unemployment

What We Want From A White House Jobs Summit

Isaiah J. Poole — Fri, 13 Nov 2009 04:32:13 -0800

President Obama's team made it clear months ago that he will brook no talk of a "second stimulus" at a time when the first stimulus is under significant criticism—from the right, to be sure, but also from the left. Nonetheless, Thursday's announcement of a White House jobs summit offers an opportunity to reset the political conversation on building an enduring recovery for the 17.5 percent of Americans who are unemployed and underemployed.

It matters where that conversation starts. When Obama disclosed news of the summit at White House, Campaign for America's Future co-director Robert Borosage issued this statement:

The jobs summit should consider both immediate and long-term strategies. Next year, the Congress should act to create jobs immediately – creating urban and green jobs corps to put young people to work, aiding states and localities to forestall layoffs of police and teachers, expanding investments in new energy, in retrofitting buildings, in transport and infrastructure to boost economy over the course of the next two years.

At the same time, the president should use the summit to begin defining what the engine of growth will be in the economy that we build out of the ruins of the old. Consumers will not go back to spending more than they earn. With a falling dollar, exports could play a bigger role. But the main engine will be public-investment-led growth, featuring a bold commitment to make the transition to new energy the centerpiece of a long-term economic strategy. This can be deficit-funded while the economy recovers, but should be paid for by progressive taxes over the long-term.

The political right would rather focus the conversation on another number—$12 trillion—which is what the national debt will be by early December. Concern over the deficit constrained the size and ultimate effectiveness of the American Recovery and Reinvestment Act, which has arguably kept unemployment from getting worse but has yet to prove to a lot of people outside the Beltway that it is actually improving the Main Street economy. If anything, our experience with that stimulus plan—split between one-third tax cuts and two-thirds inadequate spending on such items as infrastructure—tells us that our economic malaise needed to be treated like a serious infection: Only a fast, hard and consistent attack works; anything less allows the disease to fester and become harder to treat.

News of the summit comes at a propitious moment. Senate Majority Leader Harry Reid has said that his top priority now, other than getting a health-care reform bill passed, is to get job-creation legislation passed. John Nichols writes in The Nation that Reid and his fellow Democrats can borrow from proposals that are already on the table in the House, including Oregon Democratic Rep. Peter DeFazio's plan to fully fund a surface transportation reauthorization for our highways and mass transit with the aid of a crude-oil transactions tax. (Bill Scher has included links to some other ideas from progressive leaders in today's "Progressive Breakfast.")

The news also hits an American public that is dispirited by the state of the economy—only 39 percent of the people interviewed in a Pew Research Center poll this week see the economy improving next year—and the Wall Street bailouts, which a majority of the people in a CBS News poll saw as solely benefiting the bankers at the expense of the taxpayers.

But President Obama still has significant political capital, and he can use it to build consensus around an investment economy agenda: Rebuild the nation's public commons, fuel the transition to the green economy, restore manufacturing as a critical building block of restoring middle-class prosperity. Those who have reaped he most from our economic policies should be asked to contribute the most to its continued security.

The Doldrums of Young America

Armand Biroonak — Sun, 08 Nov 2009 09:25:37 -0800

Recent data from the Department of Labor shows the national unemployment rate has climbed over 10 percent. But that number does not paint the whole picture when taking a closer look at jobless figures by age demographic. For young adults in their late teens and early twenties, unemployment figures indicate truly dismal times.

Compared to the national average, young adults face substantially higher levels of unemployment. Those 20-24 years old face unemployment at over 15 percent, for those between the ages of 18 to 19, even worse at over 25 percent.

But this just continues a trend that young adults have faced for nearly a decade.

And unemployment is taking a toll. Historically, a majority of students rely on at least part-time employment to help cover the costs of post-secondary education, but many of those jobs have dried up in the downturn.

