Joblessness

There’s been a lot of right wing attacks on the Obama Jobs Act.  I continue my befuddlement.  In this looking glass reality of ours, a Democratic President has put forth an unimaginative ‘job creation’ act representing fairly conventional republican thinking.  However, there’s so much Obama Derangement Syndrome among the Republicans–especially the rabid right wing teabots–that a plan that would have been perfectly acceptable under either of the Bushes or Reagan to deal with jobless is being held up as an extravaganza of tax and spend. Eric Cantor has released a memo that basically guts this tepid response to the high level of unemployment and unacceptable level of long term unemployment plaguing this country. There is something seriously wrong with that man.  He’s listed the areas of agreement and they are all the parts of the bill that really aren’t going to create jobs at all.  These are items like passing the free trade agreements negotiated during the Dubya years or patent reform and regulations reform or programs that aren’t going to be very effective like  the ‘bridge to work’ program which is likely to create a revolving door of unpaid internships.

David Dayen has an analysis up at FDL so I don’t need to recreate that.  He’s basically calculated that the House Republicans have taken the $447 billion Act to about a $11 billion blip.  It may have started out a tepid, conventional plan but  Cantor’s basically turned it into a give away to a few select groups. The only remaining portion that’s not disagreeable is help for returning veterans.  The rest won’t do a damned bit of good.

As you may know, the AJA is comprised of about 57% tax cuts and 43% spending initiatives. So in the main, House Republican leaders tossed out the spending and embraced a few of the tax cuts. They also rejected the tax hikes on corporations and the wealthy to pay for the bill.

Grok that?  It’s 57% more worthless tax cuts that haven’t done a damned thing for the last 11 years but undermined the Federal Budget.  I’ve heard a lot of Democrats think it’s wonderful just because Obama put it out there.  Again, this is a conventional republican republican policy that probably would’ve come from some one like Bob Dole in the past.   This is getting old.   The republicans will say no to anything Obama puts out there and Obama is putting their kind of policy out there and the democrats won’t say no to it.

Meanwhile, there’s a number of really bad things that result from persistent jobless happening as we speak to millions of Americans.  Here’s some examples from Sarah Murray at the WSJ who reviewed an academic paper on long term salaries of folks laid off during recessions.  The bottom line is that their incomes will remained depressed for a huge period of time when they finally get jobs.  That’s just the monetary impact.

When a worker was laid off, his earnings dropped steeply at the time of the layoff and eventually experienced a kind of recovery. But “The earnings losses do not completely fade even after 20 years,” the paper states. That’s true even when the economy is doing well. When the economy is performing poorly, the initial earnings loss is steeper.

Workers who were laid off in recessions experienced, on average, $112,095 in income losses — three years of pre-layoff earnings. Those laid off in expansionary times experienced a $65,424 loss.

The negative impacts of job losses extended beyond the financial hit, affecting workers’ health, mortality outcomes, child achievement levels and happiness.

“The negative consequences of job displacement, and fears of job displacement, are among the main reasons that recessions and high levels of unemployment create so much concern in the general population and among politicians,” the paper states.

So, I guess in order to play out political games we’re going to embrace all these negative consequences for the large number of people that have been experiencing unemployment over the last few years.  It’s just really disgusting.  The jobs bridge plan–or as we liked to call it here the federal version of the Georgia Slave Act–brought to mind this program in Hungary where you have to go to a Labor Camp in order to collect unemployment.

Wielding scythes and pitchforks, about 30 men and women hack through brambles on a hillside above the Hungarian village of Gyöngyöspata. With the nearest road more than a half mile away, workers have to hike in with food and water for the day. For bathroom and lunch breaks, they duck into a thicket that offers the only shade in the 98F heat. “It’s degrading to work in these conditions,” says Károly Lakatos, a 38-year-old father of three who was laid off earlier this year from his forklift-operator job in an auto parts factory. When his unemployment benefits ran out, the government assigned him to a brigade clearing land owned by the village.

