Category Archives: Unemployment

It’s All About Priorities

27 Monday Jun 2011

Posted by in budget, economy, Unemployment

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What about this is so difficult to understand? There is work to be done and millions of people are out of work.

“Experts say $2 trillion of infrastructure work is needed just to catch up. The American Society of Civil Engineers (ASCE) Infrastructure Report Card, says a $2.2 trillion investment is needed to bring the country up to current standards. ASCE says, “Years of delayed maintenance and lack of modernization have left Americans with an outdated and failing infrastructure that cannot meet our needs.”

And while our “leaders” fiddle…

“The United States is falling dramatically behind much of the world in rebuilding and expanding an overloaded and deteriorating transportation network it needs to remain competitive in the global marketplace, according to a new study by the Urban Land Institute.

[…]

As Congress debates how much should be spent and where to find the money, China has a plan to spend $1 trillion on high-speed rail, highways and other infrastructure in five years. India is nearing the end of a $500 billion investment phase that has seen major highway improvements, and plans to double that amount by 2017. Brazil plans to spend $900 billion on energy and transportation projects by 2014.”

But then again, infrastructure spending might cut into the Endless War budget, and we can’t have that. Priorities.

Forecast for the Obama “Compromise”: “Weak Growth, Little Decline in Unemployment”

22 Wednesday Dec 2010

Posted by in budget, economy, Obama, Obama administration, Taxes, Unemployment

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Dean Baker writes at The Guardian:

“The enthusiasm of the US business press for the compromise tax package worked out by President Obama and Republicans in Congress led to a mini-euphoria of upbeat economic projections for 2011. While the economy will do better with this tax package than if no deal were forthcoming, much of the discussion has exaggerated the potential stimulus to the economy.

First, it is important to remember that although the total package is scored as costing almost $900bn over two years, almost everything in this package simply leaves in place current tax rates and spending. The biggest portion of the tax cut continues the tax rates put in place by President Bush in 2001. The continuation of these tax cuts, including a lower estate tax rate, accounts for almost $400bn of the $900bn.

Adding in the cost of a technical fix to the Alternative Minimum Tax, which is done every year, and the continuation of a series of smaller tax breaks, brings the total to $670bn. This portion of the package buys exactly zero stimulus, since it simply amounts to continuing tax policies already in place. Had these tax breaks not continued, it would have been a drag on growth, but their continuation does not provide any additional momentum to the economy. The $60bn cost of extending unemployment insurance for another year can also be put in this category.

The only net stimulus in this package comes from replacing the $60bn Making Work Pay tax credit in 2011 with a $110bn reduction in the payroll tax and the allowance full expensing of new investment. The latter is projected to cost $55bn a year for the next two years. The full expensing in this deal replaces a provision of the 2009 stimulus package that provided for 50% expensing, which means that the net boost to the economy is half this size.

In sum, the net stimulus for the economy from this package in 2011 will be in the range of $70bn, or about 0.5% of GDP. This is not likely to provide a substantial boost to growth.

While the tax deal will be a net positive to growth for 2011, there are many other factors that are pushing in the opposite direction. First, much of the spending in the original stimulus package will be coming to an end in the first two quarters of 2011. This includes both infrastructure spending for projects that will be nearing completion, and also assistance to state governments that allowed them to better weather difficult fiscal times.

State and local governments continue to face large budget shortfalls. They are finding it increasingly difficult to paper over their budgetary gaps (most state and local governments are required to run balanced budgets), and will have to resort to further cutbacks and tax increases in the year ahead.

House prices are once again falling, with the most recent data showing an 8.5% annual rate of decline. This pace is likely to accelerate in the months ahead. The housing market had been supported through the first half of 2010 by a first-time buyers’ tax credit. This had the effect of pulling many purchases forward from the second half of the year or 2011. As a result, sales have fallen by almost one third. As inventories build up again, many homeowners will be forced to make substantial price cuts to sell their houses.

Declining house prices will be another blow to consumption as homeowners recognise that they have lost even more wealth than their had previously believed. The current pace of decline implies a loss of more than $1tn in wealth over the course of a year. The actual loss of wealth could easily be twice as large if the rate of price decline accelerates.

