Oil barons Charles and David Koch held their annual billionaires' summit in Palm Springs on Sunday, Nancy Goldstein reports in The Nation. Every year, the Kochs gather with fellow plutocrats, prominent pundits, and Republican legislators to plan their assault on government regulation and the welfare state. This is the first year that the low-profile gathering has attracted protesters.
GDP growth at a 3.2 percent annual rate in the 4th quarter. Hurray! Or, actually, not.
Today's GDP report puts real GDP basically back where it was in the 4th quarter of 2007 (1/10th of a percent higher, but who's counting?) Based on the trend between the previous two business cycle peaks, the economy should have grown - had the capacity to grow - around 2.3 or 2.4 percent per year over that period, so we're actually around 7 percent below where we should be.
And growth is chasing a moving target: growth at 3.2 percent closes less than 1 percentage point of that gap each year.
So, yippee: we're on track to restore full employment circa 4th quarter 2018.
Why am I not happy?
But the problem is not that " we're on track to restore full employment circa 4th quarter 2018." The problem is that practically no one besides Krugman with a national microphone seems to be the least bit worried about this.
Instead we're all getting twisted in knots over the Social Security trust fund running out of reservses another few presidential terms after that (as if restoring full employment sooner, rather than later wouldn't also help bolster the SS trust fund) and the need to defund everything the government does except buying out-moded or never-moded weapons systems. Our elite economic narratives are not simply misguided, they're delusional, and Obama hasn't helped any by joining in on the delusion, just because he's "only" modestly delusional--analogizing the federal budget to the family budget like it was 1930 all over again, and announcing a domestic budget spending freeze like it was 1930 all over again. All of Rachel Maddow's enthusiasm notwithstanding, Obama being modestly delusional does far less to temper the more wild-eyed delustions of the GOP and far more to legitimize them.
America's economy is in a bad way. The economic recovery has turned out to be disturbingly weak, and joblessness rates are still actually rising. Investment is down, Americans are depressed and angry, and there are even worries about a double-dip recession.
There has not been much analysis of the causes behind today's economic stagnation. Most experts talk about how weak recoveries generally follow financial crises. Politically, Republicans blame Democrats, and Democrats are generally too busy trying to fix the problem than to think about what caused it.
Yet there is indeed something that did badly damage the recovery - an event very few nowadays link to America's economic woes.
1 in 10 Americans are on Unemployment - that is a staggering fact, one that affects our fellow LGBT brothers and sisters at a high rate. With the push for DADT repeal, I hope you will also take a second to demand that Congress extend Unemployment Benefits to the millions of Americans who are out of work.
As someone who has been on unemployment before, I can personally vouch that if it were not for the support of the Unemployment I received, I would have likely lost my home and my healthcare coverage. This can be devastating for our communities; devastating to neighbors who are dependent on medications, friends struggling to keep their homes, or family-members faced with a life threatening illness.
We all know someone who is looking for work right now, the job market is slow and even tougher for a minority. For many of us we want to be working, we want to be contributing our fair share but sometimes we are over-looked for openings because we happen to be trans or openly Gay. We have a small window to push Congress into action and extend this crucial lifeline to tens or hundreds of thousands of our community members.
Americans for Democratic Action has launched an aggressive petition to force Congress to act now. While Congress debates tax cuts for the wealthiest Americans, our community members are struggling to find work, are losing their homes and are being forced to choose between crucial medications and going hungry.
I hope you will take two seconds out of your day to sign this petition and urge your friends to do the same - this maybe a lifeline to one of your friends or even yourself, and it will only be extended in the lame duck session if we act together.
The co-chairs of the 18-member deficit commission issued a preliminary presentation two weeks ago that favored tax breaks for the wealthy and left open the possibility of deep cuts to Social Security, Medicare and other social programs. But there's still time for the commission to radically reshape its message before it issues its final report.
Weekly Audit: Millions of Americans Could Lose Unemployment Benefits
Editor's Note: Happy Thanksgiving from the Media Consortium! This week, we aren't stopping The Audit, The Pulse, The Diaspora, or The Mulch, but we are taking a bit of a break. Expect shorter blog posts, and The Diaspora and The Mulch will be posted on Wednesday afternoon, instead of their usual Thursday and Friday postings. We'll return to our normal schedule next week.
I've pointed out before that main reason the deficit has gone up is not because "spending has expoloded"--it has gone up some, as it always does during a recession--but because government revenues have dropped so much:
People being out of work is not only bad for them, it's bad for the economy and bad for the government, too, especially the federal deficit. If we want to cut the deficit, the most effective tthing we can do, it turns out, is to also handle our most pressing problem: putting people back to work!
