Jobs Bill is a Work in Process

Posted: October 5, 2011 | Author: | Filed under: jobs, unemployment | Tags: | Comments Off on Jobs Bill is a Work in Process

President Obama announced his American Jobs Act with repeated calls to just pass the bill on a Thursday night. The following Monday, he provided a list of revenue sources for the bill to head off Republican complaints on its potential deficit implications.  He then took to the countryside to try to drum up support for the measure.  That was three weeks ago around Labor Day, remember?  So, where’s the bill? As expected, the bill raised a number of issues from both sides of the aisle.  The Republicans are still determined to say no to everything and the Democratic Caucus was less than enthusiastic on many of the bills provisions.  There is some more detail coming up on all of that today so I thought I’d share it.

Senate Democrats have taken issue with the Monday list of things suggested to pay for the bill. As economist, it does seem odd to try to pass a piece of legislation made to jump start the job creation process while offsetting the impact with recessionary fiscal measures.  The President is still more interested in meeting the Republicans more than half way than actually achieving effective legislation, imho.

Reid indicated he is going back to the drawing board to shore up wavering Democratic support for the $447 billion jobs bill.

Reid told his Democratic colleagues Tuesday that he would put together a new plan to pay for the package after rank-and-file colleagues balked at proposals to limit tax deductions for the wealthy and raise taxes on oil and gas companies.

“There are a wide range of things that we’re looking at, because the only objections I’ve heard from my caucus on the president’s jobs bill deal with the pay-fors,” Reid said. “So we’re resolving that issue as we speak.”

The real issue appears to be the tax increases for the extremely wealthy.  It appears to be highly unpopular with the usual group of DINOs.  Most of them are more concerned about their job safety than the jobs that any plan could potentially create. My Senator is still basically representing her donor base.

Sen. Ben Nelson (D), who faces a tough election in conservative Nebraska, said he would vote against a motion to begin floor debate on Obama’s bill.

“No, no, no,” Nelson said, when asked if he would roll the dice by allowing the bill to come to the Senate floor in hopes of amending it. “With the current offsets that are essentially tax increases? No.

“This is a time to be cutting. The cutting stops when the taxes increase,” he said.

Sen. Jon Tester (D-Mont.), another vulnerable incumbent, said Tuesday he would oppose the jobs bill as Obama drafted it.

“I can’t support it in its current form,” he told The Hill.

Sen. Mary Landrieu (D-La.), a critic of the oil and gas tax provisions, which would hurt a crucial industry in her home state, said she had yet to make up her mind.

“I’m going to listen to what the leadership says and make a decision about that later,” she said.

Sen. Kay Hagan (D-N.C.) said she would prefer raising new revenues through comprehensive tax reform instead of zeroing in immediately on specific tax increases.

“I think we’ve got to have comprehensive tax reform,” she said. “I’m always interested in looking at what we can do from a comprehensive standpoint.”

Max Baucus is testing the waters with a surtax on millionaires to fund the act. This measure is considered less controversial for Democrats.

Now, driven by party leadership and Sen. Max Baucus (D-MT), whose powerful Finance Committee has jurisdiction over the jobs bill, they’re considering a simpler, less parochial, and thus less divisivemeasure.

A Senate Dem aide cautioned that nothing’s final yet, and the party could ultimately settle on different measures. And there’s a history of broad Democratic support for raising taxes on millionaires.

During the health care debate in 2009, House Democrats backed a similar surtax on millionaires that would have raised over $500 billion over 10 years — more than enough to pay for Obama’s bill. Republicans and conservative Senate Democrats objected, and the measure didn’t make the cut in the final bill.

During the tax fight last December, Sen. Chuck Schumer (D-NY) proposed a creating a new millionaires tax bracket, rather than letting the Bush tax cuts expire for income above $250,000. It failed to overcome a filibuster but garnered broad Democratic support. And it also would have more than paid for Obama’s jobs bill.

That’s why something along these lines seems likely to bring most, if not all, Dems into the fold.

However, that still leaves the Republicans who continue to hold the economy hostage for their political purposes.  Republicans are said to be more united in their opposition to the American Jobs Act than the Democrats care about getting the act into law.  No surprises there! Anyway, the bill–as well as the current budget fight–seems like just another political prop in a campaign election season.

Meanwhile, there’s a lot of information being released today on the job market.  None of it is good.   Announced job cuts are said to be more than three times what they were this time last year.

U.S. employers announced the most job cuts in more than two years in September, led by planned reductions at Bank of America Corp. (BAC) and in the military.

Announced firings jumped 212 percent, the largest increase since January 2009, to 115,730 last month from 37,151 in September 2010, according to Chicago-based Challenger, Gray & Christmas Inc. Cuts in government employment, led by the Army’s five-year troop reduction plan, and at Bank of America accounted for almost 70 percent of the announcements.

