James Pethokoukis

Politics and policy from inside Washington

Economic fears drive Pelosi’s healthcare push

October 30, 2009

First you have to realize that Mark Zandi has become the de facto chief economist for congressional Democrats. Here is a bit from his testimony yesterday to the Joint Economic Committee:

The Great Recession is over, but the recovery will be a difficult slog through much of next year. The risks are also uncomfortably high that the economy will backtrack into recession. This would be an especially dark scenario, as the economy would almost certainly be engulfed in a deflationary cycle of falling wages and prices. The Federal Reserve and fiscal policymakers would also have fewer options and resources with which to respond.
A range of problems suggest that such a scenario cannot be easily dismissed. Most obvious are the very high and rising unemployment and increasingly weak wage growth, the mounting foreclosure crisis, rising commercial mortgage loan defaults and resulting small bank failures, budget problems at state and local governments, and dysfunctional structured-finance markets that are restricting credit to consumers and businesses.

Me: So if you are Speaker Pelosi and Harry Reid, here is how you interpret this: The economy will still stink on Election Day 2012. Voter disapproval of Dems will continue rise.  Better pass healthcare as soon as possible or you won’t be able to pass it all.

Comments

Good point. Another problem is that the benefits to any bill that passes won’t start until 2013, but the taxes will start earlier, which won’t go over well, especially in a bad economy. Obama told people their premiums would fall if he passed his bill, but this seems unlikely to happen. That is when we’ll hear that you just can’t trust the insurance industry and it’s time for single-payer.

 

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