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Vol. 13 Issue 27…Dedicated to the Dialogue on
Race…Ju1y 4, 2010
Politics Y2K10
Denied
By Coalition on Human Needs
Thirty-seven (37) Senators and
153 Representatives vote to deny unemployment insurance to two (2) million and
those who vote no endanger state aid, youth jobs, and TANF emergency funds.
Nearly 30 million people were
unemployed or underemployed in June, with more than 45 percent of the
unemployed out of work more than six months. Never has Congress cut off federal
unemployment benefits with jobless rates over 9 percent. Until now. By July 10,
just before Congress returns from its Independence Day recess, more than 2
million people will go without unemployment checks; 140,000 will have lost
COBRA health insurance. Although the House overwhelmingly passed a bill to
restore the federal unemployment insurance program (H.R. 5618, with a vote of
270-153), the Senate continued to be stymied by a stubborn minority.
Also held up are aid to states to
cover rising Medicaid costs, $1 billion for youth jobs, another year's funding
($2.5 billion) for the Temporary Assistance for Needy Families (TANF) Emergency
Fund, and $1.065 billion for the new National Housing Trust Fund. The Senate
was unable to pass shrinking versions of these provisions as well as
unemployment insurance for lack of the 60 votes needed to do almost anything in
that chamber (in H.R. 4213). They were later even unable to pass a stripped
down bill extending federal UI through November and the homebuyers' credit
through September, although the homebuyers' credit was later extended in a separate
voice vote (H.R. 5623).
The Senate's attempt to reinstate
the federal unemployment insurance program (which was allowed to lapse on June
2) fell one vote short of the needed 60, although the final vote to cut off
debate and move the bill forward was 58-38 because Majority Leader Reid (D-NV)
switched his vote to no to allow him the option of bringing it up again after
the July 4 recess. The Senate vote was mostly along party lines, but Senators
Snowe and Collins (both R-ME) broke ranks to support the bill, and Senator Ben
Nelson (D-NE) voted against it. It is expected that the replacement for Senator
Robert Byrd (D-WV), who passed away on June 26, will provide the needed 60th
vote, but a potential court challenge to the method of naming his successor
makes the timetable uncertain.
Those voting no argue that unemployment benefits and the other provisions
should be paid for with cuts to other programs. The Senate leadership did
accept proposals to make cuts to pay for many of the provisions, but did not
try to pay for UI. Economists have urged Congress not to cut other programs to
pay for UI, since reducing other spending will detract from the boost to the
economy provided by UI benefits. The oft-cited Mark Zandi, Chief Economist at
Moody's Economy.Com, testified before the Senate Finance Committee in April
that every dollar spent on UI returns $1.61 in economic growth, and that a
dollar of state aid returns $1.41. But senators anxious to show they were
concerned about the deficit insisted on more cuts, so the Senate leadership
proposed a $9.56 billion reduction in SNAP (food stamp) benefits that would
begin in 2014 as well as other cutbacks, a move strongly opposed by advocates.
Although these offsetting spending cuts were in the bill and the Medicaid aid
was reduced from $24 billion to $16 billion, there still were not enough votes
to pass the legislation; it failed 57-41.
Republican Members have made a point of seeking cuts in the remaining economic
recovery funds as a means of paying for unemployment benefits or other spending
or tax breaks they support. The leadership of the House and Senate have opposed
ending the use of recovery funding since the $34 billion thus far unspent can
still be used and the spending is still needed to shore up the still fragile
economy.
June's one-month drop of more than 650,000 in the civilian labor force as more
people were discouraged from looking for work added to weak home sales and
other economic news causing analysts to worry that we may really face a double-dip
recession. The insistence of a minority in Congress on cutting spending to
reduce the short-term deficit is counter to most economists' recommendations.
But their insistence has threatened the extension of all the emergency state
aid, both for Medicaid and for education (see appropriations article in this
issue). The June unemployment data show that over the past 12 months, there has
been a loss of 193,000 state and local government jobs. With state governments
alone facing over $140 billion in budget gaps for FY 2011, no additional
federal aid will mean hundreds of thousands more jobs lost and service cuts
potentially affecting millions of vulnerable people.