Think having a bachelor’s degree in hand will be the ticket out? Think again. Earlier this year less than 20 percent of 2009 graduates reported finding a job by graduation. And for those lucky to land a job, average salaries are down compared to the past. In fact, the average income for college graduates has fallen since 2000 by 12 percent (adjusted for inflation). Not to leave out mentioning, as college graduates find less pay or remain unemployed, their student debt while in school rose sharply , now averaging $20,000 for graduates.

Source: Census 2000 and 2008.

This dynamic group either entering college or joining the workforce are the seeds for America’s future success, but their dream of prosperity has wilted in these extraordinary times. The lack of employment translates to fewer opportunities to gain an education, own a home and stand on secure financial footing down the line. Hopefully these numbers will wake-up Congress and the Obama administration for the need of a long-term industrial and jobs strategy to put Generation X back to work. Now is the time for action before America's brightest and energetic turn disillusioned and a permanent blue.

Faye Wilson

Faye Wilson — Fri, 30 Oct 2009 11:54:20 -0700

When are companies going to be stopped from sending our jobs offshore. Why do you think we are in the mess we are in now, with our jobs. I have watched this coming for years.

Showdown in Chicago

Richard Trumka — Fri, 23 Oct 2009 06:06:41 -0700

I'm going to Chicago next week for the American Bankers Association meeting. Oddly, I haven't been invited to the Roaring '20's dance party I hear they're having.

Why wouldn't they celebrate the era of wild money and hot times (which slid into the Great Depression)? After all, the bankers are doing well these days.

They're doing well because after financial institutions caused the global economic crisis, we bailed them out, to the tune of some $700 billion.

Now they're in good enough shape to pay the suits $7 billion in bonuses for driving working families and our economy to our knees--to the verge of a second full-fledged depression.

Things might be turning around for the bankers, but for the rest of us, unemployment heads toward 10 percent and home foreclosures continue to devastate families and communities. Working families have lost health care, pensions and savings--and in exchange we've gotten predatory lending, outrageous overdraft fees and sky-high credit card interest rates.

Meanwhile, the bankers are doing the Charleston, taking taxpayer money, handing out bonuses for disastrous failure, becoming profitable without lending money that could put people back to work--and spending billions lobbying Congress to kill financial reform.

Shameless. Absolutely shameless.

On Tuesday, about 5,000 of us will be in Chicago to tell them what we think.

It's called the Showdown in Chicago. We're gathering outside the American Bankers Association meeting to demand financial reform and re-regulation that will allow us to rebuild our communities, our lives and the real economy.

We've got a lot to rebuild.

For decades, these bankers have been dealing to each other in what amounts to their own private casino, inventing more and more exotic financial vehicles together and basically regulating themselves. Their Wild West capitalism allowed them to take outsized risk with no oversight and then come hat in hand to the American taxpayers when their house of cards collapsed.

They've become a menace. No one is safe while their private casino bankrupts the real economy and ignores necessary investments in jobs, health care and retirement without oversight or regulation.

This is a complicated topic, but we can break down a plan for reform into four basic needs.

The Consumer Financial Protection Agency (CFPA) that President Obama has proposed. This agency would protect the public against credit card and mortgage rip-offs. The agencies that were supposed to protect us from financial meltdown failed. The CFPA would place consumer protection authority in the hands of a single agency that would monitor banks and other institutions and their credit products like mortgages and credit cards--but not your butcher, as a ridiculous over-the-top ad by the U.S. Chamber of Commerce claimed.
A council of regulators to identify and fix systemic risks that could threaten the entire financial system--risks such as institutions becoming "too big to fail," too complex or too interconnected. When the government intervenes, the purpose has to be to protect the public, not just rescue executives and rich investors. The past year has proven that the Federal Reserve Board is just too close to the banks. We need either to reform and democratize the Fed or to give this job to a true public agency. Let's do it right.
Bring the "shadow markets" into the daylight. Most people probably don't really know what hedge funds, private equity funds and derivatives are or do. You're not supposed to--it makes them easy to manipulate. They've been unregulated and totally lacking in transparency. These vehicles need serious regulation and oversight before they suck more money into the black hole of convoluted transactions.
Reform corporate governance and CEO compensation to protect the interests of long-term investors--people saving for retirement, not speculating.

