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Tags: Economy

90 Percent or Bust: The Left’s Strange Eagerness to Raise Top Tax Rates



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The top income-tax rate is back to where it was during the Clinton years, thanks to the Obamacrats letting the high-end Bush II cuts expire. But don’t think for a second that the left wouldn’t love to take tax rates much, much higher. Last summer, a CNBC reporter asked President Obama if there was a limit to how high taxes should go. “You know, I don’t have a particular number in mind,” is how Obama responded. Indeed, left-wing economists continue to generate papers showing top rates of 70 percent, 80 percent, or even higher would reduce income inequality without damaging the US economy. Over at the Center for American Progress think tank — a favorite of Hillary Clinton’s — blogger Bryce Covert embraces a new paper that suggests a 90 percent tax rate on the top 1 percent of American earners would reduce inequality, boost government revenue, and “make everyone better off.”

Except the history of the US economy under extreme tax rates suggests everyone wouldn’t be better off.  Not at all. 

The last time tax rates were at 90 percent or higher was the 1950s and early 1960s. While GDP grew at a brisk 3.6 percent over the decade from 1951 through 1960, it was also a period that saw three recessions. Recall that John F. Kennedy’s 1960 presidential campaign promised he would “get this country moving again.” That suggests a decade of stagnation, not growth.

More importantly, the U.S. economy benefited from a set of one-factors that offset the high tax rates. A National Bureau of Economic Research study described the situation this way: “At the end of World War II, the United States was the dominant industrial producer in the world. With industrial capacity destroyed in Europe—except for Scandinavia—and in Japan and crippled in the United Kingdom, the United States produced approximately 60 percent of the world output of manufactures in 1950, and its GNP was 61 percent of the total of the present (1979) OECD countries. This was obviously a transitory situation.” 

What’s more, as American Enterprise Institute scholar Ed Conard has explained about the 1950s, “The United States was prosperous for a unique set of reasons that are impossible to duplicate today, including a decade-long depression, the destruction of the rest of the world’s infrastructure, a failure of potential foreign competitors to educate their people, and a highly restricted supply of labor.”

It should also be noted that effective tax rates were much lower than 90 percent because of myriad tax breaks. But many economists suggesting high taxes would also get rid of all manner of loopholes, pushing effective rates to levels unseen in American history. Finally, the decade was a period of stagnation when it came to innovation. As historian Alexander Field has noted, the postwar economy lived off the technological innovations produced in the 1930s. The postwar decades’ failure to generate big, new breakthroughs led to declining productivity not reversed until the 1990s tech boom.

In short, Big Government taxed away America’s tiger-economy years. And now with new breakthroughs in energy and the internet offering hope America’s New Normal isn’t permanent, the left would do it again.

Tags: Economy , Taxes

Economy Pundits: Who You Gonna Believe, Me or Your Own Eyes?



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Liberals, and Keynesian conservatives, are facing a tough intellectual challenge: Why do the American people — who, we can all agree, are otherwise perfectly delightful — persist in their stubborn belief that the U.S. economy stinks, when all experts agree that the fifth annual Summer of Recovery is upon us?

That question got a little more vexing this week, as the U-3 unemployment rate increased to 6.2 percent and a Gallup poll indicated Americans are the most pessimistic they’ve been about the economy since December (when the unforeseeable phenomenon of cold weather in winter — probably attributable to global warming — caused a surprise slowdown in the previously flourishing Obama economy).#ad#

The unemployment spike, as soi-disant experts love to point out, is actually a sign that things are improving, since it means more people are looking for work. (This time the experts may be right, as labor force participation has also increased.) But why can’t the people whose job it is to survive in the American economy, rather than pontificate about it, understand such subtle points? The answer rests partly in the failure of experts to miseducate the public, and partly in the failure of the public to understand the baroque terminology and chop logic of political economy. But mostly it rests in one hard fact: The experts are wrong, and the unwashed masses are right.

“There is this strange contrast with unemployment, but there is a lot of growth in our economy,” says Kirsten Powers on Fox’s Outnumbered. “If you talk to an investor, they will tell you the U.S. economy’s turning around; we’re gonna be more aggressive. I talk to different investment advisors and they say it’s time to get back in the U.S. market. So I do think you see people saying they see the trajectory going in the right direction, and I think what the administration would argue is that this type of collapse that we saw — you can’t really compare it to other recessions, because you saw the whole system kind of collapse in a way that’s different than other recessions.”