As Congress regroups after its July 12 return, there is growing concern that
decisions to split apart the jobs legislation may result in some of its
components being forgotten. In addition to the state aid, advocates will
continue to press for another year of the TANF Emergency Fund, which now is
expected to create 200,000 temporary subsidized jobs for poor parents by its
expiration at the end of September, as well as providing aid for families in
desperate straits. Efforts will also continue to fund youth jobs and the
Housing Trust Fund. In addition, advocates will re-double their efforts to fight
against SNAP (food stamps) cuts which are certain to be proposed again. When
Congress returns, members will want to revive a group of expired tax cuts that
have in the past been routinely extended and that were originally part of the
jobs bill H.R. 4213. Although combining those tax cuts and the other expiring
items did not provide the impetus for passage in June, the increasing urgency
of the economic news may make the difference in July. (Source: www.chn.org/humanneeds)
Myth of the Day: Benefits Make People Lazy
By Alexander C. Hart
Sharron Angle, the Republican
trying to unseat Senate Majority Leader Harry Reid, made herself an easy
political target when she told an interviewer that cutting unemployment
benefits was the right thing to do: How would you have voted on that bill to
extend unemployment benefits?
ANGLE: I would have voted no,
because the truth about it is that they keep extending these unemployment
benefits to the point where people are afraid to go out and get a job because
the job doesn't pay as much as the unemployment benefit does. And what we
really need to do is put people back to work.
To be fair, though, Angle isn't
the first conservative to make this suggestion. And her argument has a certain
intuitive appeal: Wouldn't generous unemployment benefits discourage people
from finding work?
In fact, a 1990 _study of
unemployment benefits (http://www.nber.org/papers/w2741) by Lawrence Katz and
David Meyer suggested as much: They found a significant link between how long
people could receive payments and how long people stayed unemployed. (For each
five to six weeks of extra benefits, people would stay unemployed one additional
week.) Katz and Meyer also noticed that people stopped being unemployed at the
same time as their benefits ran out proof, it would seem, the more generous
benefits encourage people to stay jobless.
But subsequent research showed
otherwise. A 2007 study from David Card, Raj Chetty, and Andrea Weber took a
closer look at what happens to people when their unemployment benefits run out.
They don't magically find jobs, it turns out. Rather, they simply stop
submitting the information that would cause the government to count them as
unemployed.
Remember, to be officially
"unemployed," you have to be seeking work. And unemployment benefits
are only available to people who declare they are hunting for a job. Once the
benefits run out, people no longer bother to make that declaration. (Why go to
the trouble, if you can't get the benefits anyway?) So the statistics stop
counting them as jobless even though, as the researchers found, only a tiny
fraction of workers return to the workforce right when benefits run out.
What's more, Katz himself has
said his findings, based on 1970s data, aren't relevant to the current
situation, when jobs are simply less plentiful. Speaking with Politifact in
2009, he said, "I strongly favor extensions of UI benefits when the labor
market is weak and the ratio of job seekers to job openings is very high"
According to the _Economic Policy Institute, there are about five job-seekers
for every job opening right now. In December 2007, when the recession
officially began, there were only two job-seekers per opening.
But, hey, we're about to get
something like a real-world test of Angle's theory. Thanks to the Republicans
and Democrat Ben Nelson, hundreds of thousands of people will lose their
unemployment benefits in the next few weeks. If she's right, a bunch of them
will magically find jobs just as the benefits run out. Bets, anybody? (Alex
Hart is a reporter-researcher at The New Republic. (Source: http://www.tnr.com)
Bike4Peace
Members of Bike4Peace, an
organization established in 2005, are bicycling from 
between
July 24 and September 22, 2010. The cross-country ride will demonstrate the
bicycle as a transformational tool to solve the problems of Climate Change, Oil
Wars, the Health Crisis, and the Economic Crunch. Along the way, riders will
facilitate community discussions around the question "How can we support
each other to live true to our best values?"
