Tag: Economy

Americans are struggling to make ends meet, can’t find jobs and are making less money than they did in 1997. What is the House GOP solution? Tax cuts and subsidies for drilling to oil companies that are the most profitable.

Today, the Republicans in the House of Representatives celebrated this massive redistribution of wealth from American families to oil executives. With the support of 7 oil-patch Democrats, 234 Republicans voted to block a bill to eliminate a $1.8 billion annual subsidy that treats oil drilling as “domestic manufacturing”:

   House Republicans rejected an effort by Democrats Thursday to use a procedural maneuver to force a vote on a bill to repeal a key oil industry tax break.

As they did in March, House Republicans voted unanimously to defend these wasteful, unaffordable and unfair oil subsidies, even though several members told their constituents they want to end them.

Osama bin Laden may be dead but he’s still winning the economic war he started.

By Ezra Klein, Published: May 2

Did Osama bin Laden win? No. Did he succeed? Well, America is still standing, and he isn’t. So why, when I called Daveed Gartenstein-Ross, a counterterrorism expert who specializes in al-Qaeda, did he tell me that “bin Laden has been enormously successful”? There’s no caliphate. There’s no sweeping sharia law. Didn’t we win this one in a clean knockout?

Apparently not. Bin Laden, according to Gartenstein-Ross, had a strategy that we never bothered to understand, and thus that we never bothered to defend against. What he really wanted to do – and, more to the point, what he thought he could do – was bankrupt the United States of America. After all, he’d done the bankrupt-a-superpower thing before. And though it didn’t quite work out this time, it worked a lot better than most of us, in this exultant moment, are willing to admit.

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Nobel laureate Joseph Stiglitz estimates that the price tag on the Iraq War alone will surpass $3 trillion. Afghanistan likely amounts to another trillion or two. Add in the build-up in homeland security spending since 9/11 and you’re looking at another trillion. And don’t forget the indirect costs of all this turmoil: The Federal Reserve, worried about a fear-induced recession, slashed interest rates after the attack on the World Trade Center, and then kept them low to combat skyrocketing oil prices, a byproduct of the war in Iraq. That decade of loose monetary policy may well have contributed to the credit bubble that crashed the economy in 2007 and 2008.

Then there’s the post-9/11 slowdown in the economy, the time wasted in airports, the foregone returns on investments we didn’t make, the rise in oil prices as a result of the Iraq War, the cost of rebuilding Ground Zero, health care for the first responders and much, much more.

By John Hanrahan

Nobel laureate economist Joseph Stiglitz wants Americans not to be diverted by much of the rhetoric in the political debate over deficits and the calls for harsh austerity from Republican members of Congress and some GOP governors.

In contrast to the austerity hawks’ proposals, Columbia University professor Stiglitz says, “There are principled ways of cutting the deficit” and reducing the nation’s overall debt while at the same time “putting Americans back to work,” making life better for the millions of Americans in precarious economic circumstances, and halting growing economic inequality where one percent of the population controls 40 percent of the wealth and takes one-fourth of the nation’s income every year.

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“The deficit didn’t cause the downturn,” he said, “the downturn caused the deficit.”

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A few years ago, Stiglitz and Linda Bilmes, a public policy professor at the Harvard Kennedy School, wrote a book, “The Three Trillion Dollar War,” the title a reference to what they estimated would be the ultimate cost of the Iraq and Afghanistan wars. Since then, he said, they have come to realize “we were much too conservative” in estimating the costs.

• Making sure all corporations pay their share of taxes, and requiring the nation’s wealthiest 1 percent of individuals to pay more in income taxes. Even after ending the Bush tax cuts for the wealthiest Americans, Stiglitz said, those highest-income taxpayers “would still be ahead of where they were a decade ago.”
• Imposing “moderate increases” in capital gains and estate taxes and establishing a “small financial transactions tax,” all of which could raise substantial revenue, he said.
• Stopping “government giveaways of natural resources” – oil, gas, minerals, forests – through well-structured auctions that would bring in “serious revenue.”
• Curtailing corporate welfare, “which makes our economy more inefficient and increases unemployment.”
• Increasing enforcement of federal antitrust laws. Regarding the Bowles-Simpson Commission deficit reduction recommendations, Stiglitz noted that panel’s proposal to do away with the homeowners’ mortgage deduction. He said, “Eventually, we must deal with the mortgage deduction, but not now.” Eliminating the mortgage deduction in this troubled economy “would amount to an increased tax,” hitting hardest on the already hard-hit middle-class “and would make the housing market even worse,” he said.