This is wrong, but as is often the case with wrongness, the problem isn’t what people don’t know; it’s what they know that ain’t so. It’s not true that the 2008 recession was qualitatively different from prior down cycles. The long-overdue (and partial) correction of the real-estate market in 2006, and the not-nearly-large-enough 2008 deleveraging that resulted from it, continued a pattern of recessions that has been building over many years, and the anemic post-recession recovery that we are still enduring (and I’m pretty sure that is what the Fox folks are thinking of when they talk about the tough economy) followed a pattern that has continued pretty steadily since the late 1940s. Bill McBride’s famous chart of peak-to-peak jobs recoveries since 1948 shows that employment cycles have been getting steadily feebler (with small exceptions) since Harry Truman’s time — as public and private indebtedness have become steeper, and the devaluation of the dollar, by Keynesian clowns who refuse to admit that the Phillips Curve is a fiction, has gotten more aggressive in response:

Now, Outnumbered, though it is this reporter’s new favorite television show, is not and does not pretend to be a panel of economic experts. But the panelists are onto something: Why is popular understanding of the economy so at odds with expert opinion? Some of this is easily explicable, using only official numbers: In nominal dollars, median household income has increased only 5 percent since 2006. Yet using the Bureau of Labor Statistics’ inflation calculator, cumulative CPI inflation has been 18 percent over the same period. Not a lot of mystery there: Your dollar is buying a lot less than it was eight years ago (a period that, not to put too fine a point on it, has seen nothing but sideways movement in a stagnant economy); and your income increase has been less than a third of what it would need to be to make up the loss. And the experts, many of whom can afford to have other people do their shopping for them, are telling you the key to prosperity is even more inflation? No thanks, Mr. Expert!

It’s also possible that the media have reverse competence when it comes to explaining economics in terms that mean anything to anybody. Witness this lede on a news article about the Gallup poll described above:

Perhaps it was a response to a shabby performance by Wall Street last week or mounting unease over the Israeli-Palestinian conflict or Russia’s bold military intervention in Ukraine.

Or possibly it was sheer disgust with the “Do-Nothing” Congress and the relentless partisan sniping between President Obama and House Republicans who plan to take the president to court for executive overreach.

What planet is Fiscal Times reporter Eric Pianin living on? The Israeli-Palestinian conflict? The Ukraine? The House lawsuit against President Obama? What does any of this have to do with the U.S. economy? The economy is about the buying and selling of goods and services in your daily life. Only Keynesian geniuses living in the Northeast Corridor could fail to grasp this simple point.

This delusion — that economy at the macro level is somehow qualitatively different from the economy you experience at a neighborhood yard sale — is, I think, at the heart of the gap between popular and elite opinion, a gap that will continue to widen. And nobody demonstrates the gap more clearly than the man at the very top of the American elite. Here is the president of the United States explaining our gladness to all of us on Friday afternoon:

The president provides a wonderful demonstration of the principle that you can replace any number in any speech with “eleventy-four million” and the rhetorical effect will be the same. Obama brags that he (alone, presumably) created 200,000 jobs in July, and that certainly sounds impressive. But according to the Hamilton Center’s Jobs Gap calculator, the U.S. economy needs to be creating at least 280,000 jobs per month, every month, just to get back to the pre-recession employment level by the time Obama leaves office (presuming he is willing to vacate the White House at the end of his second term). For what it’s worth, the economy has averaged about 180,000 jobs per month since the beginning of the Obama presidency.

The collective buying and selling decisions of 330 million people constitute an irreducibly complex whole, far more complex than can be understood by any central planner or central banker. Since nobody can control economic outcomes on a large scale, but many people have an interest in making you think they can, there is a clear need for this kind of numerical obfuscation. The point of political speech isn’t to say things that concur with your lived experience; it’s to make you mistrust what you’ve learned from your experience.

Then at the end, Obama suggests the “steps that we could be taking to maintain momentum and perhaps even accelerate” are infrastructure spending, a higher minimum wage, more regulation of pay and leave, and more subsidies for student loans. The president would have us believe the economic boom is being held back by insufficient regulation and inadequate spending of taxpayer dollars.

It’s not a problem that few people believe this; it’s a sign of common sense. And it’s not a mystery that people whose understanding of the American economy is experiential rather than theoretical remain pessimistic despite what their betters say. The reason people believe the economy stinks isn’t that their understanding of monetary stimulus is inadequate or that the good news from Wall Street hasn’t filtered through to Main Street. They believe the economy stinks because the economy stinks. It has been stinking for nearly ten years, and that’s a pretty big chunk of your life to spend waiting for the good news to become believable.