Another factor depressing consumption is the recent bump in interest rates. While interest rates are still extremely low in both real and nominal terms, the current 10-year Treasury rate is close to a full percentage point above the lows hit in the late summer. This rise in interest rates will bring to an end the wave of mortgage refinancing that had helped to free up tens of billions of dollars for consumption. Relatively few homeowners will see much gain in refinancing at current mortgage rates.

It is also important to recognise just how slow the underlying rate of growth in the economy actually is. Most analysts have highlighted the overall GDP growth figure. But this number has been inflated over the last year by a rapid build-up of inventories. Over the last four quarters, GDP growth averaged 3.2%. However, final demand growth averaged just 1.3% over this period. In the most recent quarter, inventories were accumulating at almost the fastest rate on record. It is unlikely that the rate of inventory accumulation will accelerate further. Rather, the rate is likely to slow – meaning that inventories will be a net drag on growth in coming quarters.

In sum, there is every reason to expect that 2011 will be another year of weak growth, with little, if any, decline in the unemployment rate. The economy will be somewhat stronger as a result of this tax package being put in place, compared to a scenario in which nothing was done, but this is very far from the fabled “second stimulus” that some are acclaiming.”

Deficit Peacocks, Debt Ceilings, and Indefinite Detention

22 Wednesday Dec 2010

Posted by in budget, Congress, Constitution, economy, financial regulation, health care, Obama, Obama administration, Politics, Taxes, Unemployment, war on terror

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In a January 20 article at the Center for American Progress, Michael Linden differentiated between those who are serious about addressing our fiscal problems–the deficit hawks–from those who posture and preen about it—the deficit peacocks. Here’s how he defines a peacock:

“Deficit peacocks like to preen and call attention to themselves, but are not sincerely interested in taking the difficult but necessary steps toward a balanced budget. Peacocks prefer scoring political points to solving problems.”

This is one of Linden’s ways to spot a peacock:

“…people who now claim to be concerned about our fiscal future even though they recently supported massive budget-busting legislation…When someone supports a deficit commission one day and votes to use another $100 billion of red ink on tax cuts for the rich the next, it is perhaps an indication that his or her commitment to real deficit reduction leaves something to be desired.”

Cases in point:

“Sens. Saxby Chambliss (R-Ga.) and Mark Warner (D-Va.) on Monday said they will introduce a bill early next year based on the report from President Obama’s deficit commission.

Warner and Chambliss have been meeting with a group of 18 senators on finding a way to balance the budget, and said they have concluded the debt commission’s proposal is the best basis for bipartisan talks.”

The rest of the “Gang of Eighteen”:

“Roger Wicker (R-Miss.), Jon Tester (D-Mont.), Mike Johanns (R-Neb.), Ron Wyden (D-Ore.), Mike Crapo (R-Idaho), Kay Hagan (D-N.C.), Jim Risch (R-Idaho), Mark Udall (D-Colo.), Lamar Alexander (R-Tenn.), Michael Bennet (D-Colo.), Bob Corker (R-Tenn.), Jean Shaheen (D-N.H.), Amy Klobuchar (D-Minn.), Bill Nelson (D-Fla.), Dianne Feinstein (D-Calif.) and Mark Begich (D-Alaska).”

Fifteen of the eighteen, including both Chambliss and Warner voted for the tax cut extension last week. Only Wyden, Hagan, and Mark Udall have any credibility here. The rest are peacocks.

The vehicle Chambliss and others plan to use to get their desired spending cuts are negotiations over raising the debt ceiling limit (aka the next hostage situation), another can kicked down the road yesterday with passage of a Continuing Resolution to fund the government through March 4.

“Chambliss said on the call that an impending vote in Congress to raise the government’s debt ceiling…will be an important turning point. “It gives us a deadline to look to from the standpoint of getting some meaningful decisions mad …If we can use that as leverage that’s an ideal scenario,” Chambliss said.”

Ezra Klein has more on what this could mean for the future of health care reform and financial regulation reform:

“The good news is that law will keep the government’s lights on until early March. The bad news is that the law does it by extending 2010’s funding resolution — and that resolution didn’t include provisions for implementing the bills that were passed as the year went on.

…this is bad news for the health-care bill and the financial-regulation bill. There’s been a tendency to assume that the universe of options for passed legislation was binary: Either they went forward, or they get repealed. But with an angrily divided government, we may find ourselves in that little-known middle category: The Republicans can’t repeal them and the Democrats can’t fully fund them, and so rather than simply going forward, they limp forward.”