It's time we hold banks and other financial institutions accountable for making this mess that required trillions of our dollars to clean up.

It's time to hold them accountable for the pain they've inflicted on working families.

It's time to put them back to work for working people, supporting families and jobs.

I've been spending a lot of time on Capitol Hill, calling for reform in meetings with committee chairs and other members of Congress. And everywhere I go, financial industry lobbyists are there, pushing back all out to block reform.

Congress is deciding right now how it will shape financial reform--we need congressional support and intense presidential leadership.

Call your members of Congress. They're sure hearing from front groups for the banks. They need to hear from you, too. Tell them to produce a financial system that isn't set up to reward big banks at the expense of everyone else. The money has to start flowing to regular people and businesses that can create jobs.

And if you're in Chicago on Tuesday, join me. We'll meet up at 10:30 a.m. at Wacker Drive and Michigan Avenue to march to the Sheraton Chicago Hotel & Towers where the bankers are meeting.

See you at the Showdown.

IBEW Members Rally Against “Jobless Recovery”

Alex Hogan — Fri, 09 Oct 2009 11:24:45 -0700

Despite hopeful numbers on Wall Street, the job situation for most Americans remains bleak – and it’s getting worse.

September brought the 21st straight month of job loss, the worst stretch since 1939. More than 7 million jobs have been lost since the beginning of the recession with little hope that they will ever come back.

The official unemployment rate of 9.8 percent only underestimates the total damage as official records don’t count those who have given up looking for a job, pushing the unofficial rate past 10 percent.

While some leading pundits are now claiming the economy is on the rebound, the reality for most Americans is that they are facing the worst job market since the recession of the early ‘80s.

Complacency in the face of rampant unemployment isn’t an option for union members. Across the United States this fall, members of the International Brotherhood of Electrical Workers have taken the lead – working in coalition with other labor unions, community and faith-based groups – in fighting for good jobs.

On October 1, more than 1,000 union members, unemployed workers and neighborhood activists marched through downtown Boston protesting layoffs and the failure of corporate America and policymakers to address the jobs crisis.
Said Boston Local 2222 Business Manager Myles Calvey:

It is not a coincidence that the rally was on the one-year anniversary of the bank bailout. We need our political leaders to focus on making sure every American who wants a job can get one instead of bailing out Wall Street.

Protestors stopped to rally in front of the New England headquarters of Verizon, which recently announced that it was laying off more than 8,000 employees, including more than 150 members of Local 2222.

Dan Manning, a Verizon technician facing an upcoming layoff, told the crowd:

I know these are hard times, but with Verizon there’s no excuse. There is still plenty of work for us to do (and) they have the money, too.

Michigan has been particularly hard hit by the recession, with unemployment topping 15 percent. Many building trade locals have upward of 60 percent of their members sitting on the bench.

Calling on state leaders to “put us to work,” nearly 2,000 union members came to Lansing on October 6 to ask Gov. Jennifer Granholm (D) take the lead in job creation by approving the construction of clean coal plants, which are expected to create nearly 2,000 construction jobs in hard-hit Northern Michigan.

According to IBEW Representative Jeff Radjewski, one of the speakers at the rally:

We’ve been waiting for over two years for these projects. The plants meet existing environmental standards, and Lansing needs to move so we can put the people of Michigan back to work.

Workers in Minnesota are hopeful that federal and state investments in green energy will help bring new jobs to the Midwest. Union members, community leaders and environmental activists rallied in Duluth on October 1 telling residents to call on their U.S. Senator to get behind new renewable energy legislation which supporters say will create 1.7 million new jobs.

Chris LaForge, a Duluth Local 242 member and owner of Great Northern Solar, told the Duluth News Tribune:

Renewable energy is local. The fuel is free … the jobs are long-term and multipurpose.

