There are a large number of politicians in Washington who are pushing a brilliant policy that will have the effect of leaving millions of people unemployed or underemployed for years into the future. Their policy is called "no stimulus".
The idea is that we just let the recession brought on by the housing crash run its course, being careful to do nothing further to boost the economy. According to most projections, after four or five years the economy will be back on track, with the unemployment rate approaching the pre-recession levels. In the mean time – the rest of 2009, all of 2010, 2011, 2012, probably much of 2013 and maybe even some of 2014 – millions of people who otherwise would be working will be unemployed or will only be able to find part-time employment, even though they want full-time jobs.
The unemployed are likely to experience some hardship during this period since the country system of social supports is very much oriented around work. Many of the unemployed will lose their health insurance coverage and their homes and will have difficulty providing for their children. Even the temporary extension of benefits only covers 52 weeks of unemployment in most cases. After that, unemployed workers may be eligible for food stamps, and their kids may qualify for the state children's health insurance programme, but they will get little help from the government in meeting other expenses.
This excess unemployment also implies losses to the economy. People who could otherwise be doing productive work will instead be doing nothing. To some extent this lost output is attributable to lost consumption. People will buy fewer cars and restaurant meals and pay less money for their kids' healthcare and education.
However, some of the lost output will also take the form of lost investment in both the private and public sectors. Businesses who see slack demand and have poor earnings because of the downturn will delay modernising their businesses and expanding their capacity. State and local governments will cut back on maintenance and put off new infrastructure projects under the pressure of recession-induced budget deficits. But the advocates of "no stimulus" are happy to forego these investments in the country's future.
More from the Guardian here:
http://www.guardian.co.uk/commentisfree/cifamerica/2009/aug/10/us-unemployment-economy-stimulus
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