On a 293-132 vote, a bipartisan House coalition supported the compromise plan to keep giving workers a small amount of extra cash with each paycheck while also providing a continued cushion for the unemployed.
In a column for the Huffington Post on Monday, June 13, 2011, Columbia University’s Steven Cohen asserts that “every American should be frightened by the profound and intensifying attack on government and public service.” Cohen submits a vision of the United States very close to an antithesis of the one that actually exists, his alternative universe being a place where the state has been trivialized in favor of “the free market.”
Cohen’s utopia would apparently be a place where the government and giant corporations work hand in glove, their alliance driven by a vaguely parental “passion for public service.” His major assumptions, then, are twofold: That public services cannot be provided but through hierarchy and violent monopolization, and that violent monopolists have every interest in serving the public. Well, on both counts, Cohen couldn’t be more wrong.
He writes that “[c]apitalists are starting to understand that mass poverty and unemployment is politically destabilizing,” but they have always understood this. Because the economic system of Big Business and Big Government has been so deftly efficient at bleeding working people dry, the ruling class has found it expedient to assemble a welfare framework.
Their bureaucracy for “public assistance,” though, whatever its appearance, is grounded not in the humanity or benevolence of the elite, but in their shrewd calculations. As in Tolstoy’s famous parable, the farmers are eventually “afraid that the cows may cease to yield milk,” and so “they invent various means of improving the condition of these cows.”
For the total state’s “helping professions,” public service consists in condescendingly rounding up and corralling those that need to be “helped,” so that their lives can be strictly regimented and overseen. The absolute best thing that the state could do for the poor — the one thing that would truly change their posture on a fundamental level — is the one that is never broached in “respectable,” mainstream debate. Under no circumstances is it considered that we might, returning to Tolstoy’s allegorical farm, “take down the fence and grant the cows their natural freedom.”
As a practical matter, the “proper balance” between commercial interests on the one hand and the state on the other has been no balance at all. Whereas “balance” implies a trade-off between two poles or sides of a scale, the interests of state and corporate power are one and the same. Indeed, to suggest even that they can be differentiated in the prevailing economic system is absurd, ignoring the pervasive coercion that runs through it at every level.
Cohen’s version of “public service” is no more than a mantra invoked to glorify the sweeping, anti-competitive affronts against a true free market that the state institutes to profit the rich. The state-corporate projects Cohen fawningly praises are the sorts of things that require eminent domain land-grabs for new Pfizer complexes; his darling infrastructure investments are the ruin of the spontaneous order of a market freed from state intervention — the kind of market that could open doors for America’s least fortunate.
Quite contrary to the fretful contentions of the Earth Institute’s Executive Director, neither an “attack on public service” nor even a faint disapproval of its underlying values is prevailing in Washington. The public-private collusion Cohen is so enamored of, rather than retrenching, has left room for “the free market” of his nightmares only at the narrowest margins of economic life. Market anarchism would restore peaceful trade and association to its proper place within society, turning social services over to the forces inherent in genuine community.
Having confused American state capitalism with the free market, Cohen accepts (completely uncritically) the asinine folk tale that, in our current economy, there is some kind of bright line dividing “the private and the public sectors.” He doesn’t seem to notice that, far from advocating anything remotely close to a true free market, the “capitalists” he refers to have persistently been at the forefront of calls for “the mix of public and private roles.”
Cohen’s program of faux “public service” has won the day — has allowed huge, bureaucratic corporations and government agencies to crowd out or completely preclude competitors and to dominate our lives. Instead of cheerleading for more of the same, genuine public service would mean unshackling voluntary cooperation and exchange, allowing communities themselves to decide how to help themselves.
Market anarchists contend that absent state monopolization — and its real-world effect of creating scarcities to enrich the well-connected — everything from utilities to aid for the poor would witness vast improvements. While Cohen would aggrandize the authoritarian institutions that have decimated the economy, market anarchists would empower individuals to work together to solve, rather than create, society’s problems.
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Nearly one-fifth of full-time employed Americans have raided retirement accounts in the past year to cover emergencies, according to a national Bankrate survey.