Worse Off Than Their Parents

Natasha Chart — Tue, 29 Sep 2009 11:33:23 -0700

Parents usually want their children to have a better life than they did. In the United States, the parents of today's under-30 crowd may be disappointed in that hope.

Throughout last year, they were far more likely than other age groups to have reported unemployment in their households. Labor force participation for those ages 16-24 has decreased to its lowest levels since WWII as a Pew report on the graying work force notes that the recession has tilted the job market towards older workers and those with degrees.

The Pew report also says that nearly a third of the public has come to believe that a degree is necessary to get a good job, whereas 30 years ago, just under half believed that. As former President Clinton pointed out last week at a a press event, the cost of a degree has tripled in recent decades, entirely wiping out the benefits of every government assistance program for college costs.

Those college costs are usually financed instead by loans which are currently not eligible for bankruptcy protection. Loan repayment therefore eats up larger percentages of future earnings which have been plummeting for 8 years for those under 55. Bad timing for anyone who's taken out student loans in recent years in the hopes that the job market would catch up to their education expenditures, and worse luck if their parents' declining wages reduce the possibility for family assistance.

A third of adults under 27 also lack health coverage, with nearly half of those young adults earning less than $14,000 per year. Since wages for most people have been effectively stagnant, they have not kept pace with health coverage increases, and the lower you go down the economic ladder, the truer that is. Especially because there's been an ongoing decline in employer-based coverage that has disproportionately affected low-income workers and the small businesses that create the most jobs.

For another worrying indicator, an AARP poll earlier this year indicated that around a quarter of adults 18 and over are living with parents or in-laws. Another 15 percent were worried they might have to do so soon, while one in seven lived with a sibling.

I don't know about you, but the American Dream I was sold didn't include worse buying power and relative wealth than my blue-collar, high school-educated parents for myself , my peers and those who came after me.

The United States' lack of an industrial policy has been cherished for its ability to bring us ever cheaper consumer goods by steadily outsourcing manufacturing work to other countries. It's been great for people who already had money, it's destroyed opportunities for entry-level blue collar work that leads to a reasonable degree of financial security.

You can see the results in the balance sheets of young adults' households and the narrowing of their prospects. They're being pressured to take on the increasingly bad investment of the typical college education to go after a declining pool of jobs that provide dwindling levels of wage and health benefit compensation.

Maybe we don't have to make all the same things we used to make, but our current and future workforce needs the upward pressure on wages and benefits that entry-level and longstanding manufacturing careers used to create. The United States can't continue to support export-led growth elsewhere in the world if our upcoming workforce continues losing the ability to sell their labor in return for a reasonable standard of living. It stands to reason that if financial capital isn't invested in the American workforce producing things that others want to buy, these trends will only continue as the US spends down the accumulated gains of previous productivity.

If Americans want a better future for their children, there needs to be a concerted effort to make more things in America.

The Great Recession: It Ain't Over 'Til It's Over

Robert Borosage — Wed, 23 Sep 2009 07:34:06 -0700

The world economy is growing; stock markets are up; talk of recovery, not world depression, fills the business pages. As the leaders of the 20 leading economies gather in Pittsburgh this week, they might well feel the euphoria of someone who has survived a near-death experience. (For an insightful report on Pittsburgh and the G-20, go here)

Well, hold the champagne. Don't declare victory while the enemy is still advancing. Bush's calamitous folly in Afghanistan—celebrating victory and invading Iraq while the Taliban and al-Qaeda were regrouping in the mountains—should have taught us that much. Let's not go Bush on the economy.

The question is one of jobs. The reality is companies are still shedding workers; unemployment is still rising. There is no recovery until jobs are being generated. Before the leaders deal with what comes after the recovery, they better secure it. Pittsburgh should be first and foremost a summit on jobs.