Even before the economic crisis hit in 2007, Stiglitz said, the vast majority of Americans “year after year were getting poorer.” Household income today, on average, is lower than it was in 1997, at the same time income and wealth inequality have became even more pronounced in the United States. Yet, he said, we “told people to pretend their income was going up and to consume more.” And people did that, going into debt while at the same time believing they were getting wealthier because of the housing bubble.

In those days before the housing bubble collapsed, “We were on artificial respiration and we didn’t even know it,” Stiglitz said.

Crossposted at Daily Kos  and Docudharma

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Note: Sections 1-4 contain dozens of additional editorial cartoons and commentary.  I’m not sure why but I was getting the below error when trying to post the complete diary.  Check out the remaining portions of the diary at Daily Kos.

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Federal Reserve chairman Ben Bernanke held a first ever news conference after the central bank’s meeting of Federal Open Market Committee which determines interest rates. His statement and the Q&A after were really boring as Bernanke droned in a monotone voice and filibustered questions. It took a bit, as David Dayen noted, to get to the meat, jobs, and what is the Fed doing to create them.

Bernanke answered that, while he has been engaged in extraordinary efforts to aid the economy, he had to be concerned about inflation as well. So basically, the Fed is failing at one of their mandates (maximizing employment) because they’re worried about their other mandate (price stability)… which they are ALSO FAILING AT! There’s also no awareness that, if inflation rises unacceptably, you can deal with it at that time. Refusing to stop the human suffering of mass unemployment because of the possibility of an inflation rise that can be dealt with if it happens is just a giveaway that the inflation mandate matters overwhelmingly more than the employment mandate.

Jobs? Never mind, too busy trying to control the inflation that hasn’t happened? Do these people shop or drive?

The first quarter growth rate report wasn’t encouraging either, coming in at a dismal 1.8% which was not unexpected due to “Higher commodity prices and winter blizzards that shuttered businesses and delayed construction were among the main causes of the slowdown, along with a large decrease in federal government spending and a sharp increase in imports, which are subtracted from output.” This will effect jobs no matter how optimist Bernanke is about the slow down being “transient”

(G)iven the ground lost during the Great Recession, the economy has a long way to go before its job market and output are back on track. And there are fears that the slow growth in the first quarter may weigh on job growth going forward, since employment trends tend to lag what happens in the rest of the economy.

“We may see employment growth weaken a little bit in the coming months, with more modest increases,” said Paul Dales, a senior United States economist for Capital Economics.

Dayen also reminds us that:

The first quarter saw a pretty modest decrease in spending – $10 billion from two continuing resolutions while negotiations on 2011 appropriations continued. If that was enough of a factor to contribute to sending growth down, then the impact will be the same in the next two quarters. And the fourth quarter, on the 2012 budget, is grand bargain time. So there’s no quarter that won’t be affected by contractionary fiscal policy. And don’t forget the debt limit, a failure to increase with will play havoc with the financial system and economic growth as well.

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Growth out of a recession is supposed to be sky-high. This homemade chart from Steve Benen is nice, but he knows that growth has sagged well below where a recovery should be for five straight quarters now. He even says it: “We can and must do much better than 1.8%, but we won’t if the nation pursues a conservative approach that focuses on one problem that doesn’t exist (inflation) rather than the problem that does exist (weak economic growth).”

How does this affect jobs? Job growth was actually above expectations for the quarter given this growth number. But realistically, you cannot expect to lower the unemployment rate without growth of 3% or higher. And as Paul Krugman noted yesterday, if you look at the employment-population ratio or other datum, you’ll see that job growth is totally stagnant. Which is in line with the stagnant growth in GDP.