Despite increasing signs of a stabilizing U.S. economy, 19 percent of Americans — including 17 percent of full-time workers — have been compelled to take money from their retirement savings in the last year to cover urgent financial needs, the Financial Security Index found.
Though 80 percent of full-time workers didn’t dip into retirement funds, far too many consumers are ill-prepared for emergencies, says Kim McGrigg, manager of community and media relations at Money Management International, a credit counseling agency.
“Perhaps the most alarming thing about these numbers is that they suggest a lack of other options,” she says. “Consumers generally consider using retirement funds only as a last resort.”
Michael Masiello, founder of the Masiello & Associates wealth management firm in Rochester, N.Y., agrees. “I believe that 17 percent of full-time workers taking early withdrawals is a higher than normal number, and it’s certainly higher than it should be,” he says.
The potential consequences of tapping retirement funds include early withdrawal fees, taxes and the loss of compound earnings — not to mention the prospect of being unable to retire.
While workers might be able to replenish the funds pilfered from tax-advantaged accounts once they regain their financial footing, one of the main benefits of long-term savings is time and compound interest. An early withdrawal of $10,000 is not just $10,000. It’s actually $10,000 plus whatever that money would have earned over the lifetime of the account. Furthermore, with penalties and taxes an early $10,000 withdrawal may only yield $6,500 if you’re in a 25 percent tax bracket.
Compounding gains turns money into a snowball, gaining size as it rolls forward. Without the advantages of compounding, workers who take an early withdrawal will later need to sock away more savings than they otherwise would have in order to fund retirement.
Americans raiding retirement funds
You may have heard that the Bureau of Labor Statistics (BLS) has modified its survey of unemployment. There is probably going to be a good deal of confusion over what’s being changed, so let me summarize the situation.
- Official unemployment numbers are derived from the Current Population Survey (CPS), which surveys American households every month in order to gather various statistical data. The potential confusion lies in that the CPS isn’t uniform in how it defines unemployment; depending on the question, somebody may or may not be actually considered to be in the labor market.
- So the CPS will (over the next four months) start including people who have been out of work for between two and five years in their calculation of median length of unemployment, which the BLS pretty explicitly thinks is being under-reported. Previously, the cutoff date was only two years; anybody out of work for longer than that would be considered effectively not part of the work force for the purposes of determining this specific statistic.
- However, the CPS will not change the BLS definition of ‘unemployed‘ (no job, actively looking for work in the last month, ready to work) for the purpose of their most commonly reported-on statistic (the U-3, which is currently 9.8%). As Ed Brayton – no friend to the Right – notes, this means that the currently reported unemployment rate numbers will not change because of this policy.
- Take up any contradiction in the assumptions behind calculating median unemployment length and calculating the current unemployment rate with the BLS.
So the real story here is not that the BLS is on the verge of reporting that the unemployment numbers are going to go through the roof. They’re not, and that’s because of a conscious and continuing decision by the government to use the U-3 numbers (9.8%) instead of the U-6 ones (17%) (permalink): there’s no point in fudging the unemployment numbers downward with one hand while raising them with the other[*]. No, the real story is that the BLS is quietly worrying that the long-term prospects for reducing unemployment are looking pretty grim.
Moe Lane (crosspost)
[*To clarify, because this came up in comments: this was only meant to implicitly push back against the notion that the government was trying to game the system by changing the criteria for the length-out-of-work question. They're already (in my opinion) gaming the system the other way by using U-3 numbers to reflect 'official' unemployment when they should be using the U-6 ones.]
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More than two million jobless Americans are entering the holiday season seized with varying levels of foreboding, worry or even panic over what lies ahead as they cope with the expected cutoff of their unemployment benefits.
Todd Anderson for The New York Times
Volunteers packed bags of groceries Friday at the Community Food and Outreach Center in Orlando, Fla.
Frank Sanders, 64, a Vietnam veteran who was laid off in May 2009, at his home this week in Fairburn, Ga.
