Gaining a Supply Chain Edge

Washington Just Doesn't Work!

Shouldn't this be much simpler? Stimulate consumers. Now.

Excuse me for stating the obvious, but the Washington D.C. rhetoric makes me angry. Many in the nation's capital are trying to make the recovery from the economic disaster of 2008-2009 too complex and politicized.

I think this gives them a sense of satisfaction in that they can claim to be wrestling with a complex problem and so they appear to the public to be doing the best that they can. However, many of us have been saying for well over a year what needs to be done, and it has yet to occur.

Let me state this as simply as I know how: The resolution to the Great Recession is a stimulus package that results in consumers spending money. This sounds so simple, and it is, but unfortunately here we sit one full year after the passing of economic stimulus and to be clear, this stimulus package does not stimulate the economy. It may have helped avoid a deeper economic disaster but stimulate it does not.

As I write this, I see that a jobs-creation bill is advancing through Congress, and I see that consumer confidence fell sharply this month, putting it at its lowest level since last April. Great, a bi-partisan measure to create jobs, that is positive, but it is not enough for this severe of a problem. The bill is predicted to only have a moderate impact on hiring and therefore, only a moderate impact on consumer confidence. We need major surgery, and we get a Band-Aid.

Let me be even more specific about the stimulus:


*Of the $787 billion of the stimulus package signed into law on February 17, 2009, only $272 billion (35%) has been paid out.

*Of the $272 billion paid out, $93 billion went to tax cuts that stimulate savings instead of spending.

*Of the $272 billion paid out, $112 billion went to state governments to pay for Medicaid, unemployment benefits and food stamps.

*Of the $272 billion paid out, only $67 billion was really a stimulus to consumer spending. This is obviously less than 10% of the $787 billion stimulus bill.


How are we doing? Not bad, given the federal government is missing the boat by not offering a real and quick stimulus to Americans.


I am, however, very proud of the American consumer, workers and business people, because we have recovered and have brought about growth and the return to profitability. In fact, I just read a report from the Bureau of Labor Statistics indicating that business sector labor productivity increased at a 6.2% annual rate during the fourth quarter of 2009. Unfortunately, for many, the government's lack of action has not provided the stimulation needed to fully return to strength.

Note: To ensure that I am not misunderstood, know that I am not taking sides here. It is not the Republicans or the Democrats; it is not the President or the Senate or Congress that I am unhappy with right now. It is the whole bunch!

Before you consider pounding your fist on the table and disagreeing with me, let me share these nuggets with you:

1) Senator Evan Bayh, just last week, said, "Congress is rife with brain-dead partisanship."

2) Vice-President Joe Biden recently told the world that "Washington right now is broken."

3) Listen to what American voters are saying in this recent poll:

75% are angry with the policies of the federal government.
63% say it would be better for the country if most members of Congress are defeated in November.
60% believe that neither Republicans nor Democrats have a good understanding of what is needed for this nation.

Just what is the Washington rhetoric that most angers me?

*Business is evil and business people are evil. Especially be on the lookout for the CEOs, as they are really evil.

*Business needs to increase exports, even though exports reached a peak in December 2009, to a level of 26.2% of all goods manufactured.

*Business and workers need to pay more taxes.

Wow! The American worker and American business people are fed up. Washington needs to wake up to the fact that 70% of the US GDP is consumer spending, and that workers and business people cannot right the economy without at least some help from Washington.

So Washington, listen up: Start stimulating consumer confidence before November arrives, or else you too shall join the ranks of the unemployed. I still remain optimistic that someone in Washington will wake up and realize that the solution really is simple.

We need Washington to spend the already approved stimulus for much-needed infrastructure projects. Please ... Stop all the meaningless rhetoric, and get on with what you need to do to fix this economic mess stimulate the consumer. And please, stop making the recovery seem more complex; we see right through the rhetoric.

More Resources

The Great Comeback from the Recession: See the blog post series


View a video on the Great Comeback from the recession, and download the white paper


Blog Post: Where Were You on September 15? 'Lessons Learned' from Lehman Collapse Show the Path Recovery Could Have Taken


Blog Post: What To Do With 2009? "Forget About It" Is Tempting, But Not Right


Jim
Tompkins Associates

TAGS: Supply Chain
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