— Tim Cavanaugh is news editor of National Review Online. Follow him on Twitter and Facebook.

Tags: Economy

Why Americans Want Politicans to Push Around Their Employers



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There’s a thread that ties the Democrats’ arguments on the employer-covered contraceptive coverage mandate and their push to raise the minimum wage to $10.10 per hour: We’re going to make your employer give you something you want.

People rarely turn down things that they’re offered for free.

Before those of us on the Right commence fuming about “makers” and “takers,” we probably ought to think about why swaths of the electorate are so receptive to this message, and so eagerly buy into a narrative where they are the victims of their miserly bosses, and the heroic white knight of Democrat-run big government must come in and give them what they deserve.

Throughout the past three decades, without any real national debate or referendum, American workers found themselves in an era of fierce foreign competition. Goods are easily imported, and services increasingly can be handed elsewhere as well. First your telemarketer or help line was serviced from Bangalore, then it became an electronic voice menu. (“I’m sorry. I did not understand your answer. Please try again.”) Companies periodically embraced “outsourcing” and “offshoring,” utilizing cheaper labor in other countries. Mass illegal immigration increased the supply of labor, particularly manual labor.

“Chainsaw Al” Dunlap, a corporate executive who built a notorious reputation for mass layoffs at Scott Paper and then Sunbeam, helped create the modern iconic villain of a corporate executive willing to throw away his own workers in pursuit of a higher stock share price. The perception of callous and greedy corporate executives long outlasted Dunlap, who was tossed out at Sunbeam in 1998. American workers feel that their employers aren’t loyal to them, so they feel no need to reciprocate that loyalty.

Wage growth is “down from the end of 2008, broadly flat over the past decade, and on an inflation-adjusted basis, wages peaked in 1973, fully 40 years ago. Apart from brief lapses, like in the late 1990s, wages have been falling for a generation.”

There are times when those thriving the most will observe the difficult time that those once considered “middle class” are having, and rather openly say that they don’t care or that it reflects some meritocratic punishment for Americans who have grown too entitled:

The U.S.-based CEO of one of the world’s largest hedge funds told me that his firm’s investment committee often discusses the question of who wins and who loses in today’s economy. In a recent internal debate, he said, one of his senior colleagues had argued that the hollowing-out of the American middle class didn’t really matter. “His point was that if the transformation of the world economy lifts four people in China and India out of poverty and into the middle class, and meanwhile means one American drops out of the middle class, that’s not such a bad trade,” the CEO recalled.

I heard a similar sentiment from the Taiwanese-born, 30-something CFO of a U.S. Internet company. A gentle, unpretentious man who went from public school to Harvard, he’s nonetheless not terribly sympathetic to the complaints of the American middle class. “We demand a higher paycheck than the rest of the world,” he told me. “So if you’re going to demand 10 times the paycheck, you need to deliver 10 times the value. It sounds harsh, but maybe people in the middle class need to decide to take a pay cut.”

Easy for him to say!

Note that a striking percentage of Americans don’t like their jobs: “Approximately 70 million Americans either hated their jobs or were simply ‘checked out,’ according to a recent Gallup survey of America’s workforce.”

That Gallup survey found that one of the biggest factors in an employee’s engagement is the opinion of the boss – more consequential than pay level, hours, benefits, and workload. “Managers from hell are creating active disengagement costing the United States an estimated $450 billion to $550 billion annually,” wrote Jim Clifton, the C.E.O. and chairman of Gallup.

Obviously, these things are subjective, but maybe Americans really have worse bosses than a generation ago. Mocking the boss has always been a comedy staple — Office Space, Dilbert, Horrible Bosses — but maybe people laugh because they relate all too well. They feel like their hopes, dreams, and life’s path are blocked, indefinitely, by the pointy-haired micro-manager. No wonder they cheer a Democratic officeholder who pledges to make the boss give you more stuff.

Mitt Romney and other Republicans spent a good portion of 2012 singing the praises of “entrepreneurs,” and perhaps many Americans heard that as singing the praises of their bosses — or more likely, the founder of the company that hired them, whom in most cases they’ve never even met.

Of course, you won’t get very far in life if you see your boss as your enemy. Ideally, it’s a partnership. But that requires a positive, flexible, mature attitude on the part of the employee — and the boss as well.

