Himes says economy's better off with Congress in recess
Volatility on Wall Street is not Congress' fault, U.S. Rep. Jim Himes, D-Conn., said Tuesday at a jobs forum, but he conceded Washington gridlock is contributing to concerns about the economy that are spooking investors.
The former Goldman Sachs executive from Greenwich, speaking at an organized labor town hall forum on job creation in Bridgeport, said the market signals "what the investing community thinks future growth will look like." He said in this case, volatility has been sparked by a downgrade in U.S. credit rating over political issues and "economic devastation in Europe."
Clearly, Congress didn't help, according to Himes.
"A very weak economy was dealt a severe blow over a non-issue, the debt ceiling," Himes said of the eight-week debate. "It's been raised 80 times since 1939."
The compromise agreement, which rolls out a series of federal spending cuts, did little to quell concerns about the economy.
"It was not a good deal," Himes said. "It was a deal that put in place some very severe cuts across the board while asking the very fortunate in this country to contribute nothing."
Himes argued many well-off citizens want to do their part, but the debt deal doesn't ask them to. He voted for the deal because to not vote for it would have put the government at risk of default.
Stock markets rebounded strongly Tuesday after the Federal Reserve left a key interest rate unchanged through the middle of 2013, and signaled a willingness to prop up the economy if necessary. The Standard & Poor's 500 Index gained 4.7 percent on the day to close at 1,173.
Twenty two people attended the forum at the Burroughs Community Center, where Himes discussed issues including the end of emergency unemployment insurance benefits, which he doesn't expect will be extended again.
Currently, anyone who exhausts their initial 26 weeks of unemployment benefits between now and the week of Christmas, will be eligible for an additional 46 weeks of payouts.
Nicolas Perna, a Ridgefield-based economist and economic adviser to Webster Bank, said this week the loss of jobless payments could deal a tremendous blow to an economy that is basically flat. He said Congress' emergency unemployment payment plan has probably been its most successful consumer-spending program.
"You can bet those get spent," he said.
He said an economy in this situation could be devastated if a major source of spending gets cut. He cited the budget tightening and tax increases levied in 1937 during the Great Depression as an example of tightening that occurred at the wrong time.
Jessica Petronella, a college student who attended the forum, can't decide whether she's more or less optimistic after meeting with Himes to discuss the job market and student loans. Though she said she was pleased the congressman listened to her.
Ed Thomas, who has been unemployed for more than 99 weeks, isn't optimistic that Congress can do anything quickly to address an economy that's failing to create enough jobs, but he remains hopeful that some programs can be funded to help with job placement.
Lori Pelletier, secretary treasurer of the Connecticut AFL-CIO, said her members only know that while Congress manufactured a debate on the debt ceiling, they were struggling to pay mortgages and find ways to cover college tuition costs.
Himes said after this last session he doesn't believe calling Congress back into session would improve the situation.
"Do I want that House to come back in session next week?" he said. "I want things to cool down and come back in September."