It is a seriously problem if they are going to start talking about the budget deficit as they begin shying away from the proper focus for continuing to work on job creation and getting the US economy going.

I’m sorry, but this is all just noise for covering Wall Street and the bank’s asses (not assets) and to divert the attention away from the facts of just how bad they screwed up the economy. They are instead now saying; “Look, the stocks are up, the market is recovering and we’re getting out of Iraq, all is getting well.”

Unfortunately, even a novice can look at some of the other factors and say, “Hold your horses. Yes, the administration did help bring us back from falling into an abyss such as occurred during the Great Depression, but it’s far from being over.”

Whether we like it or not, and against everything the GOP would like to admit, there is still a big part for the US government to play before we are actually out of this mess.

As the Nobel Prize winning economists Paul Krugman recently stated regarding the real indications of a recovering economy; “The job market — a market in which there are currently six times as many people seeking work as there are jobs on offer — will remain terrible for years to come. Indeed, the administration’s own economic projection — a projection that takes into account the extra jobs the administration says its policies will create — is that the unemployment rate, which was below 5% just two years ago, will average 9.8% in 2010, 8.6% in 2011, and 7.7% in 2012.“

It is impossible to make a statement such as that made by the Fed Chairman Bernanke, which is way “out-of-line” and totally reprehensible for someone in his position that should know better. There is no doubt that certain sections of the economy are “back from the brink”, but “the recession is over”…….? Not today and not for most of the country.

When one looks at how bad it would have been if the government had done what the Republicans wanted, which was to just sit back and “wait and see”, we now know how well that wouldn’t have worked.

It’s bad enough that we had to bail out Wall Street and the banks and insurance companies. Unfortunately, the results to date have been that the banks are still not lending to small businesses for helping them get back on their feet. If President’s Bush’s Treasury Secretary Paulson, had not panicked and had just made some demands on the banks when he first agreed to bail out their butts, this could be a much better situation today. (Ain’t hind-site grand?) But unfortunately, the panic took over and they just poured money on the problem with few demands for what the banks were supposed to do during and after they were bailed out.

We now sit with them being saved, while Wall Street, the banks and the insurance companies buy other companies and continue to pay their executives big bonuses using taxpayer money. And so far, there are no new government regulations for keeping this event from happening again.

The only obvious way for the country to really get past the recession is to have more focus on just one area, “more US job creation”.

A new report from a Mr. John Irons of the Economic Policy Institute pretty much says it all. Mr. Irons points out the devastating long-term effect that prolonged unemployment will have on the American society and in fact, how it will put the country into a skid for fulfilling the realization of America becoming a true "third-world nation". With extended high unemployment, the American income inequality between the “haves and the have-nots” will eventually resemble that of the era of the “Robber Barons” of the late 1800’s, instead of that of the middle-class of FDR’s New Deal or of President Johnson’s Great Society.

On the other hand, most economists, Mr. Krugman included, do not believe that this devastating economic result is inevitable. However, based on their predictions, the proposed solutions will definitely “stick in the craws” of the conservatives. Yes, as would be expected by those that live by the numbers, they say that "more government spending is the way to fix the problem and to get America back to work". It took FDR a few years to finally come to that conclusion, and that is why it took so long for the Great Depression to eventually come to an end. Oh, the jobs for supporting World War II helped the situation, but the foundation for the recovery had already been put in place.

Yes, according to Mr. Krugman and the other economists, “We find that a stronger short-term fiscal policy response” — by which we mean a temporary increase in government spending — is significantly associated with smaller medium-term output losses. So we should be doing much more than we are to promote economic recovery, not just because it would reduce our current pain, but also because it would improve our long-run prospects. “

Mr. Krugman went on to say; “You see, spending money now means a stronger economy, both in the short run and in the long run. And a stronger economy means more revenues, which offset a large fraction of the upfront cost. Back-of-the-envelope calculations suggest that the offset falls short of 100 percent, so that fiscal stimulus isn’t a complete free lunch. But it costs far less than you’d think from listening to what [today] passes for informed discussion.”

President Obama has shown that he is neither the “progressive liberal” that the far left would like, nor is he the "right-of-center" president that the Independents would probably want. But when it comes to economics, the reality is, that it is now up to the government to do the right thing.

To prove my point, let's just look at the basics:
The banks refuse to lend or spend. The credit market is basically closed. The stock market is recovering, but they don’t create jobs, they focus on lowering costs (such as laying off employees) and making more profit. The government has to step-up if there is to be a timely recovery and if jobs are to be created.

If not the US government, who else is there? It appears that there is no other choice.

Copyright G.Ater 2009