Age of Austerity

Republican voters are more sour on the debt deal than Democrats, and Nate Silver says polls show House Republicans owning the debt ceiling deal, creating an opportunity for Obama:

Voters’ Pavlovian reaction may simply be that fiscal austerity equals pain, which could complicate Republican messaging in the long-run.

In the short-run — depending on what happens with the markets over the next several trading days as well as with tomorrow morning’s jobs report — the question becomes whether Mr. Obama attempts to exploit the crisis by calling for stimulative measures that were lacking in the deal he signed with Republicans.

And speaking of that job's report for July: Hiring increases, expectations don't.  Via NPR, Brookings' William Dickens isn't impressed:

The July report also revised figures for the two previous months. The economy added 53,000 in May, up from an earlier estimate of 25,000; and 46,000 in June, up from 18,000.

Even so, the economy expanded at a meager 0.8 percent annual rate in the first half of the year, the slowest pace since the recession officially ended in 2009. Those figures, combined with financial troubles in the eurozone in recent days, have ratcheted up talk of a double-dip recession and put markets on edge in the past week.

"If Europe gets its act together and we don't have any more brinkmanship in the political arena here, I can see us just limping through without a double-dip recession," Dickens said.

Surely we've seen the end of "brinkmanship" hostage taking.  Dickens argues that the Fed is out of options. Dean Baker says not so quick:

... the Fed could pursue a path that Bernanke himself had advocated for Japan when he was still a Princeton professor. It could target a higher rate of inflation, for example 4 percent. This would have the effect of reducing real interest rates. It would also lower the debt burden of homeowners, which could allow them to spend more money.

That could relieve some pressure on consumers, but the numbers today are still a little good news in a sea of bad.  Private sector growth is almost -- but not entirely -- negating public sector cut backs.  Until something different than what we're doing is done, we'll be applauding "not as bad as it could have been" right into the double dip and President Mittens!/Bachmann/Perry's first term.

Obama's Economic Fatalism

Yglesias challenges (with graphs!) Obama's recent assertion on the Today Show that while the American Recovery and Reinvestment Act was a success, it's possible nothing more can be done about unemployment.

The President:

There are some structural issues with our economy where a lot of businesses have learned to be much more efficient with fewer workers. You see it when you go to a bank and you use an ATM, you don’t go to a bank teller. Or you see it when you go to the airport and you use a kiosk instead of checking at the gate

Yglesias:

Maybe Barack Obama has some reason to believe that the pace of technological change accelerated in some unaccountable way during his time in office. But above I’ve illustrated my alternative theory of the recession. It shows that the housing crisis and the problems in the banking sector led to a historically unprecedented drop in personal consumption. It also shows that while consumption has ticked back up, it hasn’t returned to its pre-recession trend level. All else being equal, if households spend fewer dollars, then fewer people will be employed in providing them with goods and services. One strategy would be to ensure that all else is not equal and that government spending fills the gap opened up by the collapse in private spending. But that hasn’t happened. Federal spending has continued roughly at trend levels, and state/local spending has also fallen below trend. The result is mass unemployment.

Prolonged unemployment, the White House seems to be arguing, is simply a result of a sudden structural shift in the economy due to rapid technological advances -- advances that haven't accellerated during Obama's first term or since the recession began.  The ARRA did all we could, and now we just wait and see what happens?  The government spent some.  Gave it an honest go.  End of story?

Outside of the poor economic (anti)-policy behind this position, I don't see how "Not Much Else We Can Do" plays well as a 2012 campaign slogan.

Weekly Audit: Standoff Continues in Wisconsin

 

By Lindsay Beyerstein, Media Consortium blogger

The 14 Democratic state senators who fled Wisconsin to thwart the passage of a draconian anti-union have no plans to return.

On Sunday night, a Wall Street Journal blog reported that the senators planned to return soon. Steve Benen of the Washington Monthly found it odd that the piece didn’t contain any direct quotes from the exiled Democrats. The claim that the Democrats were planning to return rested on a paraphrase of State Sen. Mike Miller said about the Democrats coming back. Miller says the Journal misconstrued his remarks and that the Dems are only coming back “when collective bargaining is off the table.”

It would be an odd time for Democrats to return. Republican governor Scott Walker has offered them zero concessions. Furthermore, as Benen observes, Walker’s popularity is plummeting. The latest poll by the Wisconsin Research Institute puts the governor’s approval rating at 43%, with 53% disapproving. A majority of respondents had favorable opinions of state Senate Democrats, public employee unions, and teachers’ unions.

Benen writes:

The significance of these polls can’t be overstated — they stiffen Democratic spines, while making Republicans increasingly nervous about standing behind an unpopular governor with an unpopular plan.

In YES! Magazine, Amy B. Dean explains why every American should care about the situation in Wisconsin. The collective bargaining rights of public employees are the central issue in this standoff. Walker is testing a radical new approach to unions and several other Republican governors are poised to follow his model if he succeeds. It is naive to assume that the war on unions will end with the public sector.

