A: This video from the Wall Street JournalOr,
B: This Daily Show video from a year ago, which I had blogged about on November 17, 2011With Option A, you can watch and cry.
US economy now close to stall speed. From anemic recovery to tipping point to stall speed and growth recession. Is a double dip next?Yet another reason I am simply relieved, even more than happy, that I have a job. A job that is secure. With indefinite tenure.
The average unemployed person in America has been looking for work for 39.7 weeks, or more than nine months. That is the longest average unemployment spell since the Labor Department started keeping track in 1948Robert Reich writes:
The overall jobless rate rose to 9.1 percent.
Together with plummeting housing prices, falling wages for non-supervisory workers, a paltry 1.8 percent growth in the first quarter, and a precipitous drop in consumer confidence, the picture should be clear to anyone able to see clearly.
The recovery has stalled.
We’re not in a double dip yet, but the odds are increasing.
The question is whether all this will wake up Washington, and stop the monumental distraction of the games being played over the debt ceiling and long-term budget deficit. The Republican lie that the nation’s long-term budget deficit is responsible for high unemployment would be laughable if it weren’t so tragically irrelevant to the current situation.
Major U.S. newspapers have increasingly shifted their attention away from coverage of unemployment in recent months while greatly intensifying their focus on the deficit, a National Journal analysis shows.
The analysis -- based on a measure of how often the words "unemployment" and "deficit" appear in major publications -- portrays a dramatically shifting landscape of coverage over the past two years, as the debate over how to fix the federal deficit has risen to prominence and the question of how to handle still-high unemployment has faded from the media's consciousness. ...
Mentions of unemployment have been dwindling since they spiked to 154 in the month ending August 15, 2010; over the month ending Sunday, there were 63. ...
That major newspapers and other media outlets have covered the deficit with greater intensity in recent months should come as no surprise given the focus of the politicians and policymakers they cover. The declining mentions of unemployment are perhaps more surprising, as the issue remains salient for millions of Americans.
Hollywood and the publishing industry have learned just one historical lesson from the Depression: people want entertainment in tough times.
The Grapes of Wrath, the films of King Vidor, even socially conscious gangster films from Warner Brothers were only a fraction of Hollywood's output then. The Depression was also the era of Fred and Ginger, Nick and Nora, screwball comedy and Busby Berkeley.
That hasn't changed. Writers, film-makers, game designers all want to eat - and that's the market they have to create for.
A line of poetry by T S Eliot composed at the same time Steinbeck was writing Grapes of Wrath, and Agee and Walker were having their report spiked, says it best. "Humankind / cannot bear too much reality."
But humankind has to live in the real world with other human beings. And if writers and artists won't put a human face on the jobless numbers, who will?
Here’s an analogy: think of Medicare as a footbridge that is deteriorating and will eventually become unsafe. You could propose structural repairs to fix its faults; Ryan doesn’t do that. Instead, he proposes knocking the bridge down and replacing it with trampolines, in the hope that pedestrians can bounce across the stream. And the Post declares that he deserves credit for pointing out that the bridge is falling down, and proposing a solution. Um, we knew that the bridge was in bad shape — and his solution is a fraud.Ah, the imagery of 80-year olds jumping on trampolines is priceless; can I use Ryan coupons to pay for that imagery?
Republicans are proposing to destroy Medicare; saying that clearly isn’t scare tactics, it’s simply pointing out the truth.
In my report, I outline the low-hanging fruit that could easily exceed the $4 trillion dollar target set by the Bowles-Simpson Commission. For example: (a) The Cold War ended more than two decades ago, but we continue to spend tens of billions on weapons that don’t work against enemies that don’t exist. Fruitless wars have not increased our security and our military’s credibility. Rather, they have undermined both.Greg Mankiw, who was Bush's CEA Chair, differs.
We could have more security with less spending. The commission recognized this — but didn’t go far enough. Congress and the Obama administration have not gone far enough either.
(b) The health care reform bill did little to eliminate the trillion-dollar giveaway to the drug companies, resulting from restrictions on the ability of government (the largest buyer of drugs) to negotiate prices. In contrast to every other government in the world. While much more can, and should, be done to control health care costs, this little change would make a big difference.
Eliminating corporate welfare, both that hidden in our tax systems and in the hidden give-aways of our country’s natural resources to oil and gas and mining companies; eliminating the unjustifiable and harmful tax breaks for speculators and companies that keep their money out of the country, and taxing activities that generate large negative externalities—whether the environmental pollution that threatens our health and our children’s future, or the financial transactions that brought out country and the world to the brink of ruin—could all easily generate trillions of dollars in revenues. At the same time, they could also create a fairer society, a cleaner environment, and a more stable economy.
