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Government and the “powerful, widespread and enduring” Great Recession

Friday February 8th, 2013   •   Posted by K. Lloyd Billingsley at 11:06am PST   •  

recessionSquareAmericans are skeptical about the federal government’s ability to lead a recovery from the Great Recession, according to Diminished Lives and Futures: A Portrait of America in the Great-Recession Era, a national survey from the John J. Heldrich Center for Workforce Development at Rutgers University. Those surveyed have good reason for that belief.

Near one-fourth had been laid off during the past four years and more than half of those who managed to find jobs had to accept pay rates more than 30 percent lower. A full 86 percent said that good jobs with good pay will never return or are unlikely to do so anytime soon. More than 61 percent do not expect their current economic situation to improve. Carl Van Horn, director of the Heldrich Center, told the Washington Post that such pessimism “speaks to how powerful, widespread and enduring this Great Recession is.”

The Post’s story on Diminished Lives and Futures noted that the recession “destroyed nearly 40 percent of Americans’ wealth” and pushed unemployment over 10 percent. A full 4.7 million workers remain unemployed for more than six months and “a disproportionate number of jobs created in the recovery are at the low end of the wage scale.” Those surveyed believe the economy “has descended to the new normal” and there was “deep skepticism about Washington’s ability to do anything to significantly improve the economy.” What remained unexplored was the role of federal government policies in causing and prolonging the recession.

Those policies include the sub-prime mortgage debacle, the bailout of banks, runaway spending, the creation of new federal agencies, a failed stimulus package, fathomless deficits, an onerous regulatory regime, the failure to reform entitlements, and the creation of a huge new entitlement in the form of Obamacare.

Federal politicians may talk a good game or growth but the U.S. economy shrunk last year for the first time in three years. That will not lift the spirits of those Americans surveyed in Diminished Lives and Futures. To paraphrase Lincoln Steffens, they have seen the future and it irks.

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February 2013