Category Archives: The Economy

Now, if only they would listen….

A small army of economists warned Congress on Thursday not to focus on deficit reduction instead of job creation or else risk a 1937-style double-dip recession.

“History suggests that a tenuous recovery is no time to practice austerity,” says a statement signed by more than 300 economists and policy experts. “In the Great Depression, Franklin Roosevelt’s New Deal generated growth and reduced the unemployment rate from 25 percent in 1932 to less than 10 percent in 1937. However, the deficit hawks of that era persuaded President Roosevelt to reverse course prematurely and move toward budget balance. The result was a severe recession that caused the economy to contract sharply and sent the unemployment rate soaring.”

Democrats in Congress have had 1937 in mind since March 2009. “We’re not going to let it happen again,” vowed House Speaker Nancy Pelosi (D-Calif.) at the time.

Nevertheless, deficit hawks dominated the debate in Congress this summer as Democratic leaders struggled to reauthorize a series of programs created by the 2009 stimulus bill. Pelosi and her counterparts in the Senate have had seemingly little choice other than to sacrifice things like COBRA health insurance subsidies and enhanced unemployment benefits to win the support of deficit-hawkish Democrats and moderate Republicans.

“This is about a high road to recovery versus a low road to fiscal balance,” said Bob Kuttner of the American Prospect and co-author of the statement, along with the Center for Economic and Policy Research’s Dean Baker and the Robert Borosage and Roger Hickey from the Institute for America’s Future. “The proper sequencing is: You get the recovery first, that requires increased public investment. And then the road to fiscal balance is much less arduous because people are working, businesses are investing, and tax revenues go up because you’re back in recovery.

“There is also a low road to fiscal balance, where you have austerity and you get the budget balanced at the cost of whacking the real economy.”

via 300 Economists Warn Congress: Don’t Kill Growth And Jobs In The Name Of Deficit Reduction.

Sorry, but I find this completely unacceptable in a country as rich as the US.  How can 43.6 million people be in poverty and more than 50 million not have health insurance and people not think the government needs to do something about it?

And how can they think there is not something fundamentally wrong with public policy that drives this?

The poverty rate surged to 14.3 percent last year, the highest since 1994, as the recession took its toll on incomes, the Census Bureau said Thursday.

The ranks of the working-age poor climbed to the highest level since the 1960s as the recession threw millions of people out of work last year, leaving one in seven Americans in poverty.

About 43.6 million people were in poverty last year, the Census Bureau said Thursday in its annual report on the economic well-being of U.S. households. The report covers 2009, President Barack Obama’s first year in office.

The poverty rate climbed from 13.2 percent, or 39.8 million people, in 2008.

The share of Americans without health coverage rose from 15.4 percent to 16.7 percent — or 50.7 million people — mostly because of the loss of employer-provided health insurance during the recession. Congress passed a health overhaul this year to address rising numbers of the uninsured, but the main provisions will not take effect until 2014.

via U.S. Poverty Rate Highest Since 1994 : NPR.

This is absolutely disgusting.

This is a big part of the problem with our government.  Too many wealthy people can buy their elections.  Until we have Campaign Finance Reform that either outlaws Candidate’s private funding or, preferably, converts us to a public financing mode, this is just going to continue to happen.

People forget the TV  and radio airwaves are public property.  We should allocate each candidate a certain amount of airtime and ban the practice of allowing those with the most cash to buy up the airtime.

How can you have “Representative” Democracy when the filthy rich and the corporations can contribute unlimited funding to buy the Election via uncontrolled campaign commercials?

Most people don’t pay attention to this stuff….

SAN FRANCISCO — Meg Whitman, the Republican candidate for California governor, has surpassed New York Mayor Michael Bloomberg for the highest personal contribution in American campaign history.

Whitman’s campaign reported another $15 million contribution late Tuesday, bringing her personal donation to $119 million.

The billionaire former eBay chief executive’s spending surpasses the previous record of $108 million set by Bloomberg in his bid for a third term last year.

via Meg Whitman Campaign Spending BREAKS RECORD: $119 Million Burned So Far On California Race.

Great Blog on The Huffington Post.  I encourage you to click the link under this excerpt and read the entire post.

There was a time when a principled Republican could fairly and accurately reply that he or she was voting for smaller government and lower taxes as a way of improving the fortunes of the middle class. (I personally disagree with that policy position, but it is a fair argument to make.)

But in the current Tea Party- and Beck-Palin-Limbaugh-dominated GOP, such an assertion is completely untenable. Recent news has shined a clear spotlight on exactly what the GOP is actually supporting. As I pointed out last month, odds are, the Republicans are not looking out for you.

via Mitchell Bard: What Does a Vote for a GOP Candidate in November Really Mean?.

This is truly sad…

And it’s even sadder that some people think Republicans and the Tea Party crowd might care or do something about it-besides make it worse.

