised "change you can believe in" and lied.
In his second inaugural address, Roosevelt saw "one-third of a nation ill-housed, ill-clad, ill-nourished."
Millions, he said, had too little income to live on. Disaster threatened them daily. Millions more had many other hardships. He promised to help more and did.
In his last State of the Union Address (January 11, 1944), he proposed a second bill of rights. He called the initial one "inadequate to assure us equality in the pursuit of happiness." His solution was an "economic bill of rights." He wanted it to guarantee:
- employment with a living wage;
- freedom from unfair competition and monopolies;
- medical care;
- education; and
- greater social security than provided in his first 11 years in office. He urged greater protections from the economic fears of old age, illness, accident, and unemployment.
He called his proposal "security. And after this war is won we must be prepared to move forward, in the implementation of these happiness and well-being."
Doing so, he said, was in the interest of democracy, humanity, fairness, justice, and a nation discharging its responsibilities for all its citizens equitably.
Weeks after his death (April 1944), his (GI Bill) Servicemen's Readjustment Act became law. It provided college or vocational education for 7.8 million returning vets. It also included a year of unemployment compensation.
In addition, 2.4 million got VA-backed low-interest, no down payment home loans at a time their average cost was under $5,000. Doing so let millions of families afford them.
Studies later showed the GI Bill was one of America's soundest investments. It paid for itself seven times over. It also helped millions readjust successfully to civilian life.
Roosevelt's vision was impressive even though his proposal was partially implement. Today, it's fast eroding. Bipartisan neoliberal ideologues want social America destroyed. At the same time, they want freedoms ended and repression targeting non-believers.
For over three decades, New Deal and Great Society programs eroded, ended, or are earmarked for elimination.
Growing millions of Americans today face poverty, homelessness, hunger, and government indifference to their welfare.
Europeans face similar treatment. Banker and other corporate priorities matter most. Austerity places greater burdens on ordinary people struggling to get by.
Fragile economies get weaker. Hard times get harder. Misery Index readings show why. Prior to November 1980's election, it was 22%. It helped Reagan defeat Carter. Today it's 27% and rising.
Occupy Wall Street and European protests reflect public angst. Economic data reveal troubled economies. Readings keep heading south. June German factory orders dropped 1.7%. They're down nearly 8% below year ago levels.
The latest US CEO confidence fell to 60 in Q II. It was the largest drop since 2009. The outlook for sales, revenues, hiring and capital spending eroded significantly.
Europe's Sentix investment sentiment is lowest in over three years. China's crude steel production looks on track to decline in 2012 for the first time in 31 years. Asian trade and domestic demand are softening.
Chinese exports declined three of the past four months for the first time since spring 2009.
Markets rise on hope, not reality. Economic and corporate fundamentals are weakening. Eurozone economies are extremely unstable. Eventually expect what never should have been created to partially or wholly dissolve.
Rising global food prices adversely affect households. Their impact with high energy costs impacts other spending.
Europe's recession is deepening and spreading. Core European industrial activity is falling. Exports are lowest since April 2009.
June US factory orders are down. Core capital goods order revisions showed more weakness than first reported.
One analyst called America's July employment report a head fake. Key distortions included exaggerated birth-death created jobs, seasonals, and internal weaknesses refuting the headline 163,000 read.
Moreover, the broader Household Survey plunged 195,000. Full-time jobs took the entire loss. They dropped three times in the past four months. Only 16.7% of industrial order books rose in July. It was the worst showing since February 2009.
Hard landings look inevitable. On January 1, around $2.2 trillion in sequestered budget cuts are scheduled. Trillions more are likely after November elections. Hard landings look inevitable.
Around half a million Americans lost extended job benefits earlier this year. On January 1, expect another two million to join them. America's Emergency Unemployment Compensation (EUC) ends.
Beginning next year, maximum benefits last 26 weeks. Average unemployment duration way exceeds it. Obama officials said renewal won't be sought. Congress previously extended it 10 times.
People need this money to survive. It's all spent and has economic impact. America's needy care about food, rent or mortgage payments, medical care, and other essentials.
Republicans and Democrats cut a deal to spurn them. Doing so institutionalizes poverty for growing millions. Beginning next year, less than a third of jobless workers get unemployment benefits. Expect those numbers to rise perhaps exponentially if dire economic predictions prove right.
It's the wrong time to be jobless in America. It's as bad for workers earning too little, losing benefits, and vulnerable to layoffs as economic conditions weaken.
It's worse in Europe. Rising unemployment, falling wages, eroding benefits, and indifferent governments mean harder times than in decades. They're spreading globally.
People struggling to get by increasingly are on their own. Where this ends, who knows. When pain levels cross thresholds of no return, anything ahead is possible. It's hard putting a positive spin on what looks likely.
Stephen Lendman lives in Chicago and can be reached at email@example.com.
His new book is titled "How Wall Street Fleeces America: Privatized Banking, Government Collusion and Class War"
Visit his blog site at sjlendman.blogspot.com and listen to cutting-edge discussions with distinguished guests on the Progressive Radio News Hour on the Progressive Radio Network Thursdays at 10AM US Central time and Saturdays and Sundays at noon. All programs are archived for easy listening.