In spite of some favorable signs the unemployment rate remains far too high. The pain permeates our society with all of us knowing someone who has lost a job. And unemployment promises to be the make or break issue in this year’s election.

There is now talk about a second stimulus plan to prod employment. However, we have not yet spent all of the first stimuilus plan. More, important the body politic seems to have become fixated with the Feds deficit spending and the Nation’s large debt. The general public now believes that the “Great Recession” was caused by excessive, cheap debt and is busily paying down its debts. The public sees the already huge and rapidly growing national debt as inconsistent with its own action and will have a hard time accepting even more government deficit spending.

The dilemma remains, the only way to reduce unemployment is to pump up consumption and since the general public is in a saving, not spending, mood, it falls to the government to do this. I dismiss the call for business spending to pump up the economy, and thus employment, since business already has excess capacity due to the slump in general consumption.

I have consistently called for rapid expenditure of the original stimulus money and any other funds the government may have. I also calculated and reported some months ago that, at the present cheap cost of government debt, we could incur a national debt of up to $28 trillion, it now stands at about $12 trillion.

So it boils down to a political calculation, increase deficit spending and hope it brings down unemployment, or tighten federal spending in response to the public’s concern about runaway deficits. I see voters being more influenced by continued high unemployment than by prudent federal spending.