It’s still the Economy, and Jobs, and the stupid Bush Tax Cuts

If you do not take a path different from the path that wrecked the economy, the economy will not improve. So, why–for the umpteenth time since I started this blog 3 years ago–do I find myself writing on the same economic dynamics?  Wasn’t there supposed to be a game changing election in there somewhere?

First, we just got the news that jobless claims are up.  The new twist is that corporate profits are down.  It had to happen sooner or later.  There are only so many profits you can wring out of your business by ‘austerity’ measures like lay offs and not ordering as many office supplies.  It’s obvious the ‘Economy is still Struggling’.

Unexpectedly weak consumer spending kept the economy stuck in a slow growth gear in the first quarter and would likely struggle to regain speed amid signs of a slowdown in the pace of job creation.

Data on Thursday showed the economy expanded at an unrevised 1.8 percent annual rate in the first three months of this year, while the number of Americans claiming unemployment benefits unexpectedly rose 10,000 to 424,000 last week.

The rise in jobless claims and the weakness in first-quarter consumer spending, which offset upward revisions to business inventories and investment, set the tone for more lackluster growth this current quarter.

Some businesses were surprised by the weak consumer spending.  Their CEOs need to get out of their offices and country clubs and go see how the other 99 percent lives.  Our wealth is down because our house values keep falling.  We’ve lost at least 2-3 years of returns in our investments and pensions and many folks still haven’t recovered their pre-recession balance.  Gas prices and food prices are taking larger percentages of folks’ budgets.  The very rich are the only ones that can really fling the bucks around at this point and they can go anywhere they want to do that.  They’re not stuck with the offerings at the local strip mall.  We ignore the sluggish labor markets at our own peril.

Business investment–the smallest contributor to the GDP–was up and Government spending was down.  Exports looked better than expected but they are still a very small part of our economy these days.  This is now the seventh straight week that jobless claims were above the 400,000 mark. What is even more remarkable is that the BLS could not name any factor that could be an outlier contributing to this persistent trend.

Meanwhile, the conversation in Washington DC continues to be the Ryan budget and Medicare.  The U.S. Senate voted down the Ryan budget  I was amused by Karl Rove’s WSJ op-ed today that explained that folks would like their plan if it was just put into a populist message.  I guess when you’ve got people buying into such nonsense as decreasing taxes raises tax revenues you get to thinking that you can sell them anything with the right spin on it.   However, George Bush and the Republican Party own the Deficit.  Their cronies should be the ones to pay it down.

The nonpartisan Center on Budget and Policy Priorities has updated research that projects nearly half of public debt in 2019 will be attributable to President George W. Bush’s tax cuts plus the ongoing wars in Iraq and Afghanistan. The tax cuts left the American treasury particularly vulnerable when the financial crisis hit, the CBPP reports: “The events and policies that pushed deficits to these high levels in the near term were, for the most part, not of President Obama’s making. If not for the Bush tax cuts, the deficit-financed wars in Iraq and Afghanistan, and the effects of the worst recession since the Great Depression (including the cost of policymakers’ actions to combat it), we would not be facing these huge deficits in the near term.”

It simply baffles me that we can’t even get the most stalwart Democratic politicians to pay attention to the miserable jobs market.  It’s two years into a Democratic administration.  Where is the will to put America back to work?

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22 Comments on “It’s still the Economy, and Jobs, and the stupid Bush Tax Cuts”

  1. bostonboomer says:

    OT, but related: Judge voids controversial Wisconson union law.

    A Wisconsin judge on Thursday voided a controversial Republican-backed law restricting the collective bargaining rights of public sector unions.

    Dane County Judge Maryann Sumi said Republican lawmakers violated the state’s open meetings law in rushing the legislation through during massive protests at the state Capitol earlier this year.

    The Wisconsin proposal, championed by Republican Governor Scott Walker, eliminates most collective bargaining rights for public sector unions and requires them to pay more for pensions and health coverage.

    The law has been on hold pending the legal challenge.

    Mike Tate, chairman of the state’s Democratic Party which opposed the measure, hailed the ruling and said: “It should be looked at as an opportunity to work together to find common sense solutions to grow our economy and get our fiscal house in order, not to tear our state apart.”

    Sumi, who was appointed by former Republican Governor Tommy Thompson, ruled that the evidence was “clear and convincing” that Republicans failed to comply with the law in a hastily called meeting in March to push through legislation containing the collective bargaining changes.