Klein doesn’t address it, but another question would be what does this does to unemployment benefits? Could the 13 month extension become 3? I guess we’ll find out in March.

Finally, this is what’s so confounding and confusing about the Obama administration. They take one step forward, with the repeal of Don’t Ask Don’t Tell, and then take two steps backward with this:

“The White House is preparing an Executive Order on indefinite detention that will provide periodic reviews of evidence against dozens of prisoners held at Guantanamo Bay, according to several administration officials.

The draft order, a version of which was first considered nearly 18 months ago, is expected to be signed by President Obama early in the New Year. The order allows for the possibility that detainees from countries like Yemen might be released if circumstances there change.

But the order establishes indefinite detention as a long-term Obama administration policy and makes clear that the White House alone will manage a review process for those it chooses to hold without charge or trial.

Nearly two years after Obama’s pledge to close the prison at Guantanamo, more inmates there are formally facing the prospect of lifelong detention and fewer are facing charges than the day Obama was elected.”

*Sigh*

A “Good Deal” For Who?

18 Saturday Dec 2010

Posted by in budget, Congress, economy, Obama, Politics, Taxes, Unemployment

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Now that President Obama’s “good deal” has been signed, sealed, and delivered thanks to the warm and fuzzy “spirit of compromise” floating around D.C. this holiday season, let’s take a look at who got goodies in their Christmas stocking and who got a lump of coal.

Republicans went into the lame-duck session with a letter to Majority Leader Reid, signed by all 42 Republican senators, stating that “any bill brought up before votes to extend the Bush-era tax cuts and a stop-gap funding bill to keep the government operating will be filibustered.” Those were their two main objectives—tax cut extension and stop-gap funding. They went two for two. As a bonus they also got a lower than expected estate tax.

The president gave them the first, after being, ahem, “forced” into it. Just as an aside, does anyone else find it strange that the tax cut extension got more votes in a Democratic-controlled House that the original Bush tax cuts did in a Republican-controlled one in 2001, 277–-240? But I digress.

Reid gave them the second on Thursday after another episode of Lucy and the football in which Republicans (surprise, surprise) reneged on their support for the omnibus spending bill. The result will likely be a short-term continuing resolution lasting a couple of months. At which time Republicans will control the House and demand ransom for their next “hostage”—the debt ceiling limit. Dave Dayen at Firedoglake:

“Republicans will have a chance in February of next year to set spending levels…And if anyone thinks that the result will not be a slashing of vital social safety net spending, take a look at how Reid folded last night, trading other priorities. The “stimulus” from the tax cut deal is GONE. It’ll be gone by February, at least. Republicans are fulfilling the Norquistian promise of lowering taxes massively, and then using that lack of revenue as a pretext to cut social spending. That’s what’ll happen in February. And the debt limit vote provides just another opportunity.”

But, as Laura Bassett at the Huffington Post points out, the cuts to safety net spending won’t have to wait until Republicans take over the House. Along with the working poor and the 99ers, there were others stiffed by the grand compromise:

“…federal funds for the Temporary Assistance For Needy Families (TANF) program have entirely dried up for the first time since 1996, leaving states with an average of 15 percent less federal funding for the coming year to help an ever-increasing number of needy families.

TANF, the federal program that replaced welfare under the Clinton Administration, provides a lifeline for families and workers who have exhausted all of their unemployment benefits. According to a new report by the Center for Budget and Policy Priorities, “more homeless families will go without shelter, fewer low-wage workers will receive help with child care expenses, and fewer families involved with the child welfare system will receive preventive services” now that Congress has passed legislation that will end funding for the TANF Contingency Fund in 2011.”

Other parts of this “deal” are that the GOP will supposedly allow the passage of DADT repeal and START. Don’t be surprised if Lucy makes another appearance before that gets done. Republicans also promised to allow the confirmation of four of President Obama’s nominees to the federal bench. Four out of 38.

What shrewd traders.

Six of One, Half Dozen of Another

16 Thursday Dec 2010

Posted by in Congress, economy, Politics, Social Security, Taxes, Unemployment

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This concludes another chapter in the ongoing saga of “It Doesn’t Matter Who You Vote For, You Get the Same Thing.” When all the smoke has been blown, and all the posturing and pontificating is done, this is what we get.