Bike4Peace began with Ron Toppi
as an outgrowth of his search for a public sacrifice that could supplant
War4Oil. He was joined by Jesse Card and Jeff Stepper; they biked 3500 miles
from
In 2007, four cyclists rode the
same northern route with Ron, continuing to weave together their supportive
network of hosts. The group was met in DC by Catalysts of HOPE, another group
of cyclists that included 12-year-old Tala, her 2-year-old twin sisters, and
their mother, Michele Darr, who had pedaled 4500 miles from
More people plan to converge with Bike4Peace in
For more info, including route,
schedule and a discussion group, visit http://b4p.bbnow.org. If you would like
to bicycle all or part of the route, plan a convergence ride, or host riders
passing through your community, please e-mail bike4peace@googlegroups.com.
On the Road to a Jobless Recovery (Excerpts)
By David Moberg
Unemployment in the
It may soon need more. Hundreds
of thousands of teachers, and city and state workers could be out of a job as a
result of budget crunches. The Euro zone crisis could spread to the
Despite record numbers of people
being out of work for six months or more, the Obama administration and conservative
Democrats in Congress-spooked by Republican hysteria about deficits and
"big government"-are failing to address this crisis.
By early June, Congress had only
approved a temporary renewal of extended unemployment benefits, leaving the
long-term jobless with no support. Aid to states, school systems and local
governments that could have saved a couple hundred thousand jobs fell victim to
the misguided, cynical deficit phobia.
According to a May NBC/Wall
Street Journal poll, voters rank job creation and economic growth over concern
about the deficit and government spending 35 percent to 20 percent. And in the
midterm congressional elections, Democrats could do better than pundits expect
if they run a jobs-oriented campaign, as union-backed Democrat Mark Critz did
in his May special election victory in a largely white, working-class district
of Pennsylvania that voted for John McCain in 2008.
But Democrats so far have little
new to offer voters this year on job creation. And NBC pollsters report that 42
percent of Americans do not believe that the February 2009 stimulus package
will help the economy.
Yet, limited as it was, it
worked: The nonpartisan Congressional Budget Office estimated the American
Recovery and Reinvestment Act increased the number of full-time-equivalent jobs
in the first quarter by 1.8 to 4.1 million. Many voters, however, confuse the
Recovery Act with the much-loathed bank bailout.
Unemployment in the current
downturn reflects two failures of the economy-one long-term, one (with luck)
short-term. Over the past several decades, labor market inequality and
insecurity have grown dramatically, as workers have failed to share in the
nation's growing productivity. There was no net job growth or, for most
workers, increased real earnings, in the first decade of this century.
The trends in population groups that were either working or looking for work
have also shifted. Starting in the 1990s, then accelerating in the next decade,
men began withdrawing from the labor force. In the 2000s, after decades of
increases, the percentage of women who participated in the workforce also
declined. On the other hand, growing numbers of workers over 55 have taken part
in the job market, probably out of increased retirement insecurity.
Unlike the quick rebounds from
downturns typical after World War II, the recessions of the early 1990s and
2001 were followed by two to three years of "jobless recovery." The
economy simply was not growing fast enough to generate sufficient employment
(partly due to poor public policies).
There were also more permanent
dismissals and fewer temporary layoffs. Employers were more likely to cut their
workforces deeply, even close or offshore operations, rather than hold on to
experienced workers. In the last recession, contrary to old patterns,
productivity increased rapidly as companies tapped into benefits of
computerization or business re-organization.
Those trends, which are bad for
workers, have intensified in the current recession, with the burden falling on
African-American, Latino and young workers. The unemployment rate for these
groups has soared, even as they withdraw from the workforce and are not
officially counted as unemployed. Men have lost jobs more than women,
reflecting the fates of sectors where they are concentrated (manufacturing and
construction versus healthcare and education).