If Prime Minister Viktor Orbán has his way, hundreds of thousands of Hungarians will soon join similar squads. Under a plan approved by Parliament in July, by 2012 some 300,000 people will be working in community service jobs—doing everything from picking up trash to building stadiums—instead of drawing welfare or unemployment benefits. Hungary will no longer “give benefits to those capable of work, when there is much work to be done,” Orbán said in June. The effort is part of the ruling Fidesz Party’s 2010 election pledge to create 1 million jobs over the next decade.

Is this what the jobs act will become?  More tax cuts for the political donor class and labor camps for the folks that don’t work for them at depressed wages?

At the same time we get Obama’s second Republican style whack at our economy–in other words a big speech with a small stick–more news keeps coming out about how really, truly dysfunctional the Obama team of economists has been. Have you noticed how many have gotten out of the White House quickly as if they were really worried about their reputations or sanity?  One more sneak peak was granted for the Suskind book “Confidence Men” in New York Magazine prior to its Tuesday release.  It has me even less enthused about anything coming out of Obama policy advisers than before.  Read some of this back and forth between Andrew Moss and Frank Rich who read the book and conclude that that Obama has stuck himself and the US in an economic quagmire. It just doesn’t give one confidence in the policy process, the advisers or the president.  This one is from Frank Rich.

I guess I thought Geithner’s role was more shocking just because I have become inured to tales of Summers’s outrageousness, dating back to his ill-fated presidency of Harvard. Particularly damning in Suskind’s narrative is that when Summers says “there’s no adult in charge” in the White House, he’s actually right — and appoints himself as adult in charge, Alexander Haig–style. Summers was in charge, all right, but he behaved like a child and little got done except derailing the president’s initiatives — he even blocked Obama’s agenda of tough climate-change legislation.

But the buck stops with Obama. There’s a poignant moment of sorts in December 2008 when the North Dakota senator Byron Dorgan implores the president-elect not to go with his economic team. “I don’t understand how you could do this,” he tells him. “You’ve picked the wrong people!” As indeed Obama did, under the tutelage of Robert Rubin, who also tried to finagle a White House guru role for himself, not unlike the perch from which he helped wreak havoc at Citigroup during its subprime orgy. So Suskind’s book often reads like Halberstam’s “Best and the Brightest,” with Summers and Geithner as McNamara and Bundy. But the quagmire isn’t a neo-Vietnam like Afghanistan — it’s the economy, and the casualties are measured in lost jobs. After the stimulus bill passed in February 2009, Suskind writes, “little else happened on the jobs front for a year and a half,” with proposals being “talked to death without resolution.”

Take this response from Andrew Moss:

I kept flipping back and forth between fury at Obama and — I know I’m easy — sympathy. So much of the damage comes from the initial decision to hire these guys, a decision he had to make almost immediately after being elected. He was inexperienced, he needed help, they burned him, he let them — that’s the story in brief. The number of stupefyingly momentous decisions he had to make in those first few months put me in a vicarious panic. There was no obvious path, the way I read it — though in your view, I suspect, the choices were clearer. Though we’ll never know for sure what other solutions might have worked, the book is a litany of missed opportunities, particularly with respect to financial reform (one banker after another wonders incredulously — and anonymously — why Obama didn’t pin them when they were down). Would some other president have had more success?

One thing you’re struck with is how bizarre it is that Obama has this job in the first place. Obama feels that too — and it gives him a deluded sense of his own magical powers. “Look, I feel lucky,” he says. “Just look at me. My name is Barack Hussein Obama and I’m sitting here.” He’s cocky, but also kind of amazed. What an astonishing blend of good and bad luck the man has had — the unusual cocktail of circumstances that brought him to the White House, and the pretty much impossible situation he faced when he got there. Which is not to say it’s not agonizing to watch him, in the book, fail time after time to make the big, bold move — the book is a narrative after all, and passivity (or, to be fair, caution), does not become a protagonist.