The current downturn had led to the worst period of sustained unemployment since the Great Depression. This suffering is especially tragic because, like the Great Depression, it is entirely the result of misguided economic policy.
Unemployment corresponds to lost production of goods and services. Construction workers could have been providing safe and energy efficient housing to people who lack adequate shelter, but instead they were left sitting idle. Manufacturing workers, who could have been producing more fuel-efficient cars and appliances, are instead getting unemployment checks. Health care workers who could have been ensuring that people received adequate care and teachers who could have been in classrooms, helping educate our children, are instead spending their time looking for work.
This is an incredible loss not only for these workers who must struggle to make ends meet, but also for our economy and society. The CEPR Recession Waste Clock allows people to see the value of the goods and services that we have lost in this downturn. It measures the gap between potential GDP (as calculated by the Congressional Budget Office) and actual GDP.
Given the current unemployment rate of 9.6 percent, the amount of lost GDP as measured by this gap increases at the rate of $2.873 billion per day. This comes to $120 million an hour, $2 million a minute or $33 thousand a second.
You can also see the amount of lost output measured in units of houses, college educations, or personal mp3 players.
The calculation of lost output is based on the gap between potential GDP as estimated by the Congressional Budget Office and actual GDP. The projection going forward assumes the same quarterly output gap as the last quarter for which data are available.
Weekly Audit: Curbing the Deficit, Cat Food, and You
by Lindsay Beyerstein, Media Consortium blogger
The deficit commission released its much anticipated list of helpful money-saving tips for the federal government last week. These tips include tax cuts for the rich, reducing unnecessary printing costs, and cutting the jobs of federal contractors.
Tens of thousands of Americans rallied for jobs and justice at the Lincoln Memorial in Washington, D.C. on Saturday. Organizers say that 175,000 people turned out for the One Nation Working Together rally, which was organized by labor unions, the NAACP, and other progressive groups. In an interview with GritTV's Laura Flanders, AFL-CIO president Richard Trumka, a leader of the One Nation coalition, summed up the agenda: "Jobs, jobs, and more jobs."
America isn't working
In total, 8 million jobs have been lost in this recession and 2.5 million homes have been repossessed. According to the official figures, about 10% of Americans are unemployed. The true number may be much higher because the official stats don't count those who have given up looking for work. In AlterNet, NAACP President Benjamin Todd Jealous, another featured speaker at One Nation, points out that the black unemployment rate is nearly twice that of whites. Another 11 million Americans are underemployed, according Trumka.
No end in sight
An already bleak job market is about to get even bleaker. Last week, Senate Republicans scuttled a popular emergency fund to create jobs and an extension of long-term unemployment insurance benefits, as Andy Kroll reports in Mother Jones.
Steve Benen of the Washington Monthly offers more details on the now-defunct job creation program known as the Temporary Assistance for Needy Families (TANF) emergency fund. The fund provided cash to create jobs in the public and private sectors. Over 240,000 people in 32 states and the District of Columbia worked at jobs created with TANF subsidies. Last week, Senate Democrats lost their fight to extend the program for another 3 months. With the TANF money gone, layoffs will soon follow.
The Department of Labor will release the its monthly unemployment statistics on Friday. One group of independent analysts predicts that September's unemployment rate will be higher than the previous month, according to Brian Beutler of Talking Points Memo. Unemployment rose from 9.6% in July to 9.7% in August and experts surveyed by Bloomberg News expect the trend to continue. It's doubtful that the economy produced enough new jobs to make up for all the census workers whose temporary jobs ended.
Job skills for America
On the bright side, President Barack Obama is scheduled to unveil a new job training program this week, Annie Lowrey reports in The Michigan Messenger. The program is called Skills for America's Future. The goal of the project is to encourage partnerships between community colleges and corporations. Colleges and companies will work together to identify areas of rapid job growth and train students to fill those jobs. So far, five companies have agreed to participate in the program, including the Gap., Accenture, United Technologies, PG&E and McDonald's.
Lowrey argues that this kind of training program will do little to help unemployment in the short term. Right now, companies aren't hiring because there's an economy-wide lack of demand, not because they can't fill positions for lack of trained workers. Demand is low because unemployment is high. Quite simply, people buy less when they don't have jobs, or fear that they will lose their jobs. It's a Catch-22. The jobs won't come back because not enough people have jobs.
Food stamps are stimulus
At the most basic level, an economic stimulus package is designed to break the no jobs/no demand/no jobs impasse by injecting large amounts of cash into the economy. Extending unemployment benefits makes for very effective stimulus because the unemployed typically spend their money quickly. Food stamps are another very efficient stimulus because recipients redeem them right away. To give you some indication of how quickly, consider the Wal-Mart at Midnight effect, which Lowrey discusses in the Washington Independent.