Their economic fates are now connected on a taut string to skirmishing between Democrats and Republicans in Washington over whether to extend federal financing for unemployment benefits for the long-term jobless.
Tuesday marked the expiration of a pair of federal programs that had extended unemployment benefits anywhere from 34 to 73 weeks on top of the 26 weeks already provided by the states.
The federal extensions have been customary in past recessions and their aftermath, but they have become ensnared lately in political jousting over the soaring budget deficit.
Some recipients have already received their final checks. If the impasse remains unresolved, others will see their payments lapse in the coming days or weeks, depending on how long they have been receiving benefits.
By the end of December, more than two million are set to lose their extended benefits, according to estimates by the National Employment Law Project, and about a million more by the end of January.
While benefits have lapsed twice before in this downturn because of Congressional bickering — the last time, in June and July, payments were interrupted for 51 days— advocates for the unemployed are worried that if the issue is not resolved by the current lame-duck session of Congress, prospects in the next, with Republicans ascendant, are even slimmer.
That would mean a new reality facing legions of people across the country: a cutoff after six months of benefits for anyone out of work.
In Washington, Partisan Gridlock
WASHINGTON — With jobless benefits starting to run out for up two million of the long-term unemployed, Senate Democrats this week repeatedly tried to bring up a bill that would prolong aid for a year, only to hear Republicans object and block the legislation. Democrats, in turn, rejected Republican counterproposals.
In both the Senate and House, Democrats are pressing the case for jobless aid on two fronts, arguing that it is both the moral and humanitarian thing to do — especially during the holiday season — and that it is also an effective policy mechanism to help stimulate the economy.
“Unemployment insurance, the economists tell us, returns $2 for every dollar that is put out there,” the House speaker, Nancy Pelosi, said in a floor speech on Thursday. “People need the money. They spend it immediately for necessities. It injects demand into the economy. It helps reduce the deficit.”
Republicans said they would be willing to extend benefits provided that Democrats agree to cut spending elsewhere to cover the cost, sparking indignation among Democrats who noted that the Republicans never insist on offsetting the revenue lost through tax cuts.
A deal to extend the aid is likely, but only as part of a wider agreement on the expiring Bush-era tax cuts, and it is unclear how long that will take.
“In my state of Rhode Island, people are in a very serious situation,” Mr. Reed said. “They are struggling to stay in their homes, to educate their children, to deal with the challenges of everyday life. They have worked hard and long all their lives, and now they are finding it difficult to get a job.”
Mr. Reed noted that Congress has always extended jobless benefits in times of high unemployment.
“We have always done it on an emergency basis because it truly is an emergency,” he said. “We have always determined that it was necessary to get the money to the people who could use it, who needed it desperately, and we should do that again.”
Moments later, when Mr. Reed asked for the Senate’s unanimous agreement to consider his bill, Mr. Brown was waiting. “I object,” Mr. Brown said. “And I have a pay-for alternative on which I would like to speak.”
Mr. Brown proposed that money previously appropriated but not yet spent be redirected for the jobless aid. “The recent job numbers in Massachusetts reflect over 280,000 people unemployed in my state alone — over 8 percent of the Massachusetts work force. As the senator from Rhode Island mentioned — and I know Rhode Island well; I eat in Federal Hill regularly — the unemployment is much higher there.”
The Federal Reserve has lowered the expectations for economic growth and is not expecting any significant change in the unemployment rate for the next couple of years:
Unemployment is set to remain higher for longer than previously thought, according to new projections from the Federal Reserve that would mean more than 10 million Americans remain jobless through the 2012 elections – even as a separate report shows corporate profits reaching their highest levels ever.
Top Federal Reserve officials project that the unemployment rate, now 9.6 percent, will fall only to about 9 percent at the end of 2011 and about 8 percent when the next presidential election arrives, in late 2012. The central bankers had envisioned a more rapid decline in joblessness in their previous forecasts, prepared in June.
Amazingly, there is no congressional response to the extended unemployment crisis in the works, and in fact it looks as if Congress is on the verge of ending what limited unemployment assistance they have in place currently.
