WASHINGTON -- Around midnight on April 15, 1912, there were a few minutes when Capt. Edward Smith of the Titanic realized his ship was going down -- six watertight compartments breached, less than two hours to float -- yet his passengers slept in happy ignorance. A historical fate hardened while most of the participants dreamed on.
The jobs report last week opened a long gash beneath the waterline of President Barack Obama's legislative agenda. Few yet realize it, but a scramble for lifeboats is about to begin.
On closer inspection, the economic news, which seemed bad, is even worse. Not only did unemployment rise to 9.5 percent but wages fell, undermining the consumption needed for the recovery of a consumption-driven economy. Unemployment increased among "breadwinners" -- married men and women who head households -- also making major family purchases more difficult. Recent increases in unemployment benefits and food stamps have helped many Americans pay for food and rent. Jobs, however, are what lead to the purchase of furniture, cars and homes. Paired with a decline in business investment, these trends make a second-half recovery less likely.
The stimulus package hasn't been very stimulating -- which is what many economists predicted. Pouring money into the economy through a thirsty sponge of federal programs -- the preferred method of Congress -- is slow and inefficient. In retrospect, all of the stimulus funds should have been given to individuals directly from the tap.
There are political implications of a weak recovery -- none of them good for the president.
Obama's spending ambitions would have been jaw-dropping even in the best of economic times. Federal spending this year is about 28 percent of GDP -- a figure exceeded only when Franklin Roosevelt was fighting a global war against Germany and Japan. Along the fiscal path Obama has chosen (according to the Congressional Budget Office), our national debt will double in six years and triple in 10.
Initially, Obama counted on an atmosphere of economic crisis to grease the passage of any legislation he pronounced an economic need. But it hasn't worked out that way. Whatever their virtues, restricting carbon emissions and expanding the health entitlement do not constitute a direct response to America's financial and economic failures. No economic theory suggests that a round of new federal regulations and entitlements would result in a burst of economic growth.
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