Companies will argue that no one sets out to hire a bad manager — true enough — and that they’re giving their workers the best deal that they can, setting their wages at the market rate. Still, some of America’s businesses are sitting on piles of cash — $1.64 trillion among U.S. non-financial companies at the end of 2013. If America’s businessmen are worried about the growing atmosphere of resentment, populist anger, demonization of the wealthy, then throwing that money around — whether it’s on higher wages, new hires, new product research and development, or plant expansion — might persuade frustrated, increasingly cynical Americans that the companies that employ them aren’t such bad guys.


Is this the face of America’s employers?

Tags: Economy , Business , Office Space , Barack Obama , Hobby Lobby , Minimum Wage

Oh, Hey, The Economy Is Contracting Again.



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President Obama, speaking to donors at a DSCC fundraiser, May 22: “Over the last four years, we’ve created 9.5 million jobs. The unemployment rate has come down and housing has recovered.  The auto industry has come back. The deficits have been cut in half.  We have dug our way out of the rubble of that crisis.”

The news today:

The U.S. economy contracted in the first quarter of 2014, the latest stumble for a recovery that has struggled to find its footing since the recession ended almost five years ago.

Gross domestic product, the broadest measure of goods and services produced across the economy, contracted at a seasonally adjusted annual rate of 1.0% in the first three months of the year, the Commerce Department said Thursday. It was the first time economic output contracted since the first quarter of 2011, when it declined at a 1.3% pace.

Government economists had previously estimated GDP slowed to a 0.1% growth rate in the first quarter as harsh winter weather disrupted work sites, curtailed foot traffic at retail stores and snarled transportation networks across much of the U.S. The newly revised estimate incorporates additional economic data released in recent weeks. Higher-than-expected imports and slower-than-expected inventory growth dragged the economy into negative territory.

Reuters, May 12: “Better economic data could help persuade voters in November to look past President Barack Obama’s weak approval ratings and his unpopular healthcare law and give Democrats enough lift to hold onto the Senate and limit their losses in the House, political strategists said.”

 

Tags: Barack Obama , Economy

With Worsening Messes at Home and Abroad, Obama Brags of ‘Year of Action’



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On the White House home page right now:

Had you noticed we were enjoying a “Year of Action”? Are you enjoying it?

On Saturday President Obama enjoyed his 11th golf outing of the year before heading off to the White House Correspondents’ Dinner. Today the president meets with President Ismail Omar Guelleh of Djibouti and then hosts a Cinco de Mayo reception in the Rose Garden. Later this week, the president will attend four Democratic fundraisers in California.

But perhaps the clearest sign of the “Year of Action” is in the results.

USA Today this morning:

By more than 2–1, 65 percent to 30 percent, Americans say they want the president elected in 2016 to pursue different policies and programs than the Obama administration, rather than similar ones…

By more than 2–1, Americans are dissatisfied with the direction of the country. They remain downbeat about the economy. They aren’t persuaded that the Affordable Care Act is going to help them and their families. Even the president’s supporters worry he is a political liability for fellow Democrats. The president’s job approval rating remains anemic in the new survey, at 44% approve, 50% disapprove.

Bloomberg: “Workforce Participation at 36-Year-Low as Jobs Climb”

Time: “U.S. GDP Slows to a Crawl in First Quarter of 2014″

Meanwhile, overseas . . . 

Tags: Barack Obama , Economy

CFO Survey: We’re Passing on Obamacare Costs to Staff, Customers



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The multinational consulting firm Deloitte surveyed 109 North American chief financial officers of major companies from February 7 through 21. Besides a drop in optimism about the economy, the CFOs’ thoughts on health care, and changes from Obamacare/the Affordable Care Act, are particularly interesting:

Last quarter’s findings indicated the ACA had caused 40% of U.S. companies to pass (or to consider passing) health care costs onto staff, and had also caused 32% to increase their focus on wellness management. This quarter shows CFOs expect the use of both tactics to rise as implementation gets closer:

Heavy focus on wellness: Two-thirds of CFOs say they expect to increase their focus on health and wellness.

Passing on health care costs: Sixty percent of CFOs say they plan to pass health care costs on to staff, and 12% expect to pass costs on to customers (Energy/Resources is the most likely to cite this approach).

Changing coverage: Twenty-three percent of CFOs say they expect to reduce the scope of benefits offered to some staff, and 16% expect to reduce the level or value of benefits provided. While just 10% of CFOs overall anticipate offering new coverage to staff not previously offered benefits, more than half of CFOs in Retail/Wholesale expect to do so.