While the bulk of firings are not “directly related” to economic weakness, they “could definitely be a sign of more cuts to come,” John A. Challenger, chief executive officer of Challenger, Gray & Christmas, said in a statement. “Bank of America is not the only bank still struggling in the wake of the housing collapse, and the military cutbacks are probably just the tip of the iceberg when it comes to federal spending cuts.”

More reductions will add to the pool of job seekers competing for work as policy makers, including President Barack Obama and Federal Reserve officials, strive to spur the labor market. Payrolls probably didn’t rise fast enough last month to lower the jobless rate, according to a Bloomberg News survey of economists before the Labor Department’s monthly jobs figures in two days.

However, Obama’s efforts appear to be paying off a little bit because the level of disgust with Congress is hitting a record high.  While Obama isn’t fairing much better, his bright spot was on who was more able to take on the nation’s jobs problem.

But the president’s new jobs package, which is supported by a narrow majority of the public, has bolstered his position on the issue. He now holds a 49 to 34 percent advantage over congressional Republicans when it comes to the public’s trust on creating jobs. That is a change from September, when they were evenly split at 40 percent each.

It’s hard to image that this entire situation could get much worse, but from the recent forecasts I’ve seen–including a new on from Goldman Sachs–there appears to be a consensus building that unemployment will go up again shortly.  This is certainly not good news for any one.  However, there seems like anything but a sense of urgency to do something about these forecasts within the beltway.  As usual, the only jobs they care about are their own.

Who ya Gonna Call?

Posted: September 14, 2011 | Author: | Filed under: jobs, unemployment, voodoo economics | Tags: , , , , | 5 Comments

Evidently, the new Jobs Plan is a Jobs Bust in the eyes of the electorate.  A few villagers may have gotten those tingly leg sensations, but the public is much more skeptical.  Try this one on for size!

A majority of Americans don’t believe President Barack Obama’s $447 billion jobs plan will help lower the unemployment rate, skepticism he must overcome as he presses Congress for action and positions himself for re- election.

The downbeat assessment of the American Jobs Act reflects a growing and broad sense of dissatisfaction with the president. Americans disapprove of his handling of the economy by 62 percent to 33 percent, a Bloomberg National Poll conducted Sept. 9-12 shows. The disapproval number represents a nine point increase from six months ago.

The president’s job approval rating also stands at the lowest of his presidency — 45 percent. That rating is driven down in part by a majority of independents, 53 percent, who disapprove of his performance.

“I don’t think he’s done as good a job as I think he could have,” said Paul Kaplan, 58, an unemployed Democrat from Philadelphia. “We were hopeful that things would improve in the economy and they’ve only gotten worse. People in Washington just don’t seem to want to cooperate with each other and work for the people.”

The poll hands Obama new lows in each of the categories that measures his performance on the economy: only 36 percent of respondents approve of his efforts to create jobs, 30 percent approve of how he’s tackled the budget deficit and 39 percent approve of his handling of health care.

I still have to think that some of this has to do with the fact that we all were glad to be rid of Dubya and his horrible policies and now we realize it’s just more of the same!

By a margin of 51 percent to 40 percent, Americans doubt the package of tax cuts and spending proposals intended to jumpstart job creation that Obama submitted to Congress this week will bring down the 9.1 percent jobless rate. That sentiment undermines one of the core arguments the president is making on the job act’s behalf in a nationwide campaign to build public support.

Compounding Obama’s challenge is that 56 percent of independents, whom the president won in 2008 and will need to win in 2012, are skeptical it will work.

Even members of the Democratic Party in Congress are skeptical.  Notice that the bottom line is still all about the politics instead of the people.

President Barack Obama’s new jobs plan is hitting some unexpected turbulence in the halls of Congress: lawmakers from his own party.

As he demands Congress quickly approve his ambitious proposal aimed at reviving the sagging economy, many Democrats on Capitol Hill appear far from sold that the president has the right antidote to spur major job growth and turn around their party’s political fortunes.

“Terrible,” Sen. Jim Webb (D-Va.) told POLITICO when asked about the president’s ideas for how to pay for the $450 billion price tag. “We shouldn’t increase taxes on ordinary income. … There are other ways to get there.”

“That offset is not going to fly, and he should know that,” said Democratic Sen. Mary Landrieu from the energy-producing Louisiana, referring to Obama’s elimination of oil and gas subsidies. “Maybe it’s just for his election, which I hope isn’t the case.”

“I think the best jobs bill that can be passed is a comprehensive long-term deficit-reduction plan,” said Sen. Tom Carper (D-Del.), discussing proposals to slash the debt by $4 trillion by overhauling entitlement programs and raising revenue through tax reforms. “That’s better than everything else the president is talking about — combined.”

And those are just the moderates in the party. Some liberals also have concerns.

“There is serious discomfort with potentially setting up Social Security as a fall guy because you’re taking this contribution out,” said Rep. Raul Grijalva of Arizona, referring to Obama’s proposal to further slash payroll taxes.