Frankly, the ones who should have every one’s sympathy are the vast number of people whose lives will be forever upended by this vast, deep unemployment.  They are the ones to whom the pranksters in the Republican party and the dumbstruck Democrats should think about but do not.  Again, Republicans are rejecting conventional, mild mannered, ineffective republican policy simply because it’s coming from a Democrat and Democrats are supporting it simply because that’s all the President and his team seem to be able to come up with and he’s a democrat.  They all may be democratically elected but they continue to prove that they represent no one but themselves and their corporate owners.  We’ve got a great history of what does and does not work to get the economy out of horrible places and they’re ignoring it all to force us to play political musical chairs.  It’s just not right.

Oh, and if you want to be flabbergasted at more villagers,  Steve Chapman at the Chicago Trib has basically written an op-ed that suggests Obama step down and Hillary Clinton step in and clean the place up. Now, he’s not exactly on my list of enlightened op-ed writers since he writes at Reason and the National Review too, but sheesh, he’s using Democrats words to support the argument so it’s worth a read.  I think every one feels we’re drowning in an economic quagmire now and we need the best person out there to guide us out.  I’ve skipped the first part but the last part is worthy of mention here.

Besides avoiding this indignity, Obama might do his party a big favor. In hard times, voters have a powerful urge to punish incumbents. He could slake this thirst by stepping aside and taking the blame. Then someone less reviled could replace him at the top of the ticket.

The ideal candidate would be a figure of stature and ability who can’t be blamed for the economy. That person should not be a member of Congress, since it has an even lower approval rating than the president’s.

It would also help to be conspicuously associated with prosperity. Given Obama’s reputation for being too quick to compromise, a reputation for toughness would be an asset.

As it happens, there is someone at hand who fits this description: Hillary Clinton. Her husband presided over a boom, she’s been busy deposing dictators instead of destroying jobs, and she’s never been accused of being a pushover.

Not only that, Clinton is a savvy political veteran who already knows how to run for president. Oh, and a new Bloomberg poll finds her to be merely “the most popular national political figure in America today.”

If he runs for re-election, Obama may find that the only fate worse than losing is winning. But he might arrange things so it will be Clinton who has the unenviable job of reviving the economy, balancing the budget, getting out of Afghanistan and grappling with House Majority Leader Eric Cantor. Obama, meanwhile, will be on a Hawaiian beach, wrestling the cap off a Corona.

Meanwhile, I’m on the job market AND wrestling the cap off of an Abita.  Frankly, the only people that deserve to be jobless in this country are all working in the beltway right now.

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9 Comments on “Joblessness”

  1. paper doll says:

    Frankly, the ones who should have every one’s sympathy are the vast number of people whose lives will be forever upended by this vast, deep unemployment

    Thank you

  2. Realy informative post

    I read the Frank and Moss review (your reference) of the Suskind book. If true and I think it is, Obama realy has no capacity to think.

    A further substantiation of this is a article by Bill Black

    William Black: Why Nobody Went to Jail During the Credit Crisis

    http://neweconomicperspectives.blogspot.com/2011/09/william-black-why-nobody-went-to-jail.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+EconomicPerspectivesFromKansasCity+%28Economic+Perspectives+from+Kansas+City%29&utm_content=Google+Reader

    Yves referenced this article in todays links. The article by Black seems to have a lot of logic behind it. I think Yves thinks of him as credible. Dak – do you find Black credible??

    The Black article eviserates the Regulaters during the Bush administration and Obama continues the Bush non prosecution of fraud and government corruption

    • dakinikat says:

      Regulators don’t like to create panics and frequently sweep things under the rug. I’ve seen presidents of banks embezzle money and not have anything done to them because every one is afraid to start bank panic. They usually work to sell banks off under the table to resolve problems rather than use the law. It is under the guise of keeping the depositors and loan recipients safe from financial shock.