Also a note about the Budget Battle in Congress, Senate Majority Leader Harry Reid (D-NV) decided to take the bull by the horns and ride the wave of protests at townhall meetings over Wisconsin Republican Rep Paul Ryan’s disastrous budget that passed the House on a strict partisan vote. Reid announced that he will bring the budget up for a vote in the Senate:

“Republicans seem to be in love with the Ryan budget. And they are going to have an opportunity here in the Senate to vote on the Ryan budget and see (how many) Republican senators like the Ryan budget as much as their House colleagues did, he said.

Reid spokesman Jon Summers said that the timing of the vote has not yet been determined.

The idea behind Reid’s plan is to force Senate Republicans to vote on the measure, which could put incumbents facing tough reelections on the spot.

The Ryan budget is not expected to pass the Senate, which is controlled by the Democrats.

“I would hope they do”, Reid said when asked if he thinks the Senate will reject the plan. “It would be one of the worst things to happen to this country if that came into effect.”

Talk of a Republican split emerged alst week when centrist Sen. Susan Collins (R-ME) said she would not vote for Ryan’s plan.

Jon Stewart asked where is the outrage over Paul Ryan’s (R-WI) budget plan that includes not only ending Medicare with a voucher system but also raising the eligibility age for Medicare. Yes, Medicare, not just Social Security as has been proposed by both Republicans and Democrats, including the White House, as if the one where not enough.

Under current law, you become eligible for Medicare on the day you turn 65. If the Republicans get their way, you wouldn’t become eligible for the new Medicare voucher until the day you turn 67.

The change would happen gradually, with the eligibility age rising two months every year, starting in 2022. And, in the grand scheme of things, it’s not like that many people are between the ages of 65 and 67 anyway. But think for a second about who those people are–and the insurance options they’d have available to them without Medicare.

Remember, the House Republican budget would also repeal the Affordable Care Act. That would leave insurance companies free to charge higher premiums, restrict benefits, or deny coverage altogether to individual applicants who have pre-existing conditions. Given the relatively high incidence of conditions like hypertension, arthritis, and vision problems among older Americans, it’s safe to assume many seniors would have trouble finding affordable coverage–if, indeed, they could find coverage at all.

Economist Paul Krugman in his Conscience of a Liberal blog this morning points out that “in our increasingly polarized society, life expectancy is more and more a class-related issue.”

As the Social Security Administration has shown, the gap between life expectancy in the top and bottom halves of the wage distribution has risen sharply:

Since most of the corporate media is controlled by the right wing oligarchs, it’s a little difficult to get the real message out to the people or at least an unbiased reporting of what the Republicans have been plotting. The Murdochs and Redstones have controlled the message but because of shows like Jon’s, Stephen’s, Rachel’s and Keith’s, the real agenda is finally getting out there. Evidence the events in Wisconsin, Michigan and Ohio where the voters are enraged, we now need to take this to a national level. Witness also the latest DCCC message that call the Republicans out on their lies to constituents about Medicare in this MSNBC’s segment with Cenk Uygur:

Finally, we are starting these corporate puppets being held to account for their lies and hypocrisy. Now, throw all the bums out from top to bottom.

What does “Winning The Future”, the inept slogan of the Obama 2012 campaign, really mean for the middle class and poor, especially the African American, Hispanic and other minority communities? What would re-electing Obama in 2012 mean for the economy? For Glenn Ford at the Black Agenda Report, it means a further economic decline, especially for the Black community where unemployment is still more than twice that for Whites.

“Barack Obama must bear direct responsibility for the relative Black decline, both as candidate and president.”

Black wealth has virtually disappeared. Data gathered prior to 2007, when the full scope of the subprime mortgage catastrophe was just becoming known, showed median Black family wealth at about $5,000, one-twentieth of the median white family’s $100,000 holdings. Since then, the bottom has fallen out from under whole communities, with Blacks hit by far the hardest. By the second quarter of 2010, Black home ownership had declined from its 2007 level of 48 percent to 46.2 percent, a 3.7 percent drop, and still falling – a guarantee that median Black household wealth is well below the $5,000 registered in 2007. (Median wealth for single Black women at the top of their earning capacity, ages 36 to 49, was precisely $5 – five dollars! – in 2010.)