I encourage you to click the link at the bottom and read the entire article.

WASHINGTON – The number of people in the U.S. who are in poverty is on track for a record increase on President Barack Obama’s watch, with the ranks of working-age poor approaching 1960s levels that led to the national war on poverty.

Census figures for 2009 — the recession-ravaged first year of the Democrat’s presidency — are to be released in the coming week, and demographers expect grim findings.

It’s unfortunate timing for Obama and his party just seven weeks before important elections when control of Congress is at stake. The anticipated poverty rate increase — from 13.2 percent to about 15 percent — would be another blow to Democrats struggling to persuade voters to keep them in power.

“The most important anti-poverty effort is growing the economy and making sure there are enough jobs out there,” Obama said Friday at a White House news conference. He stressed his commitment to helping the poor achieve middle-class status and said, “If we can grow the economy faster and create more jobs, then everybody is swept up into that virtuous cycle.”

Interviews with six demographers who closely track poverty trends found wide consensus that 2009 figures are likely to show a significant rate increase to the range of 14.7 percent to 15 percent.

Should those estimates hold true, some 45 million people in this country, or more than 1 in 7, were poor last year. It would be the highest single-year increase since the government began calculating poverty figures in 1959. The previous high was in 1980 when the rate jumped 1.3 percentage points to 13 percent during the energy crisis.

Among the 18-64 working-age population, the demographers expect a rise beyond 12.4 percent, up from 11.7 percent. That would make it the highest since at least 1965, when another Democratic president, Lyndon B. Johnson, launched the war on poverty that expanded the federal government’s role in social welfare programs from education to health care.

via Record gains for US poverty with elections looming – Yahoo! News.

Another insightful Sunday New York Times Column from Frank Rich:

NO, he can’t. President Obama can’t reverse the unemployment numbers by Election Day. He can’t get even a modest new stimulus bill past the Party of No, and even if he could, there would be few jobs to show for it until (maybe) 2011. Nor can he rewrite the history of his administration. Its signal accomplishments to date are an initial stimulus package that was overrun by the calamity at hand and a marathon health care battle as yet better known for its unseemly orgy of backroom wrangling than its concrete results. While that brawl raged, the White House seemed indifferent to the mounting number of Americans being tossed onto the Great Recession scrapheap.

And so the odds that Obama’s party will survive the midterms seem less than Indiana Jones’s in the Temple of Doom — as we are reminded hourly by the Beltway herd flogging the latest polls. The Democrats are facing a “historic” rout, an earthquake, a tidal wave — well, you know the drill. End of story.

Unless it’s not. On Labor Day, the fighting Obama abruptly re-emerged, a far cry from the man whose Oval Office address on Iraq days earlier was about as persuasive as a hostage video. Speaking to workers in Milwaukee, the president finally started giving voice to the anger of America’s battered middle class. And he even let loose with a little anger of his own. The unspecified “powerful interests” aligned against him, he said, “talk about me like a dog.”

That inelegant line — “not in my prepared remarks,” Obama explained — landed because it was true and because he said it with a grin. Americans like their warriors happy, not petulant (cf, “You’re likable enough, Hillary”).

via Op-Ed Columnist – Time for This Big Dog to Bite Back – NYTimes.com.

The latest from my favorite economist, Paul Krugman.  Not just my favorite economist, but one of the few who is normally right….

Some bleary-eyed thoughts from Japan on the reported administration proposal for $50 billion in new spending:

1. It’s a good idea

2. It’s much too small

3. It won’t pass anyway — which makes you wonder why the administration didn’t propose a bigger plan, so as to at least make the point that the other party is standing in the way of much needed repair to our roads, ports, sewers, and more– not to mention creating jobs. Once again, they’re striking right at the capillaries.

Beyond all that, the new initiative is a chance for me to air one of my pet peeves: the stupidity of the claim, which you hear all the time — and you’ll hear again now — that it’s always better to provide stimulus in the form of tax cuts, because individuals know better than the government what to do with their money.

Why is this claim stupid? Because Econ 101 tells us that there are some things the government must provide, namely public goods whose benefits can’t be internalized by the market.

So suppose we’re going to put $50 billion of resources that would otherwise be idle to work. Is it better to use them to produce public goods like improved roads, or private goods like more consumer durables? That’s not at all obvious — and anyone who tells you that basic economics settles the question, that is says that devoting more resources to production of private goods is better, doesn’t understand Econ 101.

And there’s a pretty good argument to be made that we are, in fact, starved for public goods in this country, so that it would actually be a good idea to shift some resources to public goods production even if we were at full employment; in that case, we should definitely give priority to public goods when trying to put unemployed resources to work.

Anyway, it’s all academic right now. My response to the administration plan, at least as best as I can respond given a massive case of jet lag, is a big eh.

via Infrastructure – NYTimes.com.