by Seth Sandronsky
Officially, the market is a place of opportunity once big government steps aside. An opportunity for whom is the question. Meanwhile, the U.S. political system is increasingly relying on taxpayer dollars to protect rich people from market harm, unlike workers. Consider what Congress recently did (not) do for property insurers and workers.
Both houses of Congress just passed a federal terrorism insurance bill. It makes the U.S. taxpayer subsidize the cash reserves of property insurers to the tune of approximately $300 billion should the nation be attacked by terrorists in the future. The private terrorism insurance market will be protected by public funds after President Bush signs this bill on Nov. 26.
The president had claimed that the insurance bill would help create new jobs in the construction industry. The evidence for his assertion was not forthcoming. The market is truly a miracle for property insurers. When the public’s wallet is spread wide for the pickings by Capitol Hill and the White House, of course.
On the outside of this market solution looking in are about one million jobless workers. Their unemployment insurance wasn’t extended by the 107th Congress. It finished on Nov. 22 for the year without acting to prevent the cutting off of these workers’ payments during the year-end holiday season.
"The cutoff arises from the fact that a temporary benefit extension approved by Congress earlier this year – providing 13 weeks of benefits for those who have exhausted their 26 weeks of basic coverage – expires Dec. 28," reported the Nov. 23 Washington Post. "About 830,000 people will be thrown off the unemployment rolls at that point, and an additional 95,000 who exhaust their state benefits each week will get no federal aid thereafter."
According to the Nov. 17 New York Times, "The percentage of people who have exhausted their regular unemployment benefits is at the highest level in two decades." In other words, U.S. society is experiencing a major job market problem. And the market solution for many workers facing the vanishing of unemployment payments will be to take jobs at low hourly wages relative to their former jobs.
Presumably, this trend can help business restore profitability. Without profits, the creation of jobs slows down. This trend is certainly underway. Current business spending on new employees and equipment is weak.
Case in point is the Federal Reserve Bank’s recent interest-rate cut to 1.25 percent. On wonders how low can the Fed go before eliminating its policy options to stimulate the economy. At the same time, Congress is turning its back on lending a hand to the people whose labor-power makes the economy grow.
Monetary policy is going in one direction. Fiscal policy is heading the other way.
Such lack of coordination creates a contradiction, the resolution of which is currently hard to predict.
Uncle Sam’s redistributing of income upward towards property insurers helps to pave the way for prolonged economic stagnation. Capitalists with large cash reserves don’t spend most of their income on the necessaries of life. Their spending patterns reflect the class interests of spending based on investment returns, unlike that of the general public.
The federal government’s redistributing of income downward could stimulate the economy. Such a policy would put more cash in people’s pockets to buy goods and services, thereby bolstering business spending. Accordingly, defunding workers’ jobless payments further weakens their buying power and the U.S. economy.
It is unclear how long political circles of U.S. power can maintain their credibility embedded in the concept of national security. It isn’t putting a chicken in the pots of a growing number of people. They are suffering from a souring job market and a cold shoulder from Congress.
Seth Sandronsky is an editor with Because People Matter, Sacramento's progressive newspaper. Email: firstname.lastname@example.org