The leaders of the labor union federations from the 20 countries, led by the AFL-CIO, call the leaders to sober up in their "Pittsburgh Declaration." Unemployment is high and rising. It is slated, they report, to almost double over the next 18 months in the industrial countries, and continue rising with rates over 10 percent well into 2011. Over 200 million workers worldwide could be pushed into extreme poverty.

In the U.S., one in six workers is unemployed or underemployed. Companies are shedding jobs, not hiring. Young workers are hurt the most. Even recent college graduates struggle, with 80 percent of new college graduates—the boomerang generation—moving back in with their parents. Long-term unemployment is at record rates. Unemployment is the worst in a quarter century and rising.

High unemployment is accompanied by stagnant wages and benefits, and cutbacks in hours. This comes after a lost decade in which most families lost ground. Hard-pressed families have no choice but to tighten belts. Declining consumption means more layoffs. Declining incomes mean falling revenues for governments. State and local governments, having burned through their rainy day funds, are now laying off teachers and police.

The unprecedented intervention of the Federal Reserve to bail out the banks—interest rates near zero, purchasing over a trillion in mortgage backed securities, and much more—and the Obama recovery plan—providing aid to states and localities, bolstering low-wage workers, and beginning to generate jobs from public works programs—have managed to staunch the hemorrhaging, at least temporarily. Unprecedented in scope, they aren't yet enough to generate a recovery.

The union leaders get it right. The recovery plans to date "are inadequate in size" and "do not sufficiently focus on employment." They urge the leaders of the G-20 not to exit from their stimulus measures prematurely. Instead they argue for another round of job-focused spending, targeted on putting people to work, and sustained until the recovery is clear.

This is heresy in this country. Our know-nothing right dismisses the recovery plan as a failure, when it is in fact what is holding up the economy. The business community and conservative economists are railing about debt, calling for cutting back the current spending plans. They fret more about the potential of future inflation than the reality of right-now misery, and the clear and present danger of continued stagnation. The big banks are gamboling back into leveraged speculation and million-dollar bonuses, and fending off efforts to shut down their casino.

Obama must stand firm against this tide. The president should make it clear to the leaders in Pittsburgh that the measure of a recovery is that people are back at work, and that wages are rising once more. He should challenge them to focus on jobs, pushing for another round of coordinated recovery plans to put people to work. Hold off on the party. There is no recovery without jobs. And no victory while unemployment is rising.

The Bonuses and the Damage They Do

Dave Johnson — Wed, 26 Aug 2009 04:00:10 -0700

This is a story we are all too familiar with: Wall Street vs. Main Street. Irresponsible behavior leads to bonuses for Wall Street while working hard and playing by the rules leads to unemployment and foreclosure for Main Street.

You've heard the elements of the story: For quite some time Wall Street and the banks were operating irresponsibly, fomenting a huge credit bubble which led to the financial collapse. At the end of 2008 millions and millions of regular people – popularly known as “Main Street” – began losing their jobs, losing their houses, losing their savings and forgetting about ever retiring.

Wall Street: Huge Wall Street bonuses are in the news: Bank Bonus Tab: $33 Billion

Nine banks that received government aid money paid out bonuses of nearly $33 billion last year -- including more than $1 million apiece to nearly 5,000 employees -- despite huge losses that plunged the U.S. into economic turmoil.

… The nine firms in the report had combined 2008 losses of nearly $100 billion. That helped push the financial system to the brink, leading the government to inject $175 billion into the firms through its Troubled Asset Relief Program.

The Cost: The same amount, used for the people, would bring over 2.5 million good-paying jobs.

The "financial collapse" bonus pool is $33 billion. For comparison, look at what $30 billion could buy for We, the People, if only we had some control over things. $30 billion is the amount requested in Senator Sherrod Brown’s (D-Ohio) Impact Act. $30 billion = more than 2.5 million jobs:

“IMPACT (Investments for Manufacturing Progress and Clean Technology) creates a $30 billion Manufacturing Revolving Loan Fund to help small and medium-sized manufacturers finance retooling, shift design, and improve energy efficiency.