Barack Obama must bear direct responsibility for the relative Black decline, both as candidate and president. As election year 2008 began, Obama took the most pro-banker, laissez faire capitalist position on home foreclosures of the three major Democratic presidential candidates. John Edwards backed a mandatory moratorium on foreclosures and a freeze on interest rates, while Hillary Clinton supported a “voluntary” halt and $30 billion in federal aid to homeowners. But Obama opposed any moratorium, mandatory or voluntary, and balked at cash for homeowners and stricken communities.

Perhaps it would be in the best interests of the majority to not re-elect Obama, as Ian Welsh argues,

America is in terminal decline.  There may be a lot of ruin in a nation, as Keynes said, but that amount is not infinite.  The next chance you get to turn this around you will be starting from a much worse position.  A lot more pain will be unavoidable.

Obama is not turning things around, what he is doing is negotiating with Republicans how fast the decline will be, and how much and how fast it is necessary to fuck ordinary Americans in order to keep the rich rich.  If Obama wins another term, he will continue to negotiate the decline, then, odds are very high, a Republican will get in, and slam his foot on the accelerator of collapse.

This is why Obama must lose in 2012. I would prefer that he lose to a Democrat in a primary, then that Democrat wins, but he must lose regardless.  If he loses to a Republican, then 2016 you get a chance to put someone in charge who might do the right things (or even just some of them.)

No, those odds aren’t good. They suck.  Every part of them sucks.  And even if you get a Dem in 2016, you’ll probably choose the right most candidate, just like  you did last time, and he’ll go back to negotiating with Republicans over what parts of the corpse of America’s middle class they should dine on next.  “No, no, eat one kidney first, they only need one to survive, so that’s not too cruel.”

But it is still your best chance. Otherwise you’re looking at full, Russian-style collapse.  What comes out the other end, I don’t know, but  you really won’t enjoy getting there.

Look at what is happening now in Wisconsin, Michigan and Ohio where the state governments where turned over to the Republican Tea Party. Even moderate Republicans and Independents are in revolt. What is happening there is happening now at a Federal Level. Reclaiming the House and throwing out the right wingers in the Senate, replacing them with more progressive, liberal representation is our best hope and needs to be our focus. It is the only ay to counter the right wing agenda of the White House.

Applications for unemployment fell by 13,000 last week which was less than expected. Partially to blame was the idling plants by automakers in the aftermath of the devastating earthquake and tsunami in Japan. The economy in the first quarter of 2011 is expected to have only grown by 2.0% after a 3.1 percent pace in the last three months of 2010.

Then there is that “little” housing issue that lingers in the background holding back economic growth.

Millions of foreclosures and short sales — when lenders agree to let borrowers sell homes for less than their values — have forced home prices down and more are expected this year. Tight credit has made mortgage loans tough to come by. Some potential buyers who could qualify for loans are worried that prices will fall further.

The dismal housing market is weighing on the overall economic recovery. Each new home built creates, on average, the equivalent of three jobs for a year and generates about $90,000 in taxes, according to the National Association of Home Builders. Most economists expect home prices — and by extension home sales and construction — to slip even further in 2011 before a modest recovery takes hold.

Well, former President Bill Clinton thinks that the US economy could use a little help from a friend. For the first time since Pres. Clinton started his Global Initiative, it will meet in Chicago in June hosting a jobs summit for the US:

New York, NY- President Bill Clinton announced today that he will host a Clinton Global Initiative (CGI) meeting focused on creating jobs and driving economic growth in the United States. The meeting, CGI America, will be the first CGI event solely dedicated to economic issues impacting the U.S. and will take place in Chicago on June 29-30, 2011.

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CGI America is being held in Chicago because the city is representative of the challenges confronting communities around the country, is home to some of the most influential companies in the U.S and has been a leader in creating jobs through investments in clean energy, a commitment to early childhood education and a renewed focus on technology.

Bill, what are you trying to tell us?

Why would anyone believe ratings or projections by the S&P or Moody’s after their part in crashing the economy?  

