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Published: Tuesday, 6/9/2009

Jobs and the debt

THE United States' job "creation" figure in May once again was negative numbers: 345,000 jobs lost, which was bad but less so than the average loss for the previous six months.

At the same time, the Labor Department reported that the unemployment rate rose from 8.9 percent to 9.4 percent.

Some will be tempted to say the economy is better because the sum of jobs lost was lower last month than the previous six-month average. Some Americans even think the corner has been turned toward recovery. Yet last month was the 17th straight month of lost jobs, even though it is considered necessary to add 150,000 jobs per month just to stay even with new entries into the labor market.

The other worrisome trend is that the national debt is growing at such a rate - based on spending and borrowing to finance the Iraq and Afghanistan wars, the economic stimulus package, and the bailouts of banks, investment firms, and now car companies - that the interest paid by the government on that debt will cut deeply into what is, in effect, America's disposable income.

This is not surprising. Anyone who has experienced household debt - from a mortgage, car payments, credit cards - knows quite well that, as they grow, a larger piece of the paycheck goes into paying the interest, while less remains for other expenses such as food, gas, and clothing.

This is what is happening to the federal government. The national debt now stands at $11.4 trillion and interest rates to finance it continue to rise. The rate on the basic 10-year Treasury note has risen from 2 percent at the beginning of the year to 3.54 percent.

This is not necessarily an argument for cutting spending, at least that being used to try to turn the tide on the recession, but it does call into question what the United States is spending on overseas wars and it requires a sharp look at any future bailouts like that of General Motors.

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