    • dakinikat says:

      Yes. I started my working career out during the S&L crisis first at a small bank, then the biggest regionl S&L in the Topeka FHLBB region. When we were in trouble, the first thing we did was lobby congress for leniency. I also remember the Keating 5 … yes? and remember they went after Neil Bush? Keating got convicted put in jail and then would up having his conviction overturned in the 1990s and copped to a lower charge. Even then I saw complicit regulators, but they did go after a few folks. His narrative sounds credible from my experience back then with regulators. I didn’t cross over to the FED until the mid 1990s to see it from the other side although FED auditors are under a completely different structure than the branches are …

  3. Bloomberg Radio has a lot of reflective comment in its shows. Saturday. Pim Fox made the comment that he took the time to go back and listen to the FDR radio shows. He commented that FDR took a lot of time to explain what was happening with the banks. Then he would bring forward his solution.

    My mother in law was a girl who lived in the northern woods of Wisconsin during the depression. She only had two dresses, one of which got washed each night. In later years, she was a staunch Republican in later years, but remembers the FDR radio broadcasts. She remembers them being the only hopefull view at the time.

    That is interesting – a small girl in the woods could understand what FDR said. That is real communication – I wonder if Obama is capable of going beyond the sound byte level.

    • It might be argued that Clinton had a lot of the FDR characteristics – people understood him.

      To be fair, we do need to clarify that a lot of the Financial Crisis was enabled by legisltion during the Clinton era and implimented in the Bush II era. Obama did nothing to countermand this

  4. Very interesting article today in NYT

    Suddenly, Over There Is Over HereBy GRETCHEN MORGENSON
    Published: September 17, 2011

    http://www.nytimes.com/2011/09/18/business/economy/as-europes-crisis-grows-over-there-is-over-here.html?_r=1&ref=global

    From the article:

    Two things were experienced in our 2008 financial crisis

    1-Some of these banks are growing desperate for dollars. Fearing the worst, investors are pulling back, refusing to roll over the banks’ commercial paper, those short-term i.o.u.’s that are the lifeblood of commerce

    2-A crucial mechanism linking financial players in the United States to the problems in Europe involves credit default swaps, those insurance-like products that did so much damage during the 2008 financial crisis. (Think American International Group.)

    But since these instruments trade in secret, investors don’t know who would be on the hook — as A.I.G. was in its ill-fated mortgage insurance — should a government default or a bank fail

    Even after what we went through with A.I.G., the huge market in credit default swaps remains unregulated and still operates in the shadows. You can thank big banks that trade these instruments — and their lobbyists — for that.

    End of quotes

    ————————

    I think this is why a lot of people say Dodd Frank has not changed the situaion. The CDS market is opaque. The warnings of Brooksly Born are still relevant.

  5. djmm says:

    Great post!!

    But I had to laugh when I saw this:
    ““The negative consequences of job displacement, and fears of job displacement, are among the main reasons that recessions and high levels of unemployment create so much concern in the general population and among politicians,” the paper states.”

    In the general population yes, but have you seen any politician with his or her hair on fire about unemployment? I have not. I am working part time now in my field but will never make the money I made before being laid off.

    And as for Mr. Moss’s comment that “One thing you’re struck with is how bizarre it is that Obama has this job in the first place.”

    No kidding. Many who post or comment or lurk here thought he was not qualified and we have been, sadly, proven right. (I would have preferred to have been wrong.)

    djmm

    • dakinikat says:

      The number of new items with that sentiment that have come out the last few days is amazing! BB linked to some guy in Canada that says the press should feel ashamed of itself for the fluffing number it did on such an incompetent president. If you check threads/posts they’re sprinkled throughout here from about the middle of the week and yet, these are things all of us have been saying since early 2008 at least. Now, some one is floating around this idea he’s going to drop Biden since none of his campaign materials have any thing but Obama’s name linked to them. Let’s hope Hillary has the sense not to settle for the number two position! The only reason she’s not brought down by his economic quagmire policies is she’s been on that state department plane working and away from him!