Some drag on earnings: Eleven percent of CFOs say they expect to reduce their earnings forecasts as a result of measures undertaken in response to the Act, roughly the same proportion that had already done so as of 4Q13. The effects appear strongest in Services, where 43% of CFOs expect to reduce their earnings forecasts.

No major impacts on hiring or staffing mix: Just under 7% of CFOs say they expect to constrain hiring, and the same proportion expects to reduce employee hours to create more part-time positions.

It may not qualify as a major impact, but 7 percent of companies constraining hiring and 7 percent shifting workers to part-time is still bad economic news. Even worse, the rest of the survey indicates companies don’t expect to be doing much hiring in the near future:

Domestic hiring expectations declined to just 1.0%, below last quarter’s 1.4% and among the lowest in the history of the survey. The median is again 0.0%, and variability of responses is very high. Forty-two percent of CFOs expect year-over-year gains (comparatively low), and 18% expect 4% cuts (comparatively low).

Country-specific expectations are 1.1% for the U.S. (1.7% last quarter).

Remember the message back in January? “Democrats are confident that a strong economy in 2014 will help them retain their Senate majority.”

Tags: Obamacare , Economy

In a Booming Economy, People Could More Easily Shift to Part-Time Work



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From the Thursday edition of the Morning Jolt:

A Rising Tide Lifts All Boats, and Alleviates a Lot of Other Problems

The editors of the New York Times yesterday: “The Congressional Budget Office estimated on Tuesday that the Affordable Care Act will reduce the number of full-time workers by 2.5 million over the next decade. That is mostly a good thing, a liberating result of the law.”

This is about 90 percent nonsense, a testament to how rapidly and thoroughly a dedicated partisan can convince themselves that a bad result of a law they support is really a good result in disguise.

The 10 percent that might not be nonsense it that it’s possible to imagine a scenario very different from our current circumstances, where people shifting from full-time to part-time, or leaving the workforce entirely, would be a good thing.

If we had a booming economy, with the vast majority of American workers feeling like they could make a good living and achieve their dreams, it wouldn’t be a problem for people to choose to work part-time. If a wife who just gave birth wanted to take a few years off to raise her child and be a stay-at-home mom, or to work fewer hours in her child’s formative years, terrific! (Dads, too!) If somebody on the tail end of his career wants to downshift to part-time, and get a head start on enjoying those golden years, wonderful. In an economy that had a voracious thirst for workers, reentry into the workforce and a return to full-time work if desired later on would be easy.

But the economy we have today and can see for the foreseeable future is nothing like that happy vision at all. The plight of the long-term unemployed over the past five years suggests that losing your job can be a career death sentence.

And when we have a plummeting workforce-participation rate – people retiring earlier than they planned because they can’t find a job, staying in school longer, longer stretches on unemployment, etc. – this is terrible.

It’s rather surprising that the Times didn’t even acknowledge that fewer people working fewer hours is very bad for income-tax revenue.

Tags: Economy , Obamacare

‘The number of jobs in the economy still is about 1.2 million lower than December 2007.’



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This point, from the Washington Post’s Fact-Checker column, seems rather important:

Obama: “The more than eight million new jobs our businesses have created over the past four years.”

The president is cherry-picking a number that puts the improvement in the economy in the best possible light. The low point in jobs was reached in February 2010, and there has indeed been a gain of about 8 million jobs since then, according to Bureau of Labor Statistics data. But the data also show that since the start of his presidency, about 3.2 million jobs have been created — and the number of jobs in the economy still is about 1.2 million lower than when the recession began in December 2007.

You can argue that the employment number of December 2007 was artificially inflated by the housing bubble. And the unemployment rate is down because of a steep drop in the labor-force participation rate, driven partially by the retirement of the Baby Boomers. But it’s still a pretty “meh” economy at best.

This is how Obama can be bragging about an economic recovery one moment . . . 

The lowest unemployment rate in over five years. A rebounding housing market. A manufacturing sector that’s adding jobs for the first time since the 1990s. More oil produced at home than we buy from the rest of the world — the first time that’s happened in nearly twenty years. Our deficits — cut by more than half. And for the first time in over a decade, business leaders around the world have declared that China is no longer the world’s number one place to invest; America is.