Long-term unemployment has hit a post-Depression high. This past spring, 45
percent of the unemployed were out of work six months or more and 25 percent for
more than a year. Unlike some long-term jobless, such as ex-offenders or
displaced workers who need re-training, most of today's long-term unemployed
are victims of weak growth and economic demand. Longer periods of unemployment
are also more common because the workforce is more educated (taking time to
find jobs that fit their skills); less mobile (exacerbated by the housing
crisis); and older (workers over 55 are less likely to be unemployed than
younger workers but out longer if they lose their jobs).
The costs of our inability to
make job creation a national priority are huge, both economically and socially.
The whole economy suffers from a loss of potential output and the waste of
unused talents. Governments lose revenue and gain new expenses. Workers seeking
a job or students entering the job market in a recession compared to a boom
will lose on average one-fifth or more of their earnings for many years.
Children of workers who lose their jobs fall behind in school and eventually
earn less over their lifetimes. The longer workers are unemployed, the greater
their risk of physical and mental illness, suicide, homicide, imprisonment and
mortality from various illnesses.
About
Me: David Moberg, a senior editor of In These Times. He can be reached
at davidmoberg@inthesetimes.com
Standing Up to the Unholy
By Sen. Russ Feingold
Wall
Street and its allies have been calling the shots in Congress for decades, so
they must be glad to see how things are shaping up on financial regulatory
reform. Congress is about to vote on a final bill that fails to fix the key
flaws in the bills passed by both the House and Senate. At the start of this
process I made clear that I had a simple test for financial reform -- will it
stop another financial meltdown? This bill fails that test, and I won't support
legislation that fails to protect the people of
I had hoped I would be able to
support the legislation, given the clear need for strong reform. I cosponsored
a number of critical amendments during Senate consideration of the bill
including a Cantwell-McCain amendment to restore Glass-Steagall safeguards,
Senator Dorgan's amendment that addressed the problem of "too big to
fail" financial institutions, and another "too big to fail"
reform offered by Senators Brown and Kaufman that proposed strict limits on the
size of those institutions. Each of those amendments would have improved the
bill significantly, and each of them either failed or was blocked from even
getting a vote.
After that, it wasn't a close
call for me. It would be a huge mistake to pass a bill that purports to
re-regulate the financial industry but is simply too weak to protect people
from the recklessness of Wall Street. That would be like building an
impressive-looking dam without telling everyone that it has a few leaks in it.
False security is no security at all.
Since the Senate bill passed, I
have had a number of conversations with key members of the administration,
Senate leadership and the conference committee that drafted the final bill.
Unfortunately, not once has anyone suggested in those conversations the
possibility of strengthening the bill to address my concerns and win my
support. People want my vote, but they want it for a bill that, while including
some positive provisions, has Wall Street's fingerprints all over it.
In fact, reports indicate that
the administration and conference leaders have gone to significant lengths to
avoid making the bill stronger. Rather than discussing with me ways to strengthen
the bill, for example, they chose to eliminate a levy that was to be imposed on
the largest banks and hedge funds in order to obtain the vote of members who
prefer a weaker bill. Nothing could be more revealing of the true position of
those who are crafting this legislation. They had a choice between pursuing a
weaker bill or a stronger one. Their decision is clear. On this bill, like the
others that preceded it, the biggest financial interests have won.
I've seen this too many times
before. When I was in the Wisconsin State Senate, I chaired the Senate Banking
Committee for nearly a decade, and fought against enactment of an interstate
banking law that resulted in the concentration of financial assets and most
large
Shortly after I came to the U.S.
Senate we considered a national interstate banking bill, the Riegle-Neal
Interstate Banking and Branching Act of 1994, which accelerated the
concentration of financial assets, and the creation of "too big to
fail" firms. I was one of only four senators to oppose that legislation.
Five years later, I was one of only eight Senators to oppose the
Gramm-Leach-Bliley Act, the bill that repealed Glass-Steagall and paved the way
for this disastrous recession, which has been an economic nightmare for so many
Americans.
