Producers and consumers alike are still afraid of the market and as such aggregate demand is still suffering. Yet there are some that say that the government needs to begin to curtail spending to work on reducing the deficit. When the Blue Dog Democrats, the Tea Party Republicans and the doomsday economists started calling for immediate action (Romer, 2010) to reduce the deficit, the outcry in defense should've been even louder. There is no question that the government's current deficit (its spending is much larger than its revenue) is unsustainable and that eventually it will need to be taken care of. But right now the recession is too pressing. In 2008 43,546 additional businesses filed for bankruptcy (Mantel, 2009). This is where the government has to come in and provide these businesses with the means to stay afloat. With the unemployment rate still near ten percent in the United States (Romer, 2010), and of those unemployed almost half have been out of work for over 26 weeks (Policy and Practice, 2010), the issue is the nation's well being, not its expenditures. This economy, with a lack of private investment and consumer spending, needs a push in the right direction- a hard push, and a very expensive one at that. One cannot expect the country to come out of the deepest financial meltdown since the Great Depression on its own. The country did not fully recover from the Great Depression until World War II, and the resulting increase in demand. That was a forced demand, brought on by the perils of the rest of the world. Now, the country needs another forced demand. This time, the demand will have to strictly come from the government until confidence in the markets is once again restored. If the country goes into a double dip recession, or if it never fully recovers, the U.S. could be looking at a changed country for good. .
The longer the United States stays in this recession, the more adverse effects the country is going to begin to see.