Rather than assess risk accurately, two major rating agencies sold their top seals of approval to their investment bank clients, blessing products that the agencies themselves knew to be undeserving, the Senate Permanent Subcommittee on Investigations concluded in a report released Wednesday. By repeatedly debasing their standards, these agencies helped banks sell shoddy securities to unsuspecting investors, inflating the value of assets that turned out to be worth far less, the report has found.

The senate panel, led by Carl Levin (D-Mich.) and Tom Coburn (R-Okla.), levels a two-part charge against the rating agencies: Not only did these companies help inflate a dangerous bubble, the report says, but they also bear responsibility for popping it, as their abrupt downgrades of mortgage-linked securities in 2007 helped set off the panic that caused markets around the world to collapse.

Wall St. wants more austerity and and their puppets in Congress will help them every step of the way. So why should anyone take this seriously? Susie Madrak at Crooks and Liars reminds that “the banks liked the recession”

You’d think, considering the part played by Standard and Poors, Moody’s and Fitch in covering up these stinking piles of crap inadvertently rating mortgage derivatives as sound and crashing our economy, they would have the good grace to shut up and sit down.

But since nothing happened to hold accountable any of these craven clowns, what possible incentive do they have to tell the truth? And what reason do we have to believe them? After all, they’ve already displayed their willingness to sell their ratings to the highest bidder.

Let me remind you that bankers actually like the recession. They like the falling wages and the weak job market. The only thing that really worries them is inflation, and only because it raises wages and depresses the value of their holdings. Don’t trust anything that comes out of their mouths, or the feckless minions who sell their souls to them.

No reason to believe them now.

AFL-CIO President Richard Trumka explains why labor leaders oppose many of the recent budget cuts, a new trade agreement with Columbia and plans to reform entitlements.

At the end of the interview, Trumka directly addresses the “entitlement” issues of Social Security and Medicaid:

Trumka: Let’s not mix apples and oranges. Socal Security is not part of the deficit crisis. It did not cause the deficit. Yet in the mix, when people talk about it, like you just did, the readers, the listeners would assume that the Social Security crisis problem . . . .

Mitchell: We’re not talking about the deficit crisis, we’re talking about making it viable as a pension.

Trumka: If you want to attack Medicare and Medicaid, you have to attack health care costs. Instead of doing away with the public option, there should be a public option to create competition. 94& of the health care markets out there are highly concentrated. That means there are one or two companies out there that can charge you anything they want. All you have to do for Social Security is scrap the cap. Take the cap away, you don’t have to have this. What we’re ding with priorities in this country, Andrea, is saying we can’t afford good jobs. We can’t afford retirement security. We can’t afford health care for our citizens. When the rest of the world figured that out, they figured out a way to do it. We are the richest nation on the face of the earth, we can do it, too. That’s why we’ll speak up and fight against those cuts to Social Security unti everybody, and I mean everybody, has paid their fair share.

In the report that was released but not approved, the President’s own Deficit Commission advocated for a strong public option for health care. There are two solutions mentioned by Trumka that are easy and viable solutions that are not mentioned by either the President, or the Democratic leadership, “scrap the cap” on Social Security contributions and a string public option for health care

Former New York governor and attorney general general, now CNN talk show host Eliot Spitzer appeared on Anderson Cooper’s “360” with “Rolling Stone” editor and blogger, Matt Taibbi discussing the two year investigation of the financial institutions that “plunged the U.S. economy into a painful recession”. The Senate subcommittee’s 650 page report that was released on April 13th is a scathing indictment of cover-ups,  lies, the conflict of interest of regulators and the cozy relationship with ratings agencies. During the discussion, Spitzer challenged Attorney General Eric Holder to either prosecute Goldman Sachs or resign:

SPITZER: Senator, I’m going to take a leap. I’m going to say it out loud. Very directly.

   Goldman Sachs, you lied to the public. You lied to your clients. You’ve got a problem. You come on the show. Sue me. I don’t care. You lied to the public, you should be prosecuted.

   I’m going to say it right now. And I hope they are.

It isn’t surprising that the “powers that be” went after Spitzer because this is the man who should be the US Attorney General.