Those two measures -- the 1994
law and the 1999 law -- accelerated the trend toward increased concentration of
financial assets, aggravating the problem of "too big to fail." Before
those two laws were enacted, the six largest
Ultimately, it was the threat of
the failure of the nation's largest financial institutions that spurred the
Wall Street bailout. I opposed that measure as well, in part because it was not
tied to any fundamental reforms of our financial system that would prevent a
future crisis and the need for another bailout. We could have had a much
tougher reform package if the bailout had been tied to such a measure.
Every single one of those bills caved to Wall Street and the biggest financial
interests, and so does the current regulatory reform bill. Economist Dean Baker
called this bill a "fig leaf," and former IMF Economist Simon Johnson
has slammed the bill's failure to address "too big to fail." These
experts paint an accurate picture of this bill's failings, and frankly those
failings shouldn't come as a surprise. Many of the critical actors who shaped
this bill were present at the creation of the financial crisis. They supported
the enactment of Gramm-Leach-Bliley, deregulating derivatives, even the massive
Interstate Banking bill that helped grease the "too big to fail" skids.
It shouldn't be a surprise to anyone that the final version of the bill looks
the way it does, or that I won't fall in line with their version of
"reform."
This bill caves to Wall Street
interests, it doesn't meet the test of preventing another financial crisis, and
it won't get my vote. (Source: www.huffingtonpost.com)
Mailbox: E-Mails, Faxes and
Telephone Calls
Email www.moveon.org
...Yesterday news broke that John Boehner, the Republican Leader in the House
of Representatives, believes that Congress should raise the retirement age to
70 and cut Social Security so that we can finance the wars in
Email www.wsj.com US Growth Revised Down Again...By Justin LaHart and Jeff Bater...The U.S. government revised downward for the second time its estimate of economic growth in the first quarter. Gross domestic product, the total output of the nation's goods and services, rose at a 2.7% annual rate from the fourth quarter of last year, the Commerce Department reported. That was down from an original estimate of 3.2% in April and from May's downward revision to an estimate of 3%. It was also down from the fourth quarter, when GDP grew at an annual rate of 5.6%. Consumer spending, a key engine of growth for the economy, was less robust than previously thought. Spending rose by 3.0%, down from a previous estimate of 3.5%. That revision suggested the economy had less momentum heading into the second quarter. The report also showed that companies had built inventories by more in the first quarter than earlier estimated, suggesting that they may not have had to increase output by as much to meet demand in the second quarter. A survey conducted by The Wall Street Journal in early June showed that economists, on average, expected GDP to grow at a 3.6% annual rate in the second quarter. On a positive note, first-quarter corporate profits were revised up, rising by 8% from a previously reported 5.5% increase. Year over year, earnings were up 34%. Many economists look to strong profit growth--which looks to have continued in the second quarter--to overcome hesitancy by many businesses to spend and hire.
Email www.ritholtz.com... NFP: Bring Da Noise, Bring in Da Funk...By Barry Ritholtz ...Today, we are expecting a very noisy, very funky NFP report. That is what the "N" and "F" stand for in this NFP report: Noisy & Funky...Last month, we noted how much the Census data was skewing employment reports. The Labor Department had hired ~ 417,000 more census workers, and that was skewing the numbers. We even said you could see a crazy number, as high as ~700k, and you should ignore it. The next few months is the unwind of the census hiring. Bloomberg's survey of economists had a median estimate of a payroll declined of 130,000 in June. Ignore that as well. Given all the noise, these estimates are little more than wild-assed guesses. The reporting week for NFP does not fit in precisely with the Census layoffs, and so we could see a payroll report plus or minus 250k around that number. Anything between plus 100k new jobs and minus 400k should not surprise traders (but probably will). One last trader's caveat: Expectations for this report have been continually ratcheted down this month. Whisper numbers are for an awful data point. Hence, anything less than horrible number could spark a relief rally. It’s all about the noise.