    • dakinikat says:

      I wonder how long it will take SCOTUS to over turn it?

    • And Vermont has gone single payer!!

      http://news.consumerreports.org/health/2011/05/vermont-establishes-road-map-for-single-payer-health-care.html

      Vermont made history today when Governor Peter Shumlin, a Democrat, signed into law a plan to create the nation’s first state-run “single-payer” health system. If fully implemented, every Vermont resident, including those on Medicare and Medicaid, would be entitled to enroll in the state’s own insurance plan, Green Mountain Care. Private insurers would still be allowed to operate in the state.

      • dakinikat says:

        I hope they do well and the country takes notice.

      • Pilgrim says:

        I guess if it’s going to happen in the U.S., it will be the states which lead the way. And Vermont is a leader among leaders.

        If they ever get going on universal, preferably single-payer, they’ll find it’s ok, and they’ll be happy with it just like the oldsters now are happy with medicare (even republican voters).

      • Minkoff Minx says:

        I want to move to Vermont!

      • Peggy Sue says:

        Vermont’s trailblazing program will give the Nation a chance to see what single-payer can do in providing healthcare and containing overall cost, instead of fastening on the GOP running around with their hair on fire.

        We’ve seen how Romneycare works–people get coverage but the costs are not contained. And Romneycare is a kissing cousin of Obamacare. The costs are killing us. Until someone breaks the grip of the health insurance biggies, forcing them to be actually competitive, costs will continue to escalate. All this talk about Medicare and baby boomers [like we didn't know the wave was coming] is compounded by the sky-high expense, far higher than any other country and climbing each and every year.

        POTUS insisted he was going to bend the cost curve down but quickly caved to the lobbyists: insurers, Big Pharma and hospital administrators.

        Vermont has a chance to lead the way, showing the populace that there is a solution to health care management, beyond throwing granny and a whole lot of other Americans down the stairs.

        Fingers crossed.

        I’ve never understood why we didn’t run these state-based programs before, each trying something different, tweaking them until we found the most efficient, cost effective solution for the country as a whole. Leaving people out of the system to fend for themselves doesn’t make sense and is grossly inhumane.

        As I said, fingers crossed. I give Vermonters a salute. Good for them!

  2. dakinikat says:

    Here’s something from Truth Out that the 99 percenters may want to check out … They need to Remember why FDR took action back in the great depression, maybe.

    I expect anger and here it is, standing right in front of me. Something in the capitalist environment has engineered the bloody politics of revolt that is summed up on the back of the black T-shirt he wears:

    “Class war: we have found new homes for the rich,” it spells out in all caps.

    The image is of a graveyard, of row upon row of white crosses on a black background. “Look at this,” he says, showing me a swatch of cloth on the other side of his shirt. The message again screams out through capital letters.
    “Warning! Rich scum beware! Class war coming soon to a street near you.”

    Class Warrior wears his grassroots protest on his T-shirt, while the Tea Party has sent the representatives of their own, very different kind of protest to Congress. The gold earrings he wears in the middle of his earlobes, his T-shirt warning to the rich and suggestions that the capitalists are going to get bloodied are clearly not the winning social engineering strategy here.

  3. paper doll says:

    Terrific post

    The very rich are the only ones that can really fling the bucks around at this point and they can go anywhere they want to do that. They’re not stuck with the offerings at the local strip mall. We ignore the sluggish labor markets at our own peril.

    Indeed…as I have said many of the wealthy aren’t even here anymore. My relative at the NYC billionaire watering hole says the working wealthy like Martha Stewart and Vera Wang are still coming in …but other wise it’s first families and adult children…the wealthy are elsewhere…so if even NYC has been left behind….oy

  4. bostonboomer says:

    Where is the will to put America back to work?

    I don’t get it either. The Democrats could be building a whole new coalition, but all they care about is corporate money. No one thinks long-term anymore.

    • Minkoff Minx says:

      I really don’t understand why the Democrats just don’t act like Democrats and get to work. I know the corporate money and campaign contributions are all that any politician cares about. But it is frustrating to see there are ways to make all this better, and just sitting on their thumbs, spinning these numbers over and over again each month is really pissing me off.