Jobs gap

Writing at The Nation, Chris Hayes explains why Washington doesn’t care about jobs. Hayes argues that Washington elites are insulated from the toll of unemployment by class and geography. The jobless rate for workers with college degrees is only 4.2%, which is less than half of the official unemployment rate of 9% and a quarter of the 16.1% underemployment rate. (The underemployment rate counts both the jobless who are still looking for work and those who have given up and left the labor force.) Furthermore, Hayes notes, the unemployment rate in greater Washington, D.C. is only 5.7%, which is lower than that of any other major city in America. He writes:

What these two numbers add up to is a governing elite that is profoundly alienated from the lived experiences of the millions of Americans who are barely surviving the ravages of the Great Recession. As much as the pernicious influence of big money and the plutocrats’ pseudo-obsession with budget deficits, it is this social distance between decision-makers and citizens that explains the almost surreal detachment of the current Washington political conversation from the economic realities working-class, middle-class and poor people face.

Even as the overall unemployment rate falls, economic recovery proves elusive for many workers of color, Shani O. Hilton reports at Colorlines.com. The February jobs report shows that the economy added 192,000 jobs, with overall unemployment falling by a tenth of a percentage point, bringing joblessness to its lowest rate since 2009. However, the unemployment rates for black and Hispanic workers remained fixed in February, at 15.3% and 11.6%, respectively.

Hilton notes that even if the economy were to add 200,000 jobs a month, it would take three years to bring general employment up to pre-recession levels.

Public innovation

The stereotype is that the private sector drives innovation. However, as Monica Potts reports in The American Prospect, industry’s well-deserved reputation for innovation is built on a foundation of publicly funded basic research. Conservatives often argue that the private sector would pick up the slack if public funding for basic research were reduced. Potts argues that public funding for basic research is essential because companies will naturally gravitate towards research that has an immediate payoff, instead of investing in cultivating deeper scientific understanding through basic research.

This post features links to the best independent, progressive reporting about the economy by members of The Media Consortium. It is free to reprint. Visit the Audit for a complete list of articles on economic issues, or follow us on Twitter. And for the best progressive reporting on critical economy, environment, health care and immigration issues, check out The Mulch, The Pulse and The Diaspora. This is a project of The Media Consortium, a network of leading independent media outlets.

 

Weekly Audit: A Recall Fight Brewing in Wisconsin?

 

By Lindsay Beyerstein, Media Consortium blogger

Tens of thousands of people continue their peaceful occupation of the Wisconsin state capital to protest a bill that would abolish most collective bargaining rights for public employees. As the protests entered their eighth day, GRITtv with Laura Flanders was broadcasting from Madison, Wisconsin in collaboration with The Uptake.

Flanders interviewed Nation journalist and seventh-generation Wisconsinite John Nichols. Nichols and fellow guest Matthew Rothschild of The Progressive noted that the bill isn’t just an attack on collective bargaining rights. The bill would force public sector unions to hold recertification votes every year, which would put their very existence on the line annually. “The unions realize that this is a threat to their very existence,” Rothschild explained.

A game of chicken

The Wisconsin state Assembly begins debate on the bill on Tuesday, but 14 Democratic senators remain in hiding in Illinois, depriving the Senate of the quorum it needs to vote on the bill. According to an obscure procedural rule, the state Senate can still pass bills on non-fiscal matters.

The result is that a game of chicken is about to begin, in which the Republicans will attempt to pass as many non-fiscal bills hated by Democratic senators as possible, such as legislation mandating photo ID for voters, in an attempt to provoke their colleagues into coming back home to vote on the fate of public sector unions.

The Democrats don’t control the state Senate at the best of times, so it’s not clear why they would be more eager to come home to lose on voter ID and public sector unions. As of Tuesday, the legislators in exile showed no signs of wavering, telling CBS that they were waiting to hear from the governor.

“I think if this [bill] gets pushed through, we’re going to have a recall effort and take this governor out,” Rothschild predicted.

Solidarity

An estimated 80,000 protesters gathered in Madison, Wisconsin to protest a Republican-backed budget bill that would abolish collective bargaining rights for most public employees, Democracy Now! reports.

The bill would spare the bargaining rights of unionized police officers and firefighters. However, Mahlon Mitchell, president of the Wisconsin Professional Firefighters Association, tells host Amy Goodman that Wisconsin’s firefighters and police officers stand with other public sector workers. “An assault on one is an assault on all,” Mitchell said.

Union busting, not budget fixing

Matthew Rothschild in The Progressive argues Gov. Walker’s real agenda is union busting, not budget repair. Walker claims that he is forced to abolish collective bargaining rights because the state can no longer afford them. But this is a matter of priorities, not a true fiscal emergency. Walker is asking working people to pick up the tab for his economic agenda. During his brief tenure in office, Walker refused $800 million in federal funds for high speed rail, which would have created jobs and stimulated the economy. He has also pushed through $117 million in tax breaks.