On November 30th, insurance benefits for the long-terms unemployed will expire because of congressional gridlock, and even if Congress does eventually find a way to extend them, it will probably be for only three months. That would keep the program alive just until the Republicans, who have routinely tried to block the Democrats from extending benefits in the past, will be in control of the House and yield more influence in the Senate.
As the Fed projections reconfirm, the job market is in a long-term contraction (4+ years above 8% unemployment), which means that millions of people are being squeezed out the workforce with no chance of being reabsorbed. Based on the facts, one might expect Congress to be looking at something like S.3706, which would let unemployed people collect insurance benefits for a longer period, or some other approach to help the people who are most in need. But they’re not, and homelessness, hunger and suicide rates across the country are rising as a result.
Most of the commentary today on the new Fed projections is about what the unemployment crisis means for Obama’s re-election chances in 2012. But, the fact is, Obama, Congress and most of the people writing about the politics of this will be fine. Let’s consider what this means for the people who are suffering and start getting serious about a national response
A wave of government layoffs in September outpaced weak hiring in the private sector, pushing down the nation’s payrolls by a net total of 95,000 jobs.
The unemployment rate held at 9.6 percent last month, the Labor Department said Friday. The jobless rate has now topped 9.5 percent for 14 straight months, the longest stretch since the 1930s.
The report is the final one before the November elections, which means members of Congress will face voters next month who are frustrated with an economy that is still struggling to create jobs.
The figure that may matter most is 18,000 — the number of positions lost after subtracting the 77,000 temporary census jobs that ended in September. That marks the first loss for that grouping since last December, according to economists at Nomura Securities.
Another troubling sign is a sharp rise in people working part time who would prefer full-time work. Their ranks have increased by nearly 1 million since July and total 9.5 million, the most on records dating from 1955.
When adding that to the 14.8 million unemployed and the 2.5 million who have stopped looking for work, there are a startling 26.8 million Americans who are “underemployed.” That’s 17.1 percent of Americans who want to work.
Government job losses led the declines in September. A net total of 159,000 public-sector jobs were eliminated. Local governments cut 76,000 jobs last month, most of them teachers. That’s the largest cut by local governments in 28 years. States cut 7,000 jobs. The rest were census jobs.
The private sector is not compensating for those losses. Companies added only 64,000 jobs. That’s the fifth straight month of weak private hiring. And it’s roughly half the pace needed simply to keep up with population growth and hold down the jobless rate.
“The labor market remains far too weak to raise confidence among consumers, lift spending and in turn spur businesses to step up hiring,” Sophia Koropeckyj, an economist at Moody’s Analytics, wrote in a note to clients.
The local government job losses reflect the toll the recession is taking on state and local government budgets. Falling home values are just beginning to push down local governments’ property tax revenues. Most state and local governments are required to balance their budgets, which means drops in revenue are forcing cuts in services.
Local officials say more cuts are coming. The National League of Cities projects that local governments will cut 480,000 jobs this year and next. More jobs will be lost among private companies that do business with cities.
The weak job market makes it more likely that the Federal Reserve will take additional steps to boost the economy. Most economists expect the Fed to decide at its meeting next month to buy government debt in an effort to lower interest rates and spur more borrowing.
That expectation enabled investors to take the jobs report in stride. The Dow Jones industrial average rose 29 points in midday trading. Other indexes were mixed.
Even areas of the economy that were strong earlier this year are weakening.
Manufacturers cut 6,000 jobs, the second straight month of losses. The sector drove job growth after the recession ended, adding 134,000 positions in the first five months of 2010. But factory employment has been flat since then.
Construction firms cut another 21,000 jobs, hampered by weakness in commercial real estate development. Information services lost 5,000 positions.
Some sectors showed job gains. For example, the health care industry added 32,000 jobs.
But most of the new jobs don’t necessarily pay well. The leisure and hospitality sector added 38,000 jobs — many in bars and restaurants. Retailers added 5,700. Temporary help services hired nearly 17,000 workers.
Anemic job growth is also holding down wages. Average hourly earnings rose by just a penny in September and are up only 1.7 percent in the past year.