. . . the IMPACT Act could create 680,000 direct manufacturing jobs nationally and 1,972,000 indirect jobs over the next five years.”

Gas Prices and Bonuses: Do you remember those soaring gas prices that hit Main Street so hard last year. They play a part in this bonus story. For some background, see Matt Taibbi's Rolling Stone piece, Inside The Great American Bubble Machine,

So what caused the huge spike in oil prices? Take a wild guess. . . . [Wall Street] persuad[ed] pension funds and other large institutional investors to invest in oil . . . The push transformed oil from a physical commodity, rigidly subject to supply and demand, into something to bet on, like a stock. Between 2003 and 2008, the amount of speculative money in commodities grew from $13 billion to $317 billion, an increase of 2,300 percent. By 2008, a barrel of oil was traded 27 times, on average, before it was actually delivered and consumed.

[. . .] But it wasn't the consumption of real oil that was driving up prices — it was the trade in paper oil. By the summer of 2008, in fact, commodities speculators had bought and stockpiled enough oil futures to fill 1.1 billion barrels of crude, which meant that speculators owned more future oil on paper than there was real, physical oil stored in all of the country's commercial storage tanks and the Strategic Petroleum Reserve combined. It was a repeat of both the Internet craze and the housing bubble, when Wall Street jacked up present day profits by selling suckers shares of a fictional fantasy future of endlessly rising prices.

This fits our story because the top bonus-getter this time around is Andrew J. Hall. Hall "earned" it by helping to run up the price of oil last year. Hall is getting a $100 million bonus. (Thanks to previous years' bonuses Hall already owns a 1000-year-old castle called Schloss Derneberg. Go look at some of the pictures of what these nice Wall Street bonuses can buy.)

Here's some more bonus news: Goldman may pay out largest bonus pool ever,

Looks like things are back to normal, or perhaps even better, at Goldman Sachs Group Inc. (NYSE:GS) as the firm is reportedly on track to pay out its largest bonus pool in the firm's 140-year history thanks to soaring profits in the first half of 2009.

Yes, that’s right "back to normal." Huge bonuses, in some cases the largest ever.

Main Street: Also back to "normal," the rest of the country remains mired in debt, unemployment, foreclosures, budget cuts and a health care crisis looks on, helpless to do anything about it because the functioning of their government has been captured by a wealthy few. Even before the financial collapse things were pretty bad. Wages had been near-stagnant for decades while costs rose, resulting in soaring credit card and other household debt. The savings rate had actually gone below zero. But not for Wall Street. While this was happening the finance sector had quadrupled to nearly 40% of all corporate profits and insiders were reaping tens and hundreds of millions and even billions for themselves.

There are many who say that these problems of debt and stagnant wages are because of Wall Street. Wall Streeters encourage companies to focus on maximizing short-term profit rather than investing in long-term stability. Wall Street pressure encourages companies to cut benefits, outsource jobs, increase workloads and eliminate customer services as much as possible.

These changes in business practices occurred partly because of the huge cuts in the top tax rates from the Reagan through the Bush years. It used to be that people built fortunes over time by carefully building businesses. But the tax cuts enabled "get rich quick" schemes that let a few benefit from chopping up and selling off once-stable companies, raiding pension funds, and so many of the business practices that have destroyed Main Street livelihoods.

This also happened because of deregulation. People were convinced that regulation of business "cost jobs," or a hundred other things we were told. Well it turned out that regulation was important. And it turned out that a few people reaped massive fortunes from the experiments in deregulation and tax cuts.

The Damage Done: While the bonuses are the largest ever, for public trust in their government and elected leaders this may equate to some of the most damage ever. People see these bonuses being handed out, paid for with taxpayer money, and they understand that their money is going out to the very people who destroyed the economy and their dreams. This kind of unfairness and injustice can tear apart the fabric of society. We are seeing elements of this in the disruptions at the Town Hall meetings on health care. People are angry at the way they are being treated, and the corporate right is channeling that anger into further demands for deregulation and favors for a few at the top.

