Second Half Slowdown?

There has been a lot of talk around whether the second half of 2010 puts the U.S. back into recession. It seems that this will not be the case from a strict GDP standpoint but it certainly is from an employment standpoint. I am afraid that we all have lost sight of the importance of employment is and how its affects aggregate demand. We have a significant aggregate demand problem. Have we lost sight of the fact that if we continue to depress wages in order to raise profits (or even in many businesses, simply to stay afloat) that has significant downward pressure on all levels of prices. The spiraling effect simply cannot be left to the market to work itself out. It is so very alarming that we continue to follow the economic policies of Hoover and Carnegie and do not see how disastrous those were.  We also seem to be pushing to follow FDR ill-advised skew tightening that in large part muted the recovery in 1937. Why? Why do we pretend that macro-economics is the same as a personal checkbook or even a business? It is most certainly not either.  Should we be concerned about long-term debt? Of course.  Should we be concerned today? Absolutely not. The issue that we need to address is how we can bring unemployment back to under 7 percent and then have a real discussion about the long-term structural deficit that we have in the United States.  In short, we need to look at our revenue stream, including raising taxes on individuals, changing the corporate tax structure to make it competitive with the rest of world, looking at the benefits promised and the defense structure that we feel is necessary.  Those are the issues and they are not nearly as hard to solve as one might think.  But those all need to be addressed when we do not have 10 percent unemployment and an economy with significant excess capacity. We don't want to muddle through this and we don't have to.