Wal-Mart managers are noticing that increasing numbers of customers are buying staples like bread, milk, and baby formula at midnight on the first of the month. That's because state governments directly deposit welfare and food stamp benefits into debit accounts at midnight. Wal-Mart says it brings in extra staff to keep up with the influx of customers during this period.
By contrast, tax cuts are an inefficient stimulus, especially if the cuts go to people who are already wealthy. In tough times, people who already have everything they need may prefer to save their extra money instead of blowing it on luxuries. Rich people will not throng Best Buy at midnight on tax refund day, no matter how big their checks are.
The high cost of economic inequality
It would be nice to think that unemployment is part of a cyclical downturn, but there is mounting evidence that short-term unemployment is a symptom of a deeper problem: pervasive and growing inequality. Sam Petulla of the American Prospect interviews economist Jacob Hacker and political scientist Paul Pierson about their new book, Winner Take All Politics: How Washington Made the Rich Richer and Turned its Back on the Middle Class.
The authors note that the U.S. has greater inequality than other industrialized countries. Since the 1970s, the richest Americans have gotten much richer while the rest of us lagged further behind. The authors found that almost 40% of household income gains from 1979-2007 went to the richest 1% of households. The trend is accelerating: the top 1% of households pocketed over half of the economic gains of the 2000s. Hacker and Pierson blame tax cuts for the wealth, lax financial regulations that allow the wealthy to rake in unprecedented profits, and stagnating middle class wages for the widening gap between the ultra-rich and the rest of society.
This brings us back to the old demand/jobs paradox. Contrary to the platitudes of trickledown economics, shoveling an ever greater share of society's resources to the ultra-rich doesn't make everyone else better off. Shocking, right?
Right wing economists say that letting the ultra-rich accumulate still more wealth is good for the economy as a whole because the rich have more money to invest in businesses, which are the main source of jobs. The ultra-rich aren't stupid, however. They aren't going to start businesses unless they foresee demand for goods and services; and everyone knows that demand is flat because there are no jobs. Trying to stimulate the economy by making the rich richer is like shoving money into a black hole. The tried and true way to end a recession is to create jobs and provide social services for people who need the money enough to spend it.
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So bipartisanship isn't dead. By a vote of 348-79, Democrats and Republicans alike put aside their acrimonious differences and agreed, at least for a moment, to stop blaming each other for the sad state of American economic life. Instead, they agreed to blame China.
The bill authorizes the president of the United States to impose tariffs on Chinese goods in response to what it considers an illegal subsidy of Chinese exports in the form of an undervalued currency. It helps that the supporters in the House know that this bill has precious little chance of becoming law; it will not pass the Senate and it is unlikely that it would be signed into law by Obama if it ever came to that. As a result, the bill is the perfect campaign gesture, bombastic, angry, self-righteous, and without much real-world consequence.
The office AFL-CIO union leader Richard Trumka issued a statement that encapsulated the thinking behind the bill: "the House of Representatives voted to put an end to the Chinese government's currency manipulation, which has destroyed millions of good American manufacturing jobs. For more than a decade, the Chinese government has deliberately manipulated the value of its currency, ballooning our trade deficit with China and costing American communities good jobs....Working people continue to mobilize to elect candidates who will put America's workers first and are committed to rebuilding an economy that values working people. This November we will send a powerful message that we will support those who vote for an economy that works for everyone."
The economy is terrible. Jobs are nowhere to be found. Wall Street bonuses are through the roof. But mainstream business journalism is still praising the con-men who created this mess, yet attacking anybody who takes real solutions-like government spending to create jobs-seriously.
by Catherine A. Traywick, Media Consortium blogger
A new study about the effects of immigration on U.S. employment supports the long-standing arguments of immigration advocates: Rather than displacing American workers, immigrant labor actually makes our economy stronger. Kevin Drum has the details at Mother Jones.
Last week, Social Security advocates learned something they had long suspected. Arguments for cutting Social Security aren't really about economics or the deficit. They're all about waging war on social services.
As I pick up the pace of work again, coming into the midterms, I have to get some stories cleared off the desk in order to make room for some others, and that's what we're about today.
We'll be talking about saving more than 300,000 of this country's most important jobs, and paying for it in a way that is not only good policy, but is a real problem for Republicans who are yelling "no new taxes!" once again while pretending they care about actually paying for actual spending and actually want to cut actual unemployment.
We have a bit of work to do today, but we want to keep it somewhat short...so let's get going.