While the stage was set for the bailouts and bonuses by the Bush administration, President Obama was elected to change things. Immense damage has been and continues to be done to the Obama administration in the public mind by these huge Wall Street bonuses. This set the stage for opposition to the health care plan. People feel that the President should find a way to stop this travesty. But instead he is seen as continuing it. His advisors are seen as being from Wall Street and unwilling to stand up against their friends and social and professional circles in which they live.

The Hope: President Obama has appointed a "Pay Czar." Kenneth Feinberg, who previously worked for free as head of the September 11th Victim Compensation Fund, has the job of "Special Master for Compensation." He will look at the compensation of the top 25 executives at these firms and decide if it is fair.

I think I speak for a lot of people when I say I want Mr. Feinberg to be aware that this bonus pool comes from taxpayer money, that the firms giving these bonuses wouldn't even be here if the taxpayers hadn't bailed them out, that the rest of the country - Main Street - hasn't seen a raise in a very long time, largely because of the policies of Wall Street, and that the bonus pool just happens to match the amount that would create 2.5 million jobs on Main Street through the IMPACT Act.

Mr. Feinberg, claw it back. Don't let these people get these bonuses, and be very public about it. The public needs to have their trust restored.

But more than that, the conditions that enabled Wall Street to benefit from destroying the livelihoods of the rest of us need to be reversed. Strong regulation needs to be reintroduced by the administration and backed up as necessary by the Congress. Top tax rates need to be increased back to where they were before Reagan to discourage this terrible "get rich quick" behavior and to reverse the concentration of the country's wealth among a top few. Most important: strong campaign finance and lobbying rules need to be implemented to remove Wall Street's ability to influence government. Truest and fairness need to be restored to our system.

Puleeze! Washington Post, Would You Stop Blaming ME For The Recession?

Chris Collins — Mon, 03 Aug 2009 10:21:30 -0700

It was Saturday morning and I had just returned from yoga class and a few minutes shopping at the local farmers market. I poured myself a cup of coffee, picked up the newspaper and went to sit on my back porch to enjoy a few more minutes of relaxation before I started in on the day’s chores.

I took a sip of coffee, opened the Washington Post, and totally lost my hard earned karma! The headline read: “Economy Turning Out of Steep Dive: Slow to Spend Again, Consumers Could Be Holding up the Recovery” (emphasis added).

Excuse me? I thought consumer spending WAS the problem! For months, we’ve been told that we were the ones who overextended ourselves, failed to read the fine print in our mortgage documents and home equity loans, bought LCD TV’s when we should have saved, etc….

And just when we’ve started to learn our lesson and cut back on our spending, we’re supposed to spend more and take on more debt?

And even if that was a good idea, exactly how are we supposed to spend more? Clearly, Neil Irwin and Ylan Q. Mui, the authors of this article, failed to talk to Michelle Singletary, who only the next day in the business section of that very same newspaper, exhorted the unemployed to “take charge” of finding a new job, and listed out the “very sobering and very real” jobless numbers:

-- 584,000 people filing first-time claims for unemployment benefits in the week ended July 25. That was an increase of 25,000 from the previous week.

-- 6.2 million people collecting unemployment checks.

-- 6.5 million jobs slashed from the labor market.

This is the only recession since the Great Depression that has wiped out all job growth from the previous business cycle, according to the Economic Policy Institute, a nonpartisan think tank. Further, with less than one job opening for every five job seekers, unemployed workers are getting stuck in unemployment for long periods. Twenty-nine percent have been jobless for more than half a year.

And, according to the Bureau of Labor Statistics, the total number of unemployed people in June was actually 14.7 million people -- in other words, another 8.5 million people are unemployed and don’t even have unemployment insurance checks to help them out.

So, with almost 1 in 10 people out of a job, and the rest of us taking furloughs, pay cuts, and looking at 401Ks that are worth only 2/3 of what they were 18 months ago, you have to wonder what world Irwin and Mui are living in to write that headline.