Employers, faced with slow sales and a weak economy, see little reason to ramp up hiring. The economy expanded at a feeble 1.7 percent annual rate in the April-June quarter. Most analysts think the economy will fare little better for the rest of this year.
Since the recession ended in June 2009, the economy has grown 3 percent, according to economists at Deutsche Bank. That’s less than half the average 6.5 percent pace in postwar recoveries.
The department said the economy shed 15,000 more jobs in July and August than previously estimated.
The government also issued a preliminary estimate of its annual revision to the jobs data. The revision is made after examining unemployment insurance tax records. The department said the revision is likely to show the economy lost 366,000 more jobs that it previously thought in the 12 months ending in March 2010.
With today’s news it’s even clearer: the Obama-Pelosi-Ellsworth economic experiment has failed.
Our economy has shed another 95,000 jobs keeping the unemployment rate at 9.6 percent and sending the broader underemployment rate – including those with part-time jobs seeking full-time employment and others who have given up altogether – up to 17.1 percent.
What’s even more troubling is our nation’s “jobless rate has now topped 9.5 percent for 14 straight months, the longest stretch since the 1930s.”
Washington’s spending spree habits have contributed to our perpetual jobless economy. A Monthly Budget Review by the Congressional Budget Office released yesterday reported that, “The 2010 deficit was the second-highest shortfall—and 2009 the highest—since 1945, relative to the size of the economy.”
Quoting the CBO as saying the rise in spending was “somewhat faster than in recent years” the Washington Times called the report “a stark evaluation at a time when President Obama and Congress are working to convince voters they are pursuing a fiscally frugal course in Washington.”
Considering this news, here are a few questions for incumbent Congressman Brad Ellsworth:
- Do you still believe the stimulus bill – which you supported – has helped revive the economy? Even the federal government’s own estimates say it hasn’t.
- The two highest deficit years on record were under your watch – how can you claim to be a fiscal conservative after passing the deficit-inflating legislation that caused this?
Coats on the Road
Dan Coats visited Evansville yesterday where he spoke at the Southeast Indiana Chamber of Commerce breakfast followed by greeting festival-goers at the Fall Festival. Today, Dan will give the keynote address at the 28th Annual Meeting of the Hoosier Heartland Corridor in Huntington.
[Disclosure: Pete Seat is the Communications Director for the Coats for Senate campaign.]
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by Donny Shaw
I’m down in D.C. today and tomorrow for the excellent Gov 2.0 summit, hearing from a great bunch of folks from both inside and outside government on how the internet and open data can be harnessed to bolster transparency and efficiency, and improve governance through a more participatory civic infrastructure. You can follow along on Twitter using the #g2s hashtag and you can stream some session live here.
Before I dive too far into the exciting world of gov 2.0, here’s a quick update on the Obama stimulus measure that is probably going to keep Congress busy from when they return to D.C. on Monday until they adjourn sometime in September.
First and foremost, the payroll tax holiday, an idea favored by most Republicans and that probably would have been swallowed without too much bitterness by most Democrats, is now, reportedly, off the table. At this point, here’s what the new Obama stimulus package is looking like:
1) Allowing businesses to deduct 100% of their equipment purchases from their taxes through 2011. This would be the deepest business reinvestment incentive in recent history. According to the NYT, it would cost the federal government about $200 billion in lost revenues, $170 billion of which is expected to be recouped eventually through revenue gains when/if the stimulus measures start turning the economy around.
2) Making the research and development tax credit permanent. This credit has been in place, nearly constantly, for the past 30 years. But it’s always been done through temporary extensions, and the politics and uncertainty involved in it have put a bit of a damper on its effect. Making it permanent should make businesses more confident that they can predict the costs associated with investing in innovation.
3) New infrastructure investments. Obama yesterday announced that he plans to call for $50 billion in new spending for infrastructure projects — roads, trains, and runways — to be organized through a new “infrastructure bank” that would give priority to projects that are able to attract private funds. To pay for the projects, he is proposing to eliminate some oil and gas company tax breaks and loopholes that have been in place since the late 90’s.
