Big 3 rescue 'a done deal,' given 2 million jobs lost in 2008, economist says

Joseph Lazzaro — Fri, 05 Dec 2008 13:56:00 EST

Filed under: Industry, Ford Motor (F), General Motors (GM), Employees, Politics

The behavioral sciences teach us that it's mature to compartmentalize, for many circumstances. To use a magazine industry analogy, a lethargic advertising sales staff should not affect your attitude toward your features writing department.

Compartmentalize? Washington doesn't

Sorry, it doesn't work that way inside the beltway. Image matters. Signals matter. In short, events in one theater can affect the entire political climate.

And that's the case with the nation's job losses in 2008 and the proposed $34 billion rescue package for the Big Three auto manufacturers winding its way through Congress, so says economist David H. Wang.

"We have now suffered 2 million jobs lost in 2008, including an awful 533,000 jobs lost in November. That means the auto rescue package is a done deal," Wang said. "There will continue to be debate on the scope of the rescue, the metrics, the form of the U.S. government's investment, the timetable for the repayment, and how much Congress wants the new auto sector to contribute to energy policy goals, but the status of the package is a done deal."

And the political climate clincher, is obvious enough, Wang added.

"The U.S. Congress is not going to say, after seeing two million jobs lost in a year, 'O.K., here's another, automatic, 1-million job loss, just for good measure, to further drive the U.S. economy into a ditch' " Wang said. "The U.S. auto sector represents too many good-paying industrial jobs and spin-off jobs. They are a key component of our industrial base and will play a role in the nation's economic recovery."

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Congress seen letting budget deficit rise, for now, to pay for rescue package

Joseph Lazzaro — Mon, 20 Oct 2008 14:38:00 EST

Filed under: Forecasts, Politics, Financial Crisis

Just call the impact of the bank rescue package's cost a 'bad news, goods news' saga.

The bad news is this year's budget deficit, for Fiscal 2009, will reach unprecedented heights, in terms of total money borrowed.

The good news is the dollar's reserve currency status will lower the financing cost of the rescue package and related deficit spending to an interest rate of 4% - - or less - - on the additional debt, The New York Times reported Monday.

Further, the Congress could have chosen to offset at least a portion of the additional outlays by increasing taxes or trimming spending in other areas. However, given the contraction effects of the above two, Congress has chosen to let the U.S. budget deficit rise, at least for now, The Times reported.

U.S.: record, back-to-back budget deficits

The United States just posted a record $438 billion budget deficit (preliminary) for F2008, which ended September 30, according to Congressional Budget Office data. This year's deficit is likely to exceed $700 billion, so says economist David H. Wang. Is it wise to straight-line the new spending directly to the national debt via borrowing, in Wang's view? Indeed it is, he says.

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Congress seen letting budget deficit rise, for now, to pay for rescue package originally appeared on BloggingStocks on Mon, 20 Oct 2008 14:38:00 EST. Please see our terms for use of feeds.

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