The captain of the Superbowl-winning Green Bay Packers, the NFL’s only non-profit team, has come out in solidarity with the protesters in Wisconsin, Dave Zirin reports in The Nation. Captain Charles Woodson said in a statement:

Last week I was proud when many of my current and former teammates announced their support for the working families fighting for their rights in Wisconsin. Today I am honored to join with them. Thousands of dedicated Wisconsin public workers provide vital services for Wisconsin citizens. They are the teachers, nurses and child care workers who take care of us and our families. These hard working people are under an unprecedented attack to take away their basic rights to have a voice and collectively bargain at work.

“Budget crisis” theater

Forrest Wilder in the Texas Observer notes that the Lone Star State is facing a $27 million shortfall of its own. He argues that Republicans are construing this relative small shortfall as a “budget crisis” in order to imbue their crusade against public services with a false sense of urgency. The budget gap could be bridged with a small and relatively painless tax increase, Wilder notes, but Republicans only want to talk about cuts.

Raise our taxes

Fifteen thousand Illinoisans massed in the state capital with an unusual demand for their state legislators: Raise our taxes! The Save Our State rally was one of the largest citizen assemblies in the history of the state legislature, David Moberg reports for In These Times. The event was organized by the Responsible Budget Coalition (RBC), an alliance of more than 300 organizations including social service agencies, public employee unions, and religious and civic groups. The RBC is calling on legislators to fix flaws in the Illinois tax structure that threaten essential services and the long-term financial health of the state.

No help for 99ers

Rep. Barbara Lee’s (D-CA) bid to attach a 14-week unemployment insurance extension for Americans whose benefits have run out (known as 99ers because they have already been unemployed for at least 99 weeks) to the continuing resolution to fund the government proved unsuccessful last week. Ed Brayton of the Michigan Messenger reports that the provision foundered late last Wednesday due to a procedural objection.

This post features links to the best independent, progressive reporting about the economy by members of The Media Consortium. It is free to reprint. Visit the Audit for a complete list of articles on economic issues, or follow us on Twitter. And for the best progressive reporting on critical economy, environment, health care and immigration issues, check out The Mulch, The Pulse and The Diaspora. This is a project of The Media Consortium, a network of leading independent media outlets.

 

 

The Effects of Welfare reform.

The Personal responsibility and work Opportunity act was passed and signed into law in 1996. The legislation is also known as Welfare reform. The act redistributed welfare delivery, and structure from the Federal government to state, and local governments. Allowing states to determine their own model for welfare. Since then some states have placed more requirements for welfare recipients  then the act placed.
Some of the major provisions of the PRWORA of 1996 include but are not excluded to:
1)      Requiring welfare recipients to be actively in search of employment. Limiting benefits for beneficiaries who do not obtain employment two years after receive benefits.
2)      The act also placed a 5 year lifetime limit on benefits paid by federal tax dollars, however there are some exceptions for children.
Now we are on to the real felt effects of Welfare reform. Firstly A study conducted by “The Center on Budget and Policy Priorities,” published in 1999[Yes over ten years ago] found that from 1993-1995 poor families income increased by near $1,000. However the poorest families income after the passage of Welfare reform decreased even though the economy was experiencing significantly better economic growth. Their income fell by around $750 dollars in the two years preceding legislation. [1]
Other findings from the study show a significant drop in the number of children leaving poverty or extreme poverty. From 1993-1995 2.4 million children were lifted out of extreme poverty, compared to only 360,000 in 1995-1997, this is again despite a better economy during the latter years. [1]
The above mentioned effects are a bit shocking and disappointing for the well being of American families yet there's more.  
Before the welfare reform act 12 million Americans were on welfare, after the act the number of Americans on welfare fell to 5 million in 2001 or by 60%. Total yearly benefits for those on welfare fell by around $200 or by 10%. Total welfare spending equaled 28 billion dollars in 1996, and 24 billion dollars in 2001.[2,3] If your scratching your head wondering, “How come total welfare spending only fell by 15% when the number of people on welfare fell by 60% and their benefits fell by 10%?”[2,3]
The answer lies in the fact that the major effect of Welfare reform was a substantial increased in administration costs, commonly known as  bureaucracy, and wasteful spending. In fact the total amount of administration costs increased by 300%. [2,3]. After doing the math I found that we could double the number of people on welfare without adding a cent to the total cost of welfare, if we simply repealed “The Personal responsibility and work Opportunity act (welfare reform)”. The savings would come in the reduction in wasteful spending.
The major reasons why welfare reform increased wasteful spending include but don’t exclude:
1)      A decentralized system. Instead of one federally operated program there are now 50 different ones.
2)      Requirements on welfare recipients such as that they must be actively looking for a job. There’s tons of paperwork that has to be done to prove you’re looking for a job and it takes government time and employees to make sure you’re following the requirements.

Feel free to copy and past these realities as you desire.

References:
Footnote #1
http://www.cbpp.org/...
Footnote #2
http://www.libraryindex.com/...
Footnote #3
http://www.libraryindex.com/...

 

 

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