THE POST LABOR DAY ECONOMY

Labor Day is behind us, the President’s employment speech is Thursday and electioneering is everywhere.  For anyone who has followed the excellent political and economic commentary over the long holiday weekend, three infallible points have emerged.

            First, the path for Obama to reelection is to improve the economy by lowering unemployment and returning the limping middle class to some semblance of health, in a world where easy credit and inflated housing no longer exist.  Conversely, those republicans focused only on politics rather than recovery, believe they cannot win in 2012 unless the President’s rescue mission is defeated and the middle class is placed on life support over the next 12 months.

            The second point is that, in the short run, the country cannot pursue immediate federal austerity measures through deficit reduction and expect to achieve any job creation.  Cutting off the limping unemployed worker’s leg is the quickest path to life support rather than full employment. Moreover, deficit surgery now, will guarantee that the middle class remains disabled and a ward of the government for years to come.

            The last point is that there is a middle road, where both political parties can act responsibly in the face of economic crisis and take the health of the middle class off the operating table.  The President and democrats must agree to long term deficit reduction efforts that are not smoke and mirrors.  Further, to kick start the economy, business, industrial and environmental regulations must be muted or deferred until we are running on all cylinders.  Any business activity that is likely to create jobs must be offered a tax break.

            For their part, Republicans must agree to short term federal spending for any program that will allow the middle class to keep buying goods and services on the one hand while creating jobs on the other.  They must agree to an immediate tax on the income, capital gains and inheritances of the wealthy.  Republicans will find that the sick and suffering 95% of Americans will thank them for calling on the 5% who hold most of the wealth, to contribute their fair share.  Moreover, the wealthy realize more than anyone that a rising tide lifts all boats and that this economy is threatening to beach their yachts.

            In this economic crisis, the United States has advantages and paths to recovery not available to other developed countries.  All we need is the political will to use them.