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Economy, Consumer Spending Sink. We Need a Recovery Package Now |
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The U.S. Commerce Department’s announcement today that the U.S. gross domestic product (GDP) declined by 0.3 in the third quarter—the worst such decline since 2001—is more proof America’s working families need Congress and Bush to move a genuine economic recovery package. Says AFL-CIO President John Sweeney:
Such a package must provide relief for the one million unemployed workers who will exhaust their unemployment benefits before the end of the year; aid state and local governments so they can continue to provide needed services and jobs; and jump-start infrastructure investments to create jobs quickly and rebuild our crumbling schools, bridges, and roads.
The GDP’s decline was fueled by falling consumption spending, which declined at a 3.1 percent annual rate in the third quarter, according to the Center for Economic and Policy Research (CEPR). Further, according to the CEPR:
The fall in consumption spending was the largest drop since an 8.6 percent decline in the second quarter of 1980. It was driven primarily by a drop of 14.1 percent in durable good purchases. Car sales fell at 25.6 percent annual rate in the quarter. Purchases of non-durable goods also fell sharply, declining at a 6.4 percent rate. Spending on services continued to increase, rising by 0.6 percent. Health care spending was the main factor behind this growth.
Consumer spending is by far the largest driver of the U.S. economy, and the sharp fall in spending is the first in 17 years. According to economist Josh Bivens at the Economic Policy Institute (EPI):
While American families have known it for a long time, today’s news should surely settle any lingering academic debate as to whether or not the U.S. economy is in recession.
Some analysts see this new data as just the start of a declining U.S. economy. Ethan Harris, co-director of U.S. economic research at Barclays Capital in New York, told Bloomberg Television:
We’re going to be looking at a very unfriendly GDP number in the fourth quarter, with a drop of 2 [percent] to 4 percent.
Bivens and the EPI agree that economic aid for working families needs to happen now.
Quick passage of a strong fiscal recovery plan that emphasizes expansion of unemployment benefits and food stamps, aid to states, and direct job creation through infrastructure investment is needed.
Strengthening the middle class also requires passage of the Employee Free Choice Act, legislation that will level the playing field for workers seeking to join unions and improve their wages, benefits and voice at work.
As Sen. Barack Obama pointed out today, Bush’s trickle down theory, embraced by Sen. John McCain, is pouring down on all of America’s workers.
The decline in our GDP didn’t happen by accident—it is a direct result of the Bush administration’s trickle down, Wall Street first, Main Street last, policies that John McCain has embraced for the last eight years and plans to continue for the next four. These policies didn’t work then, they won’t work now, and I’m running for President to end them. We need to grow our economy by creating jobs, providing tax relief for middle-class families, and helping people stay in their homes, and that is exactly what I will do as President.
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Paid for by the AFL-CIO Committee on Political Education Political Contributions Committee, www.aflcio.org, and not authorized by any candidate or candidate’s committee.
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In a few days the nation will be selecting a new President. For the sake of our nation I hope it is Barack Obama.
The last eight years could be considered for a great number of Americans a national disaster. Nothing has been done right. The economy has tanked following the rule of logic. Expenditures galore thanks to two wars, and good jobs leaving our shores; while revenues shrank thanks to tax cuts to the very wealthy and a shrinking middle class that relies on credit to hold onto their former standard of living.
John McCain proposes more of the same Bush policies. He will continue the tax cuts to the very wealthy while increasing taxes on the middle class and the working poor through his health care plan. McCain, as candidate of the Republican Party, will certainly be more prone to cut even more in programs that benefit children, elderly and the poor. But, the main reason to avoid McCain like the plague is that he doesn’t seem to have learned any lessons from the past eight years. He claims to be anti-Bush, but his essence is the same or worse. His selection of Sarah Palin for Vice-President is now recognized by the vast majority of Americans as a major mistake. The Palin selection clearly shows that McCain is more interested in partisan delight than in the well-being of the nation. It should remind Americans of “Brownie” as head of FEMA during the New Orleans debacle.
McCain talks about winning the war in Iraq whatever that means. Apparently, McCain fails to recognize that we are an occupying force which will guarantee a forever opposition to our presence. In this sense he is worst than Bush who is trying to negotiate a withdrawal. The expenditures of $10-12 billion per month in Iraq should be cause of concern to our economy, and a major incentive to withdraw.
In Afghanistan, I don’t see any indication that McCain has any sense of urgency regarding what is happening there. It should also be a matter of concern his lackadaisical attitude towards Bin-Laden as shown through his response to what we should do if Bin-Laden is spotted in Pakistan.
Obama, on the other hand, right from the start of the campaign identified the state of our economy as the main issue to focus on. This tells me that Obama has a much clear understanding to what middle class and working people are going through during these days. Obama’s plan to cut taxes to the vast majority of Americans who make less than $250,000 per year is a brilliant maneuver that in the long run will have major positive effect in the economy by adding monies to hundred of millions that need it to buy goods. Obama has also talked about tax credits for business owners as long as they hire workers.
Obama’s opposition to the Iraq War is well documented; what it’s sometimes glossed over are the reasons he opposed our involvement. Obama was clear from the get-go that Iraq would be a quagmire that will tie us down for years. He was also reticent to support a war that did not have an exit strategy attached together with it. He never believed that we will be greeted as liberators. In Afghanistan, Obama understands the urgency of the crisis there. He will also be more open to share views with Republican officials, like Secretary of Defense Robert Gates, on how to deal with difficult foreign policy objectives. McCain, I am sorry to say, is yet to identify his objectives. Platitudes will not do the job.
The choice of Joe Biden as Vice-President is another indicator of the seriousness of Obama. Biden is a nationally recognized expert on foreign policy matters. Biden is also a man very capable of succeeding Obama if needed.
Much has been mentioned of Obama’s support overseas, especially in Europe. The reason has nothing to do with Obama’s celebrity status or silver tongue, but much to do with his policies. The world economy is inter-connected. The United States is the main player. How our economy functions resonates all over the world. The “Greed Rage” that infected us also caught others. Everybody, Greedy or not, is paying for the excesses of a few. The world needs sanity back in control of our nation.
To conclude, I believe the Obama presidency will face serious obstacles, but with Obama/Biden we have the possibility of gathering the nation’s best minds, free of partisan short-sightedness, to save us from sinking deeper.