Deficit reduction is important. But it is a means to an end — not an end in itself. We need to think about what kind of economy, and what kind of society, we want to create; and how tax and expenditure programs can help achieve those goals.
At a tax symposium in 2007, a G.E. tax official said the department’s “mission statement” consisted of 19 rules and urged employees to divide their time evenly between ensuring compliance with the law and “looking to exploit opportunities to reduce tax.”Ah, good ol' US of A.
Transforming the most creative strategies of the tax team into law is another extensive operation. G.E. spends heavily on lobbying: more than $200 million over the last decade, according to the Center for Responsive Politics. Records filed with election officials show a significant portion of that money was devoted to tax legislation.
The chart shows the proportion of GDP spent on entitlements and interest, compared with the proportion of GDP that the government is expected to raise in the form of revenues. ... As can be seen, entitlements and interest will absorb all government spending by 2025. ... In short, the fiscal position is deteriorating rapidly. Where then is the appetite for cutting entitlements or increasing taxes sharply?
California is arguably the heaviest-hitting state in any league of higher education. To find something comparable, you would have to aggregate the combined performance of the entire Northeastern United States. Massachusetts, Connecticut, Pennsylvania, New Jersey and New York together have produced precisely as many Shanghai top 50 institutions as California. And they have done so with the head start of an extra century or more of development, with the resources of a combined population base close to twice California's and, of course, with vast amounts of private-pocket financing.So, whatever happened to California, which finds itself in such a mess today?
The combined endowments of the 10 top-50 institutions on the East Coast top $80 billion. The West Coast's 10 top-ranked universities have a combined endowment of just over $21 billion, or about one-fourth of what their East Coast counterparts have amassed. Moreover, Stanford alone accounts for more than half of the endowment money held by the West Coast's top universities.
In other words, in terms of bang for the buck, the efficiency of California's university performance is staggering. Only a few state institutions in the Northeastern United States make it into the Shanghai top 50. All the others are plushly upholstered private institutions.
Well, the business of the American government is insurance. Literally. If you look at how the federal government spends our money, it’s an insurance conglomerate protected by a large, standing army.
“We’re going to get rid of all earmarks, all waste, fraud and abuse, all foreign aid, Air Force One, all congressional pensions,” said Simpson on Sunday in an interview on CNN’s “State of the Union.” “That’s just sparrow belch in the midst of the typhoon. That’s about six, eight, ten percent of where we are. So, I’m waiting for the politician to get up and say, there’s only one way to do this: you dig into the big four, Medicare, Medicaid, Social Security, and defense. And anybody giving you anything different than that, you want to walk out the door, stick your finger down your throat, and give them the green weenie.”...The Pentagon doesn't even know how many defense contractors it has? Do they at least know how many billions we spend?
While many Republicans are still resisting cutting the defense budget, Simpson said that military spending needed to be addressed in order to seriously reduce the deficit. He said that the commission asked Sens. Dick Durbin (D-Ill.) and Kent Conrad (D-N.D.) about what they hear from the Defense Department about cutting contractors. “They don’t know how many contractors they have,” he said in amazement of the Pentagon. “It’s something between 250,000 and a million. So, our proposal is to cut 250,000 contractors out of the game.”
The U.S. defense budget is now about the same as military spending in all other countries combined.That is Gregg Easterbrook (ht) writing about the out of control defense budget, which grows even despite mounting concerns over the deficit and debt. Even under Barack "Change" Obama's presidency:
This year, the United States will spend at least $700 billion on defense and security. Adjusting for inflation, that’s more than America has spent on defense in any year since World War II—more than during the Korean war, the Vietnam war, or the Reagan military buildup. Much of that enormous sum results from spending increases under presidents George W. Bush and Barack Obama. Since 2001, military and security expenditures have soared by 119 percent.And then Easterbrook has this nugget way towards the end of his essay, which has plenty of specifics:
The mindset of top-heavy spending has also infiltrated the realm of counterterrorism and intelligence. For security advice, the president now has a secretary of defense, a secretary of state, a director of national intelligence, a national security adviser, a Central Intelligence Agency, a National Security Council, a President’s Intelligence Advisory Board, a National Security Agency, a Defense Intelligence Agency, separate Air Force, Navy, Marine, Army, and even Coast Guard intelligence commands, a National Counterterrorism Center, an FBI Directorate of Intelligence, a State Department Bureau of Intelligence and Research, a National Reconnaissance Office, and a National Geospatial-Intelligence Agency. Even the Treasury Department has an Office of Terrorism and Financial Intelligence.
