Archive for Recession
Two views here on the repatriation holiday. (Sorry about the ad in the first clip.) I had a brief conversation on this Saturday night as Sen. Kay Hagan (D-NC) was speaking at the Grove Park Inn. Hagan is a the primary sponsor of another repatriation tax holiday. (Because it worked so well when the first one passed under Dubya.) Like she said, we’re all about jobs, jobs, jobs.
Hagan, two Democrats and six Republican senators think they can coax the public into having another run at the jobs football that got yanked away after Bush teed it up in 2004. And within weeks of getting their money, Pfizer, HP and others thanked us by laying off thousands of workers to boost their stock prices. As I wrote in back in August,
From the Wall Street Journal, a sign of the times:
For generations, Procter & Gamble Co.’s growth strategy was focused on developing household staples for the vast American middle class.
Now, P&G executives say many of its former middle-market shoppers are trading down to lower-priced goods—widening the pools of have and have-not consumers at the expense of the middle.
That’s forced P&G, which estimates it has at least one product in 98% of American households, to fundamentally change the way it develops and sells its goods…
Wow! That’s terrific bunny …
They’re like the guy who shows up at your Labor Day picnic empty-handed. He drinks all your beer, eats four helpings of barbecue and leaves a huge mess for everyone else to clean up. Then he asks you for 20 bucks in gas money to get home.
A troubling number of U.S. corporations behave as moocher guests at our national cafeteria. They help themselves to all the taxpayer-funded goods and services we create and pay for together and leave patriotic small businesses and individual taxpayers with the bill.
Compared with previous projections, our revised base case scenario now assumes that the 2001 and 2003 tax cuts, due to expire by the end of 2012, remain in place. We have changed our assumption on this because the majority of Republicans in Congress continue to resist any measure that would raise revenues, a position we believe Congress reinforced by passing the act.
When comparing the U.S. to sovereigns with ‘AAA’ long-term ratings that we view as relevant peers–Canada, France, Germany, and the U.K.– we also observe, based on our base case scenarios for each, that the trajectory of the U.S.’s net public debt is diverging from the others. Including the U.S., we estimate that these five sovereigns will have net general government debt to GDP ratios this year ranging from 34% (Canada) to 80% (the U.K.), with the U.S. debt burden at 74%. By 2015, we project that their net public debt to GDP ratios will range between 0% (lowest, Canada) and 83% (highest, France), with the U.S. debt burden at 79%. However, in contrast with the U.S., we project that the net public debt burdens of these other sovereigns will begin to decline, either before or by 2015.
Given S&P’s complicity in the 2008 meltdown, lots of folks online are downplaying S&P’s action and questioning the firm’s credibility. No one seems to have noticed that S&P expects those ‘AAA’ “socialist” countries with their “big government” health care programs to perform better than the U.S. in the near term.
The NCGOP is seeing the fruits of their labors – increased unemployment as educators and other public employees received their pink slips.
North Carolina’s unemployment rate jumped to 9.9 percent in June as community colleges, universities and other state government employers cut 7,600 workers, the state Employment Security Commission said Friday.
The number of government jobs lost may continue increasing. North Carolina’s Legislature closed a $2.5 billion budget shortfall projected for the fiscal year that began this month primarily by cutting spending. The budget, written by Republicans fully in control of the General Assembly for the first time in more than a century, took effect after lawmakers overrode a veto by Gov. Beverly Perdue…
“I hope it does increase,” Hayes said of the prospect of further state government layoffs.
While the leader of the NC Republican Party cheers layoffs in the public sector, there is still no coherent jobs policy coming out of Raleigh. They are excelling at the anti-education, anti-environment stuff, and as if on cue, the private sector is also doing away with their professionals:
June’s other big job-loser was the sector that includes professional, scientific, technical and administrative workers at private companies. That sector lost 5,400 jobs, the bulk of them from administrative and support positions, the ESC said.
During the Iraq occupation in 2006, I observed that at the top of their game conservative spinmeisters are as skilled at misdirection as close-up magicians at the Magic Castle. One of their best sleight-of-hand tricks is “Heads, I win. Tails, you lose.” Steve Benen at Washington Monthly observed the same thing about the weak jobs numbers released last week and illustrates his point with simple graphics:
When the jobs reports were looking quite good in the early spring, Republican leaders were eager to take credit for the positive numbers they had nothing to do with. Needless to say, GOP officials are no longer claiming responsibility, and are in fact now eager to point fingers everywhere else. It’s a nice little scam Republicans have put together: when more jobs are being created, it’s proof they’re right; when fewer jobs are being created, it’s proof Obama’s wrong. Heads they win; tails Dems lose.
We’re coming full circle: The stock market is dropping because corporate earnings are slowing. Corporate earnings are slowing because consumers are pulling back. Consumers are pulling back because they don’t have enough jobs or adequate wages.
The immediate cause of the sell-off was an announcement by ADP Employer Services, a payroll processing firm that estimates employment, that private employers added only 38,000 jobs in May. The economy needs 125,000 new jobs a month just to tread water, given that at least 125,000 people join the potential labor force every month. Simply put, if new hires are in the range of five digits, American consumers will not have enough purchasing power to buy what the private sector can produce.
The leaders of the Street and big business may now have to wake up to a reality they’ve tried to avoid — that the central economic problem of our time isn’t the long-term budget deficit but the immediate deficit in aggregate demand.