Now, it’s hard to imagine this infrastructure spending not being lopped off in the Senate. Assuming Sen. Ben Nelson [D, NE] is a no, if all other Democrats voted in favor of it (and that’s a big if), they’d still need 2 Republican votes to break an inevitable filibuster. But the usual Republican cross-overs haven’t been biting on Dem stimulus plans for the past few months. And as the campaign season begins in earnest, Republican cross-over votes are even less likely.
Plus, it’s already been shown that the plan to end oil company tax breaks can’t survive on its own. In June, Sen. Bernie Sanders [I, VT] brought an amendment to end the tax breaks to a vote and it failed miserably, 35-61. Twenty-one Democrats and all Republicans voted against it.
Also noteworthy is one thing that has not been floated for inclusion in the package — extending unemployment benefits. The CBO recently found that unemployment benefits are the most stimulative form of government spending, more than twice as stimulative as equipment investment credits and significantly more effective than infrastructure spending. Yet, after Nov. 30, none of the millions of long-term unemployed will be eligible for insurance payments. Not to mention the millions of 99ers who continue to be ignored.
By CHRISTOPHER S. RUGABER
Friday, August 27, 2010
WASHINGTON — The economy grew at a much slower pace this spring than previously estimated, mostly due to the largest surge in imports in 26 years and a slowdown in companies’ restocking of goods.
The nation’s gross domestic product – the broadest measure of the economy’s output – grew at a 1.6 percent annual rate in the April-to-June period, the Commerce Department said Friday. That’s down from an initial estimate of 2.4 percent last month and much slower than the first quarter’s 3.7 percent pace.
The revision follows a week of disappointing economic reports. The housing sector is slumping badly after the expiration of a government homebuyer tax credit. And business spending on big-ticket manufactured items such as machinery and software, an important source of growth earlier this year, is also tapering off.
As a result, most analysts expect the economy will grow at a similarly weak pace for the rest of this year.
“We seem to be in the early stages of what might be called a ‘growth recession’,” said Ethan Harris, an economist at Bank of America-Merrill Lynch. The economy is likely to keep expanding, but at a snail’s pace and without creating many more jobs. Harris expects the nation’s output will grow at about a 2 percent pace in the second half of this year. As a result, the jobless rate could rise from its current level of 9.5 percent.
That’s “very disappointing relative to a normal business cycle,” he said. “Usually you get a bigger bounce back.”
Still, stock futures rose modestly after the announcement as investors appeared relieved the estimate wasn’t lower as some economist had forecast.
Investors will now turn their attention to a speech by Federal Reserve Chairman Ben Bernanke, scheduled for 10 a.m., that will address what the Fed may do in response to the weakening economy.
The widening trade deficit subtracted nearly 3.4 percentage points from second quarter growth, the largest hit from a trade imbalance since 1947, the government said.
The economy has grown for four straight quarters, but that growth has averaged only 2.9 percent, a weak pace after such a steep recession. The economy needs to expand at about 3 percent just to keep the unemployment rate from rising.
Business investment in new machinery, computers and software drove much of the growth last quarter, increasing nearly 25 percent.
But much of that spending involved the purchase of imported goods. Imports surged 32.4 percent, the most since 1984. That overwhelmed a 9.1 percent increase in exports.
Consumers spent a bit more in the second quarter than previously calculated. Their spending rose at a 2 percent annual rate, above the 1.6 percent estimated last month and slightly higher than the first quarter’s 1.9 percent. The revised estimate was largely due to higher electricity and natural gas usage, the Commerce Department said.
Economists expect many other supports for economic growth to fade. Federal government spending and the housing sector bolstered the economy last quarter, but housing has slumped again and will likely drag growth down in the third quarter. The impact of the federal government’s $862 billion stimulus package is also projected to taper off this year.
There are few other signs of strength. Even business investment is expected to drop, as a report earlier this week showed that business orders for capital goods fell in July.
The government’s GDP report measures the economy’s output of goods and services and covers everything from autos to haircuts. Friday’s report is the second of three estimates the government makes each quarter.