End the Recession With Health Care Reform
The unexpectedly bad “jobs report” released by the Department of Labor on Friday came as no surprise to the Obama Administration, who has warned all along that the recession would most likely impact the economy for the rest of 2009 and probably most of 2010. Given the depth of the recession, that actually began in the fourth quarter of 2007, and given the disastrous consequences of the financial meltdown of the financial system, the Obama Administration took the correct actions in getting the $787 billion stimulus package through Congress. The President made it clear when the stimulus package was enacted, and has continued to make it clear throughout 2009 that the various provisions within the package will take up to two years to have a full impact on the economy. In the meantime, the stimulus package is having a significant effect on the economy by creating thousands of jobs that would otherwise have been lost. In a recent interview, Republican Governor Arnold Schwarzenegger of California admitted that the economic stimulus package has been worth billions of dollars to cash-starved California.
Because of the unfavorable September “jobs report”, and because of the likelihood of continuing high unemployment, the Obama Administration is considering the extension of unemployment and health benefits to ease the burden of laid-off workers. It is noteworthy, however, that the President has made it clear that he is not considering a second “stimulus Package” at this time. Although the economy has picked up considerably from its 2008 lows, any further significant improvements will depend upon enacting health care reforms. There is little doubt that the cost of providing health care to its employees has been a major impediment for companies looking to re-hire its laid-off employees.
The return of prosperity to the American economy and the resolution of the health-care cost dilemma are inextricably intertwined. The Obama Administration knows that enacting health care reform will bring confidence back to the economy, and will help to quickly lift America out of recession. This scenario would be successful for the American people, and bring credit to the Obama Administration. For this very reason, the Congressional Republicans will continue fighting against health care reform tooth and nail.
—Rich
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Well said,
Without reform skyrocketing healthcare costs will smother small and mid sized businesses and cause a worse deficit problem for the federal government (the nations largest employer)
I don’t understand why the prospects of specific and general bankruptcy in the face of health care costs doesn’t “register” with these various corporate “obstructionists” (& republicans) who want to kill the whole bill? When we compare the percentage of GDP we spend on healthcare with our competitors, we are eating their dust, for sure. And that’s just the economic side…what about the moral imperative of caring for our fellow man? Not hardly on the map, is it?
I have been here in USA for a year only, and I am thankful to have found your blog and learn something. Thanks.
And where will the money for “reform” come from? And the “stimulus” money has only allowed states to postpone doing what they should have done all along… reform their budgets and cut spending.
Project,
Exactly right! Once small and mid-sized businesses know what to expect on health care reform, they will be able to invest in their businesses and begin hiring.
Willoak,
The imperative of caring for our fellow man is hardly on the Republican agenda. The “Party of No” is not interested in supporting any Obama Administration initiatives, regardless of how much they will help the country. I think the primary conservative agenda is to win back Congressional seats at whatever price my be.
Grace,
Welcome to the Ashcherlock blog, and welcome to America. We’ll never run out of interesting topics to discuss.
Harrison,
I think you know exactly where the reform money will come from; whoever buys American Government securities. It appears that you and Herbert Hoover are on the same page regarding economic stimulus. However, the consequences weren’t so great when he cut spending and decreased the money supply. I believe it prolonged The Great Depression. But then again, who gives a damn about people, as long as the corporations are doing well. I’m with you, Harrison, let them eat cake!
Actually you’re incorrect. If you look at the reasons why a recession turned into a depression it was because American politicians wanted to protect their local industries from competition and very soon we had trade barriers erected which spread to tariffs which soon shut down global trade which soon plunged the world into a depression.
And the problem we have now is Government securities are practically worthless thanks to all of the debt we have. China won’t buy much more neither will Japan.
So… wrong on all counts!
Harrison,
It is a myth that trade barriers between countries in the nineteen-thirties had much to do with prolonging the great depression here at home. America had all the industry it needed to thrive at that time. The main problem was the mind-sets of the laisez-faire capitalists, who resented any government (i.e. the people) intervention in their exploitation of labor.
I agree that the country has far too much government debt; however, I disagree that it is practically “worthless”. If this were so, the interest rates on T-Bonds would be through the roof, which they are not. Perhaps you would prefer to establish a few trade barriers and tariffs to solve the problem? Or perhaps you believe the answer is to raise taxes to pay down the debt?