We get Sen. Sherrod Brown of Ohio, who once upon a time called the extension of the tax cuts “legislative extortion” voting yesterday to “pay the ransom.” Get used to paying, Sen. Brown. You’ll be doing a lot of that in the next two years. Next up, trading cuts in Medicare, Social Security, education, and whatever else the extortionists ask for, in exchange for raising the debt ceiling.

We get self-contradictory nonsense like this from Sen. Franken in the Huffington Post:

“Extending the excessive Bush tax breaks for millionaires and billionaires will explode our deficit over the next two years without doing anything to help our economy. I think it’s simply bad policy.

But…

…I got into this line of work because I wanted to stand up for Minnesota families trying to put food on the table and build a better life for their kids. And, for them, the only thing worse than a bad deal would be no deal at all. That’s why I voted yes yesterday — and why I will continue my fight for economic policies that create jobs, address our deficit problem, and build new opportunities for Minnesota.”

So even though this is a “bad deal” that will explode the deficit and won’t do anything to help the economy, Sen. Franken vows to fight for policies that address the deficit and create jobs. Sometime in the future, that is. Not now. Just trust him. By the way, senator, the lesser of two evils is still evil.

Sen. Franken is also “taking the president at his word that he will fight harder to put an end to these wasteful tax breaks in 2012 than he did in 2010.” Hold on to that dream, Al.

We get Majority Leader Reid calling passage of the package a “tremendous accomplishment,” and saying that it will “cut taxes for middle class families and small businesses, and ensure that Americans who are still looking for work will continue to have they safety net they rely on to make ends meet.”

Except for the 99ers, they’re SOL. And except for the working poor who will have their taxes raised while the “middle-class” folks like JPMorgan Chase CEO Jamie Dimon get a $1.179 million cut. And except for the deal laying the groundwork for cutting Social Security. Other than that it’s a tremendous accomplishment.

So next election, put all the names on a dartboard, close your eyes and throw. Democrat, Republican, whatever. Six of one, a half dozen of the other.

President Obama to Meet With Corporate CEOs

13 Monday Dec 2010

Posted by in budget, economy, Foreclosures, Obama, Politics, Social Security, special interests, Unemployment

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*Sigh*

“President Obama will host a roundtable with about 20 corporate chiefs on Wednesday, according to the White House, part of an attempt to ease strained relations with business.

Expected for the session at the Blair House, across the street from the White House, are executives from a range of industries, including American Express, Cisco Systems, Dow Chemical, Google, Motorola, Intel, UPS and PepsiCo, according to people involved in the planning. But the White House said it would not divulge attendees until the meeting.

With the mood for the meeting already lightened by his recent announcements of a trade deal with South Korea and a compromise on tax cuts with Congressional Republicans, Mr. Obama and the executives will discuss a variety of issues, said Jen Psaki, the White House deputy director of communications. Among the topics will be deficit reduction, an overhaul of the tax code, government regulation, export promotion, public-private investments in areas like technology and clean energy, and efforts to improve education and job skills, Ms. Psaki said.”

How about this “roundtable” Mr. President. How about meeting with the long-term unemployed—the 99ers—asking them how they intend to get by on the big, fat zero your “compromise” did for them? What about meeting with the firefighters and police who have been laid off due to state budget cuts, like in Camden, NJ where half of the police and a third of the firefighters are headed out the door.

What about meeting with the Social Security recipients who haven’t had a COLA increase in two years, and the federal workers whose pay you propose to freeze? Ask them how they’re going to handle rising gasoline prices, which could reach $3.50 a gallon by spring, and home heating oil prices, which are 13% more than last winter, brought on by Fed Chairman Bernanke’s “quantitative easing.” I guess they’ll have frozen homes to go along with their frozen pay. Ask the victims of foreclosure fraud how they feel about being denied legal aid by Treasury Secretary Geithner.

What about “easing strained relations” with these people? Or don’t they matter? Probably not. The unemployed, the laid off firefighters and police, Social Security recipients, and those facing foreclosure don’t write the checks with enough zeroes on them to finance that billion dollar re-election campaign like the CEOs do.