No! stomp the deficit hawks. Don’t you dare speak the J-word. We have to cut, cut, cut. We have to slash and burn those entitlement programs. No, don’t listen to that guy from S&P who says, “Home prices continue on their downward spiral with no relief in sight.” Or that report that retail sales are down as gas prices take a bite out of already stretched household budgets. Paul Ryan will save us by maybe?
E. J. Dionne points out that other countries are adapting to a global economy:
Encouraged by Carl Pope of the Sierra Club, I spent time recently with the Wall Street Journal’s report on its annual ECO:nomics conference, published in March. Right off, the Journal’s account emphasized that China is “grabbing clean-technology market share not because of its cheap labor … but through strong mandates and subsidies to build a new export industry.” Ahem, those words “mandates” and “subsidies” don’t come out of the free-market playbook.
On his blog, Pope cites another corporate leader who attended the conference, Andrew N. Liveris, the chairman and chief executive of Dow Chemical. “Around the world,” Liveris writes in his book “Make It in America,” “countries are acting more and more like companies: competing aggressively against one another for business and progress and wealth. … Meanwhile, in the United States, we operate as if little has changed.”
So many of these CEOs behave like “pragmatists, not ideologues,” writes Dionne. Read More→
When the George W. Bush administration set about giving 90 million Americans tax rebates in 2001, it first wasted taxpayer dollars on 90 million letters sent two weeks ahead of putting the checks in the mail to alert people that their checks would be in the mail. When the Obama administration cuts taxes for 95 percent of working Americans, nobody noticed.
One of the biggest problems the Obama administration has had to date is its lack of bold P.R. in promoting its own accomplishments from its bully pulpit. This lame duck congress has been surprisingly productive for Obama, but who will notice (or remember) if he doesn’t do a better job of tooting his own horn? If you didn’t catch the Rachel Maddow Show on Wednesday night, she did a bang-up job of promoting the Obama administration’s accomplishments and contrasting the Democrats’ agenda with the Republicans’. A pity Maddow doesn’t have reach much beyond the liberal choir. For that, Obama’s campaign had best hire a good ad agency, yesterday if not sooner.
Spend some time with this video to see how it’s done in long-form. Now if Obama could just distill this 13 minutes down to a couple of lively 30-sec spots:
Via Digby, Brian Beutler speculates on why the GOP suddenly got the holiday spirit in cooperating with Democrats.
The tax deal the White House has cut (sort of) has critics all around. It’s not perfect, sure. But it’s the nagging little things. On Wednesday HuffPost wondered about one of those little things:
WASHINGTON – The tax cut deal that President Obama struck with congressional Republicans contains a provision that could ultimately be the undoing of Social Security, say Senate Democrats and backers of the old-age and disability program.
Obama, as part of the Democratic package, secured a roughly 30 percent cut in the payroll tax, from 6.2 to 4.2 percent. Allowing it to expire in a year will mean that workers will see a nearly 50 percent jump in payroll taxes as the rate reverts back — an event that will surely be described as a tax hike. The cut is estimated to cost $120 billion per year.
Democrats have never allowed the rate to be cut, even temporarily, in the history of the program, because payroll taxes feed the Social Security trust fund and create the political base of support for the program, said Nancy Altman, author of “The Battle For Social Security”, a history of the program, and head of the advocacy group Social Security Works. Republicans have won a long-sought victory, even as President Obama hails it as a win for his party.
On Tuesday, Nancy Altman elaborated on possible implications — the end Social Security — at Firedoglake:
… I find it unfathomable that a more conservative Congress, in two years, in an election year, will increase the payroll tax by 2 percent on the very first dollar, and every other dollar up to the cap, earned by virtually every single worker in the country. Consequently, I think we have to assume that the payroll tax holiday will be extended beyond the two years the president is proposing and quite likely could become permanent.
That means that the federal government will have to continue to transfer $120 billion to the Social Security trust funds each and every year even as it has to transfer more and more interest payments as the trust funds continue to grow and as interest rates return to more normal levels. Unless Congress acts to restore Social Security to solvency, the Treasury bonds held in trust will have to be redeemed, again on top of that new $120 billion transfer from the general fund, starting fifteen years from now, assuming Congress even continues to make the $120 billion every year before that point. These dollars will be competing with dollars for defense, environmental protection, education, school lunches, Food Stamps, Medicare, Medicaid, SSI, Pell grants for low income college students, and every other good and service financed by the federal government.
A permanent two percent cut in Social Security contributions doubles the 75 year projected shortfall. Scrapping the cap (eliminating the $106,800 maximum on earnings), tonally eliminates the shortfall today. If FICA is cut by 2 percent, scrapping the cap gets Social Security only halfway there.
You don’t need a weatherman to know which way that wind blows. The rest (including Social Security?) is history waiting to write itself.
Paul Krugman writes today Obama got “a significant amount of short-term stimulus” that could produce “a noticeable net positive for the economy next year,” but he wonders at what cost. There are significant weaknesses in the deal, not the least of which are political implications for 2012:
You may say that economic policy shouldn’t be affected by partisan considerations. But even if you believe that — how’s the weather on your planet?
One of Krugman’s big concerns? That Obama is paying for the release of some hostages by giving the GOP new ones.
Republicans may try using the prospect of a rise in the payroll tax to undermine Social Security finances.
Republicans would do that? Nah!
Alarmist? Maybe. But then again, we have had plenty of reason for alarm lately.