    • Sima says:

      The only explanation I can come up with is twofold: terror of being first leading to inaction, and absolute corruption. The whole system is corrupt, and anyone who might stand up to do right is both ridiculed and immediately shunted off to the side.

      We are all longing for an FDR, a class traitor who has the best interests of the middle and lower classes at heart, who realizes that lifting them up lifts up his class.

  5. grayslady says:

    The “miserable jobs market” might equally apply to the types of jobs most Americans hold. If you take a look at the Bureau of Labor Statistics 2010 report on the primary occupations of most laborers (http://jaredbernsteinblog.com/page/3/), they are almost all at the bottom end of the wage scale. And the Reuters reporter writes that consumer spending is “unexpectedly” weak? If you’re living on $10.50 an hour as a retail salesperson–pre-tax–and your gas and food bills have just skyrocketed, how are you expected to find extra money for “non-essentials”, like clothing, maybe?
    I’m still waiting for someone to lay out a program for real job creation–not an economy that simply employs more waitresses and sales clerks.

    • CinSC says:

      I wholeheartedly agree. A few of my relatives have lost jobs with benefits and are only able to find work now in retail. The wages are indeed miserable. Just had a phone call this morning that the brother-in-law was laid off (cad designer). There are so few good opportunities these days.

  6. Peggy Sue says:

    I read this over at Naked Capitalism and nearly fell off my seat. It’s a quote from Obama’s former advisor and GM car czar, Steven Rattner, who claims that unemployment is a sign of America’s strength:

    “Perversely, the nagging high jobless rate reflects two of the most promising attributes of the American economy: its flexibility and its productivity. Eliminating jobs – with all the wrenching human costs – raises productivity and, thereby, competitiveness.

    Unusually, US productivity grew right through the recession; normally, companies can’t reduce costs fast enough to keep productivity from falling.

    That kind of efficiency is perhaps our most precious economic asset. However tempting it may be, we need to resist tinkering with the labor market. Policy proposals aimed too directly at raising employment may well collaterally end up dragging on productivity.”

    Love the response to this:

    ‘Rattner comes dangerously close to articulating a full-unemployment policy.’

    I suspect those desperately looking for work before their unemployment insurance runs out might have a problem with this sentiment–unemployment=good; programs to fix unemployment=bad.

    Are these people for real???

    If this is the type of advice Obama is listening to, no wonder nothing has happened on the job front.

    • paper doll says:

      who claims that unemployment is a sign of America’s strength

      The kind of person who thought sending all our jobs overseas was a sign of America’s strength as well

      HELP

      They will saying thing that distracts from the fact they are taking everything unnailed or nailed down.

    • dakinikat says:

      unbelievable … that’s what comes when you hire lawyers instead of economists

    • I read this over at Naked Capitalism and nearly fell off my seat. It’s a quote from Obama’s former advisor and GM car czar, Steven Rattner, who claims that unemployment is a sign of America’s strength:

      “Perversely, the nagging high jobless rate reflects two of the most promising attributes of the American economy: its flexibility and its productivity. Eliminating jobs – with all the wrenching human costs – raises productivity and, thereby, competitiveness.

      Unusually, US productivity grew right through the recession; normally, companies can’t reduce costs fast enough to keep productivity from falling.

      That kind of efficiency is perhaps our most precious economic asset. However tempting it may be, we need to resist tinkering with the labor market. Policy proposals aimed too directly at raising employment may well collaterally end up dragging on productivity.”

      I am seeing red.

  7. dakinikat says:

    The Economy Is Wavering. Does Washington Notice?

    An economy that is growing this slowly will not add jobs quickly. For the next couple of months, employment growth could slow from about 230,000 recently to something like 150,000 jobs a month, only slightly faster than normal population growth. That is certainly not fast enough to make a big dent in the still huge number of unemployed people.

    Are any policy makers paying attention?

  8. paper doll says:

    I think if we look how companies are usually cut up and sold off, the parallel between that and how this country
    economics are being curretly run would be startling

    • Sima says:

      Wow. That’s really insightful. I had never thought of it that way before.

      Of course it makes tons of sense, since the same band of a$$es are running both the companies and the economy.

  9. Sophie says:

    Unexpectedly weak consumer spending kept the economy stuck in a slow growth gear in the first quarter…

    Unexpectedly? Unexpectedly?! As in, no one could have predicted that people out of work would stop buying crap they don’t need?