Krugman: “Sacrifice is For the Little People”

20 Monday Sep 2010

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Never mind this, let’s just be sure we keep rich people’s taxes low.


And it’s not just Republicans. Why? Paul Krugman explains:

“You see, the rich are different from you and me: they have more influence. It’s partly a matter of campaign contributions, but it’s also a matter of social pressure, since politicians spend a lot of time hanging out with the wealthy. So when the rich face the prospect of paying an extra 3 or 4 percent of their income in taxes, politicians feel their pain — feel it much more acutely, it’s clear, than they feel the pain of families who are losing their jobs, their houses, and their hopes.

And when the tax fight is over, one way or another, you can be sure that the people currently defending the incomes of the elite will go back to demanding cuts in Social Security and aid to the unemployed. America must make hard choices, they’ll say; we all have to be willing to make sacrifices.

But when they say “we,” they mean “you.” Sacrifice is for the little people.”

Unemployed “Sitting Back and Waiting”

29 Thursday Jul 2010

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Is there no end to these heartless pricks who think unemployed people are lazy?:

“This past Tuesday, Rep. Zach Wamp (R-TN), who is also a leading candidate for the GOP nomination for governor, joined a conference call with the right-wing National Federation of Independent Business (NFIB). When the subject of extending unemployment benefits arose, Wamp complained that giving people unemployment insurance was “creating a culture of dependence which we do not need.” He then said that he wants “people out there scraping and clawing and looking for work and not just sitting back waiting”:

Wamp […] said small business, the NFIB and he as governor “must resist… any more mandates to small business to help the unemployed — that we have continued to extend on a federal level, I think, unemployment compensation so long that there’s disincentives for people to actually re-enter the workforce or go out and look for a job.

“And this is creating a culture of dependence which we do not need. We want people out there scraping and clawing and looking for work and not just sitting back waiting. And so we’ve got to not allow any more mandates.”

Asshole.

Is 9% Unemployment the New Norm?

28 Wednesday Jul 2010

Posted by in economy, Obama, Obama administration, Politics, Unemployment

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Considering this:

“Nearly half of the unemployed—45.9%—have been out of work longer than six months, more than at any time since the Labor Department began keeping track in 1948…Overall, seven million Americans have been looking for work for 27 weeks or more, and most of them—4.7 million—have been out of work for a year or more.”

And this:


How do you get to this?:

“Treasury Secretary Timothy Geithner said the economy has now recovered sufficiently for government to begin to make way for private business investment.

Mr. Geithner’s comments on Sunday, which echo previous sentiments expressed by President Barack Obama, reflect a turning point in the government response to the worst economic downturn since the Great Depression, a period marked by deep federal intervention in the financial, housing, auto and other industries.

“We need to make that transition now to a recovery led by private investment,” Mr. Geithner said Sunday on NBC’s “Meet the Press.”

Led by private investment? Corporations are sitting on nearly $2 trillion of profits now and unemployment is still hovering around 10%. Just when is this private investment going to kick in and start hiring?

“A survey last month of more than 1,000 chief financial officers by Duke University and CFO magazine showed that nearly 60 percent of those executives don’t expect to bring their employment back to pre-recession levels until 2012 or later — even though they’re projecting a 12 percent rise in earnings and a 9 percent boost in capital spending over the next year.”

“2012 or later” huh? Something else significant is scheduled for 2012, isn’t it? Conspicuously convenient timing for the unemployment picture to start improving if you ask me.

Why aren’t corporations hiring now? The Chamber of Commerce claims it’s because of the “onerous regulations” being placed on them by the Obama administration. Now if one had a conspiratorial mind one might think that big business wants to keep the unemployment numbers high through 2012 so that they get a Republican Congress this year to be followed by a Republican president in 2012 who would cancel all those “onerous regulations.” One might think that, and one would be right, in my opinion.

Sadly, the administration seems to be willing to accept 9% or higher as the new norm:

“The White House said Friday it expects that unemployment will stay at or above 9% until 2012, but at the same time forecast that the economy will grow by at least 4% in 2011 and 2012.”

To whom it may concern at the White House:

If you seriously think that the economy has “recovered sufficiently” so that the government can get out of the way and let private investment take over on job creation; if you’re willing to accept unemployment at 9% or above through 2012; schedule the moving vans for the morning of January 20, 2013.