The specter of terrorism obviously required an improvement in intelligence. But spending for the sake of spending doesn’t make the nation any safer, while multiple overlapping bureaucracies may only slow reaction time. The new security hierarchies are sagging under the weight of senior-grade officials who spend much of their time in turf battles. Recently, the director of national intelligence, Dennis Blair, resigned after just 16 months on the job, after a sandbox squabble with the CIA over whose name comes first on memos. If that’s how people at the top of the security hierarchy are behaving, imagine how those in the middle are wasting the public’s time.
The biggest peril Americans now face isn’t Islamo-fascism. It’s our own inability to live within our means. It would be nice to give our country the wisdom and self-discipline to stop running up the credit card. And we should try. But it’s unlikely that we can remake the national character (including our own) in 19 years. What we can do is offer a lecture and a fresh start. We should pass on to the next generation an America that’s free from debt. Instead of ignoring it, or arguing endlessly about whose fault it is and who should pay for it, Boomers as an age cohort should just grab the check and say, “This one’s on us.”The "we" in this excerpt? The boomers.
We may legitimately disagree about the timing of any Great Fiscal Clean-Up: do we need a second or third jolt of stimulus first to nail shut the coffin of the Great Recession, adding a trillion or more in IOUs to the pile before turning to the task of reducing the pile? Maybe so. But money well spent is still money spent. The Great Recession may have been a legitimate reason for putting off the day of reckoning—just as a cold may be a good reason to put off a necessary heart operation—but the cold doesn’t cure your heart problem or eliminate the need for the operation.Not convinced? Here are some hard data that Kinsley then provides:
pick a document at random from the pile. Here’s one: the latest annual “Long-Term Budget Outlook” of the Congressional Budget Office, published in June. The future is especially hard to predict at this moment, because current law includes several things that are unlikely to happen, such as the expiration of the George W. Bush tax cuts, and major unspecified cuts in defense and other spending programs. But making reasonable assumptions about these matters, the CBO projects that the national debt—nearly 62 percent of GDP—will rise to 87 percent of GDP by 2020 (a decade away), 109 percent (its previous peak, during World War II) by 2025, and 185 percent by 2035. “After that, the growing imbalance between revenues and noninterest spending, combined with spiraling interest payments, would swiftly push debt to unsustainable levels.”
To get spending down to the level we're taxed at, we'd have to cut back to persistent levels of federal spending we haven't seen in 50 years. Average federal spending in the 1960s was 18.6% of GDP. In the 1970s it was 20.1% of GDP. In the 1980s it was 22.2% of GDP. In the 1990s it was 20.7% of GDP. In the 2000s it was 20.0% of GDP. In the 1950s, federal spending was 17.6% of GDP, but in the 1950s, there was no Medicare or Medicaid.The scarier aspect is that this is not the only story. Again, as I have blogged referring to a number of commentators, there is another issue as well--the budgetary crises at local and state governments. The only good news here is that these entities cannot print money as the federal government can!
And this is all the data can tell us. The data can't tell us whether we want to go back to the levels of federal spending we had in the 1950s. That's a question of value that voters have to decide.
My reading of contemporary Republican thinking is that there is no chance of any attempt to arrest adverse long-term fiscal trends should they return to power. Moreover, since the Republicans have no interest in doing anything sensible, the Democrats will gain nothing from trying to do much either. That is the lesson Democrats have to draw from the Clinton era’s successful frugality, which merely gave George W. Bush the opportunity to make massive (irresponsible and unsustainable) tax cuts. In practice, then, nothing will be done.
Indeed, nothing may be done even if a genuine fiscal crisis were to emerge. According to my friend, Bruce Bartlett, a highly informed, if jaundiced, observer, some “conservatives” (in truth, extreme radicals) think a federal default would be an effective way to bring public spending they detest under control. It should be noted, in passing, that a federal default would surely create the biggest financial crisis in world economic history.That is from Martin Wolf's lengthy examination of the political aspects of supply-side economics. (ht)
The danger does not arise from the fiscal deficits of today, but the attitudes to fiscal policy, over the long run, of one of the two main parties. Those radical conservatives (a small minority, I hope) who want to destroy the credit of the US federal government may succeed. If so, that would be the end of the US era of global dominance. The destruction of fiscal credibility could be the outcome of the policies of the party that considers itself the most patriotic.
In sum, a great deal of trouble lies ahead, for the US and the world.There is only one word to describe the situation ... fucked!
My guess is that elected officials will have no choice but to either layoff government employees, or to force cuts in pay and benefits, or both. And appointed officials will have no choice but to implement that decision. As all these people do that, I hope they will exercise careful thought, and have empathy, as best demonstrated in this episode of Benson.Since the start of the recession, at least 25 states and the District of Columbia have curtailed programs that include meal deliveries, housekeeping aid and assistance for family caregivers, according to the Center on Budget and Policy Priorities, a research organization. That threatens to reverse a long-term trend of enabling people to stay in their homes longer.
