(Above: The Doa, Doatia’s currency)
For the last decade or so, Doatia’s economy has suffered greatly. It started in 2011, when certain industries began to crash and the government failed to respond adequately. Dealing with a sizeable deficit and the CP quickly rising in polls, the EJP-PLP Coalition majority proposed limited and moderate relief and response packages, which had little impact on the stock market; and more importantly, the people of Doatia.
By the beginning of 2012, nearly 8% of homeowners lost their homes, 14% of small businesses had shut their doors for good, and unemployment had risen to a 50 year high of 12%. In comes the first relief/response package, the “Economic Restimulation Act of 2012”, which mainly cut income taxes and government spending, and slightly increased the monthly unemployment benefit.
The economy’s decline slowed but didn’t stop. Doatia has a large steel production industry, the workers of which are represented by the National Steelworkers Alliance (NSA) union. In mid-2012, negotiations with the largest steel producers failed, and the union voted to authorize a national strike. The strike went on for over 6 months, and resulted in significant pay raises for steelworkers and improvements to safety, as well as motivated a slight raise in the minimum wage ($12 – $12.15/hour) and stricter safety regulations. The economy slightly recovered in 2013-2015, with unemployment lowering to 9% and businesses opening back up.
In early 2015, the banks failed. People were unable to access their money. In an emergency decision, the government decided to suspend the use of credit cards to “slow down the impact on banking reserves”. After the last recession, many Doatian’s depended on credit to pay their bills, and when the suspension took place, lost a large amount of disposable income which ultimately resulted in the worst eviction crisis in Doatian history. With roughly 14% of homeowners losing their homes, an alarming 34% of renters were evicted.
When the banks collapsed, several other industries did too. Companies resorted to mass layoffs to offset losses in revenue, which causes unemployment to spike to 22% by mid-2016.
The EJP-PLP coalition majority responded by increasing regulations on the banking industry, improvement insurance on bank accounts, and authorizing localities to enact and enforce rent controls, which had been previously prohibited.
Despite the increased government oversight of the economy, the economy continued to decline rapidly. By the end of 2016, unemployment sat at 24%. Rising deficits and decreased tax revenue causes the government to face default. At the time, the nation had a debt ceiling (the maximum amount the government is allowed to borrow). The Chamber couldn’t agree to raise the debt ceiling, which was about to be hit, which would’ve resulted in a shutdown of the Federal government, along with a default on its debt.
After days of debate, the Chamber agreed to abolish the debt ceiling, in exchange for decreasing the unemployment benefit and cancelling all future adjusted increases to the minimum wage. With the EJP-PLP Coalition majority decreasing, and constant infighting, they had to rely on CP votes. This resulted in a significant cut in government spending between 2017 – 2019, largely on safety net programs (decreased Food Stamp/Housing/Unemployment/Disability benefit and eligibility), Education (cut spending on pell grants, abolished universal education, and Healthcare (decreased how much the Federal Government contributes to the Single Payer system, increasing the burden significantly on regions and localities.
To try and decrease unemployment, the government also decreased corporate and business taxes.
By mid 2019 (3 months before the election), the average Doatian’s income had dropped from $56,000/year to $32,000/year and unemployment remained between 24-32%. The CP to revive the economy, cut spending and taxes, and privatize certain industries. The first things they did were abolish the unemployment benefit, cut spending on social programs further, cut corporate, wealthy, asset and capitol taxes. They privatized several industries and repealed dozens of regulations.
While their initial goals were to cut government spending by 60%, the Loaz Administration only managed to cut it by 38%. Due to the cuts, food insecurity rose from 8% to 25% and homelessness from 2% to 14% by 2022. Unemployment dropped to 16%, where it has remained until recently.
Chancellor Recardo promised to revive small businesses, regulate large corporations, decreased middle and low income tax rates overall, and increase the minimum wage, among other things. Since her budget was passed, unemployment has dropped to 9% (-7%). Along with her budget, and several executive orders she has signed, along with relief from the Monarchy, homelessness has dropped to 10%.
With only 8% of her recently passed budget implemented, its already having a positive impact on the economy. In light on recent improvements, along with the government’s initiative to communicate regularly about the status of the economy and updates on their agenda, and increased media coverage on the subject, the EJP approval has risen from 52% at the election to 56% nationally, with much of the increase coming from urban centres.
The average Doatian’s income has risen to $38,400, and dependence on the social safety net in some form or another has decreased to 28% of Doatians, excluding those that rely on the recently restored (by the last EJP-PLP minority government) unemployment benefit, which an additional 4% (# who receive unemployment benefit who don’t also rely on other safety net programs) of Doatians.
In summary, 32% of Doatians currently depend on government assistance, in form or another. Most economist, however predict this to change. Our own Senior Economist (Doatian Journal), Syr Tarentino, saying “a rapid rise [for the economy is] ahead.”
Doatian Journal Financial Correspondent Charlie Crist
