(Photo: Jeff Zelevansky / Getty)
In the 22 January 2009 issue of Rolling Stone, Paul Krugman writes “What Obama Must Do – A Letter to the New President.” In it he emphasizes that Obama will face an unprecedented economic crisis that is “worse than almost anyone imagined” and will grow still worse unless and until adequate measures are taken to combat it. Primary among those measures is to put Americans back to work. Under Bush from 2001 through 2007 job growth was insufficient to keep pace with population growth, resulting in 1.5 to 2 million additional unemployed. Then in 2008 alone 2 million jobs were lost outright. Krugman asserts that “There's nothing in either the data or the underlying situation to suggest that the plunge in employment will slow anytime soon, which means that by late this year we could be 10 million or more jobs short of where we should be.” (snip) “Add in those who aren't counted in the standard rate because they've given up looking for work, plus those forced to take part-time jobs when they want to work full-time, and we're probably looking at a real-world unemployment rate of around 15 percent — more than 20 million Americans frustrated in their efforts to find work.” (snip) “As many as 10 million middle-class Americans would be pushed into poverty, and another 6 million would be pushed into 'deep poverty'...”
Because 75% of our Gross Domestic Product (GDP) is due to American consumers consuming, growing impoverishment of the middle class is the single most important factor that must be reversed, and reversed fast, if we are to have any hope of avoiding another great depression. And Krugman explains why the burden of reversing this trend now falls squarely on the shoulders of the new president (because “the FED has lost its mojo”) and how much it will cost (likely double Obama’s present plan in the short run, and more in the long run).