Democrats in large numbers will still back the president’s overall jobs package, and when the plan heads for House and Senate consideration, some of these same skeptics will very likely vote to advance the measure. But as details of the plan began to be vetted on Capitol Hill on Tuesday, it was clear that the White House needed to redouble its sales job — or tweak its plan — to force Democrats to fall in line at a pivotal point in Obama’s presidency.

Wow!  I’d like to think it’s all those economists–like Robert Reich and Martin Wolf and the IMF–getting out there and explaining that austerity is killing middle class incomes, the basic problem is a lack of aggregate demand and that tax cuts are kind’ve worthless right now that’s moving the people. I actually believe that most people have a lot more common sense when it comes to economics than beltway-disabled politicians. You can see the contrast right up there in all those quotes from people v. politicians.

The centerpiece of the proposal — and the plank that Republicans have said they are most willing to consider — is a cut in payroll taxes, which cover the first $106,800 in earnings and are evenly split between employers and employees.

Respondents are evenly split at 45 percent on this approach, which would cost $240 billion to the U.S. Treasury. Independents oppose it 47 percent versus 43 percent who favor it.

Think about it.  We’ve had 11 years of deregulation of financial markets and banks, tax cuts, bail outs for failing businesses, government largess to corporations, and your basic Republican Voodoo economics and what do we have to show for it?  Higher Poverty rates.  Lower median incomes. Huge long term joblessness.  High unemployment.  What rational person thinks that more of the same is going to do anything?  You don’t need an economics degree to see that none of this stuff has worked in the past.  But, thankfully, you do have some economists out there backing up our gut feeling with solid economic theory.  Here’s something from Martin Wolf at FT just as a reminder.

Contrary to conventional wisdom, fiscal policy is not exhausted. This is what Christine Lagarde, new managing director of the International Monetary Fund, argued at the Jackson Hole monetary conference last month. The need is to combine borrowing of cheap funds now with credible curbs on spending in the longer term. The need is no less for surplus countries with the ability to expand demand to do so.

It is becoming ever clearer that the developed world is making Japan’s mistake of premature retrenchment during a balance-sheet depression, but on a more dangerous – far more global – scale. Conventional wisdom is that fiscal retrenchment will lead to resurgent investment and growth. An alternative wisdom is that suffering is good. The former is foolish. The latter is immoral.

Reconsidering fiscal policy is not all that is needed. Monetary policy still has an important role. So, too, do supply-side reforms, particularly changes in taxation that promote investment. So, not least, does global rebalancing. Yet now, in a world of excess saving, the last thing we need is for creditworthy governments to slash their borrowings. Markets are loudly saying exactly this. So listen.

Here’s Robert Reich showing his chops on what the real problem is in our economy.  If only Obama, would find out the real problem from real economists and stop it with the political pandering to the Republican Party.

We don’t need a Texas Economy.

States don’t have their own monetary policies so they can’t lower interest rates to spur job growth. They can’t spur demand through fiscal policies because state budgets are small, and 49 out of 50 are barred by their constitutions from running deficits.

States can cut corporate taxes and regulations, and dole out corporate welfare, in efforts to improve the states’ “business climate.” But studies show these strategies have little or no effect on where companies locate. Location decisions are driven by much larger factors — where customers are, transportation links, and energy costs.

If governors try hard enough, though, they can create lots of lousy jobs. They can drive out unions, attract low-wage immigrants, and turn a blind eye to businesses that fail to protect worker health and safety.

Rick Perry seems to have done exactly this. While Texas leads the nation in job growth, a majority of Texas’s workforce is paid hourly wages rather than salaries. And the median hourly wage there was $11.20, compared to the national median of $12.50 an hour.

Texas has also been specializing in minimum-wage jobs. From 2007 to 2010, the number of minimum wage workers there rose from 221,000 to 550,000 – that’s an increase of nearly 150 percent. And 9.5 percent of Texas workers earn the minimum wage or below – compared to about 6 percent for the rest of the nation, according to the Bureau of Labor Statistics. The state also has the highest percentage of workers without health insurance. Texas schools rank 44th in the nation in per-pupil spending.

The Perry model of creating more jobs through low wages seems to be catching on around America.

According to a report out today from the Commerce Department, the median income of U.S. households fell 2.3 percent last year – to the lowest level in fifteen years (adjusted for inflation). That’s the third straight year of declining household incomes. Part of this is loss of jobs. Part is loss of earnings.

More and more Americans are retaining their jobs by settling for lower wages and benefits, or going without cost-of-living increases. Or they’ve lost a higher-paying job and have taken one that pays less. Or they’ve joined the great army of contingent workers, self-employed “consultants,” temps, and contract workers – without healthcare benefits, without pensions, without job security, without decent wages.

It’s no great feat to create lots of lousy jobs.

We just don’t need no stinkin’ jobs.  We need real jobs.  For that, it takes a lot more than tax cuts, rhetoric, and political pandering.  So, I’m not calling Rick Perry or Barrack Obama any time soon.  It’s real jobs or bust for me.