Might want to look into the Smoot-Hawley Tariff Act of 1930 which reduced imports and exports by over 60%. Unemployment was 7.8% after the stock market crash in 1929 but it jumped to 16.3% in 1931, 24.9% in 1932, and 25.1% in 1933.
As a matter of fact, the Smoot-Hawley Tariff Act was so destructive that once WW2 was over we had the Bretton Woods Agreement, the GATT, then the WTO to prevent such a horrible thing from happening again.
Study your history… it will provide you with the truth because you do not appear to have a solid grasp of the causes of the Great Depression.
And the T-bill answer is because U.S. government debt is an unsafe investment however considering the alternatives it is slightly safer.
I would prefer to cut spending and lower taxes.
“It is a myth that trade barriers between countries in the nineteen-thirties had much to do with prolonging the great depression here at home. America had all the industry it needed to thrive at that time.”
Steel executives firmly supported the passage of the 1930 Smoot-Hawley Tariff, which pushed duties to nearly 60 percent for a number of iron and steel products. (More than 1,000 economists signed a letter pleading with President Herbert Hoover not to sign Smoot-Hawley, but Hoover ignored their sound advice.) Smoot-Hawley benefited the Steel industry at the expense of many others that withered when they couldn’t sell their products to new customers overseas. Because steel firms started to depend on the government for protection from competition, many steel firms failed to modernize their plants and to become more economically efficient, depending instead on government policy. The severe recession of 1982 was fatal to many steel firms.
You would think that a hard lesson was learned–Obviously not…we are repeating history.
VC… once again we see examples as to how when government gets involved in private industry the result is disaster.
I agree that we need health care reform and we need it now. It must have a “public option” though. Anything less is a defeat for President Obama and the Democratic Party. I told my congressman that, in person, at a town hall meeting last Saturday. Have you told your senators and congressman what you think?
If American companies didn’t have to supply health insurance to their employees, they would be more competitive around the world. General Motors was brought down, in part, by the cost of health care for their retirees.
Bob Herbert of the New York Times is my favorite columnist. He wrote two columns recently that I thought were excellent. “Does Obama Get it” is about the huge unemployment problem in this country. Where are the jobs going to come from and when?
The second column is “A World of Hurt.” In it he says, “This recession, a full-blown economic horror, has left a gaping hole in the heart of working America that is unlikely to heal for years, if not decades.”
It’s great that the banks are doing better and the head of Bank of America can retire on $53 million, but what about the rest of us? This Great Recession is not over by any means. Millions and millions of people in this country are in “A World of Hurt.”
I am referring to the previous commenter now: This disaster is an example of what happens when government isn’t involved in private industry.
Every bit of this disaster can be traced back to the repeal of the Glass-Steagall Act in 1999. Our ancestors who lived through the Great Depression didn’t want future generations to have to suffer like they did. They knew what they were doing.
If we don’t put something like the Glass-Steagall Act back into place, we will be going through this whole thing again.
“If we don’t put something like the Glass-Steagall Act back into place, we will be going through this whole thing again.”
Beyond this generic “regulation good, deregulation bad” mantra, there is very little that people have to say that specifically backs up their own regulatory proposals. In contrast, I say that housing policy, securitization, and regulatory capital arbitrage were at the heart of the crisis. I propose changing housing policy to stop trying to use cheap, lenient mortgage credit to promote affordable housing. I propose disconnecting the feeding tube of government support from the mortgage securities market. And I propose attempting to make failure of financial institutions a viable, credible option for regulators.
Glass-Steagall would not have stopped the housing bubble because banks would have found a clever way around it in order to make profits–regulations and those that advocate them always overlook “regulatory capture” until its too late.
John,
Amen and amen! I couldn’t agree more. The repeal of Glass-Seagall opened the door to allowing financial institutions to make lots of money by taking huge risks with other people’s money. Those regulations need to be put back into place and strengthened. Of course, there are many of our friends to the right who think that American financial institutions should left unfettered to do whatever they want; (caveat emptor, right?)
The lack of universal health care coverage in our country is a national disgrace. This situation cannot be remedied without the “public option”, which the lobbyists for the drug and insurance companies are fighting tooth and nail. I believe that unemployment will remain high and that small businesses will continue to disappear without health care reform.
VH,
There is little doubt that the government’s policy over the last few decades to promote home buying by guaranteeing mortgages has led to disastrous consequences. The same thing is now going on with the “reverse mortgage” business, and will ultimately lead to the same disastrous consequences for the American taxpayer.