And then I remembered Bush’s solution to the 9/11 crisis: "Get down to Disney World in Florida," he said two weeks after the attack. "Take your families and enjoy life, the way we want it to be enjoyed."

So much for change…...

The Choice: Second Stimulus Or 'Lost Decade'

Isaiah J. Poole — Thu, 16 Jul 2009 08:18:03 -0700

It's worth slogging through the minutes of the June Federal Reserve Open Market Committee meeting. Read the deliberations of the Fed board members and staff and you see an economic horizon that is much more dangerous than what is suggested by the assurances of the White House and some of our allies in Congress.

Even though the Obama administration is tamping down talk of a second stimulus plan right now, the prudent course would be to prepare the political ground to begin pushing one through Congress this fall. The alternative, according to some of the thinking at the Fed, is a period of above-average unemployment that would begin to look like the Japan "lost decade" of economic recession.

One mistake Japan made was being too timid in using government funds to create jobs that would lay the foundation for future economic growth. The Congress has already made a similar mistake, passing a $787 billion stimulus bill earlier this year when many economists were saying that the economy needed a spending plan that was twice that size. And keep in mind that a third of that stimulus was not government spending, but was various forms of tax relief, at the insistence of conservatives in both parties.

It is no surprise, then, that the actual dollars available for job creation are barely making a dent in the wave of layoffs still taking place in both private industry and in state and local governments. (Note the links in Terrance Heath's detailed look at the economic "recovery" thus far.)

Against that backdrop comes this sobering assessment from the Fed:

With the strong adverse forces that have been acting on the economy likely to abate only slowly, participants generally expected the recovery to be gradual in 2010. Even though all participants had raised their near-term outlook for real GDP, in light of incoming data on labor markets, they increased their projections for the path of the unemployment rate from those published in April. Participants foresaw only a gradual improvement in labor market conditions in 2010 and 2011, leaving the unemployment rate at the end of 2011 well above the level they viewed as its longer-run sustainable rate. ...

Most participants indicated that they expected the economy to take five or six years to converge to a longer-run path characterized by a sustainable rate of output growth and by rates of unemployment and inflation consistent with the Federal Reserve’s dual objectives, but several said full convergence would take longer.

Can the United States take the risk of five to six years of above-average unemployment? Already, working-class families fell behind during the past eight years, as a conservative White House and Congress focused economic policies on top-end tax cuts and corporate deregulation rather than on improving the wage-earning prospects of middle-income families.

Yet the message from the right wing is more trash talk. This past weekend, House Minority Whip Eric Cantor railed against "pork barrel spending, government waste, and massive borrowing" during a radio address. Their alternative: They call it tax cuts for small business. In reality, much of what they propose is the same tax-cutting for the wealthy that didn't stimulate the economy for working families when Republicans seized the chance to impose that prescription after 2001. Conservative ideologues in Congress, having sabotaged the political climate for a robust stimulus months ago, have pronounced the compromised result a failure and are well-positioned to try to convince the public that conservative policies that have demonstrably failed in the past will someh

While some additional targeted tax relief directly tied to job creation ought to be on the table, the Fed minutes underscore the depth of the economic trench the country is now in, and how pulling out of that trench requires stimulating demand. If the unemployed continue to believe they have few options and workers continue to fear they will lose their jobs at any moment, no amount of tax cuts will prompt businesses to invest to meet a non-existent demand. The surest way to rapidly stimulate demand is to have the public sector put people to work (as well as keep people in jobs they now have) doing the work that needs to be done. That rejuvenates the economy and puts the government on the path of keeping its deficit in check.

Congress needs to get the message that whatever the costs of a federally-led job-creation effort this fall, and whatever the political difficulties, those costs will be minor compared to the economic and social costs of six or more years of sustained unemployment. Rather than patience, the public and their representatives in Congress need to be primed for urgency.