. . . and lamenting the state of the economy the next:

Average wages have barely budged. Inequality has deepened. Upward mobility has stalled. The cold, hard fact is that even in the midst of recovery, too many Americans are working more than ever just to get by — let alone get ahead. And too many still aren’t working at all.

Tags: Economy , Barack Obama

Suddenly Every Pundit Wants to Be a Revolutionary.



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From the Tuesday edition of the Morning Jolt:

Pundits, Columnists Run to the Barricades to Begin New Revolution

I see our nation’s political scribes are in a revolutionary mood.

Matthew Dowd:

Could an “Arab Spring” type of upheaval be brewing in the United States? Is the frustration and anger toward our dysfunctional politics and economics beginning to reach a tipping point where young folks begin to push for profound change? Has our democracy become so broken that citizens are going to find creative avenues to express their feelings? Will we pass through the holidays and winter of our dysfunction to arrive at a spring of change? I sense a movement of social unrest growing strongly and quietly towards our own version of the Arab Spring . . . 

For more than a generation, the middle class of this country has not seen any significant improvement in their financial situation. In fact, when you factor in inflation, the majority of the country has actually seen a decline in their economic status over the past 25 years. The wealthiest 5 percent of America has basically garnered nearly all the gains we have seen in economic growth over the last few decades. Many in New York City, Washington, DC and small enclaves around the country have done very very well, while the rest of America is either stagnant or in decline. As we reflect on Nelson Mandela’s passing it is time to ask if we have our own version of apartheid here — not by race, but by economic status.

Ron Fournier of National Journal, who had been on an anti-Obama tear lately:

Cities across the nation have become flash points of polarization, as one population has bounced back from the recession while another continues to struggle. One in five American children is now living in poverty, giving the United States the highest child poverty rate of any developed nation except for Romania.

Written by Andrea Elliott and illustrated by photographer Ruth Fremson, Dasani’s story is an indictment of a political system that is aiding and abetting America’s division by class, where the rich get richer, the poor get poorer, and the middle class gets squeezed into oblivion. Both major parties are complicit, but Republicans, more than Democrats, seem especially eager to widen and exploit American inequality.

Where to begin?

One problem with the “this is intolerable, and we need an uprising!” cry is that we’ve already had at least two “uprisings” at the ballot box in recent years: The Obama wave of 2008 and the Tea Party wave of 2010. But their remedies for the “intolerable” condition are contradictory — one envisions a much greater role for government in Americans’ daily lives, while the other concludes government’s growing role exacerbates the problems instead of solving it.

Ironically, the two sides agree in their denunciation of crony capitalism, but what they usually mean is that they’re opposed to the other guy’s crony capitalism. Obama voted for TARP and then exploited its discontent, shrugged at the taxpayers’ getting stuck for the bill of Solyndra and other green energy boondoggles, then did his part to help walking conflict of interest Terry McAuliffe become governor of Virginia. The flip side of the coin is that too many Republicans are all too comfortable with their own versions of crony capitalism — loans and loan guarantees subsidize U.S. exporters, state economic development boards, and Bob McDonnell’s cozy financial arrangements with donors, among other examples. While crony capitalism isn’t really a driving force behind our national sense of diminishing economic opportunities, it certainly doesn’t help anyone except the cronies, and enhances the sense that wealth is built through cheating and secret deals, not hard work or innovation.

(Notice that this expression of economic discontent is so generic that everybody’s got a grievance, and nobody thinks they’re the beneficiaries. This is how you get multimillionaire rapper/mogul Jay-Z selling Occupy Wall Street-themed t-shirts, or the CEO of bailed-out insurance giant AIG explicitly comparing the treatment of his company to lynchings in the South, or the number of members of Congress who have complained about their $174,000 per year salary.)

Dowd and Fournier aren’t dumb guys. They must know that the problems of the poor and the squeezed middle class aren’t just a matter of enacting policy A instead of policy B. Or, more specifically, you would go a long way towards solving the problem of the middle class getting squeezed and the poor getting poorer if you could alter any one of the persistent social problems in American life:

  • Public schools that stink, fail to prepare kids for college or the working world, and often provide the worst education to the poorest kids who need it the most.
  • Teenagers having children and kids being raised without a mom and a dad who are engaged in their daily life, teaching them the out-of-the-classroom life lessons, providing discipline and a moral compass, and providing good role models.
  • Helping those who encounter difficulties in life from succumbing to drug abuse and/or alcoholism.

Perhaps most frighteningly, even young college-educated people who don’t face the daunting problems above can still begin their careers dreadfully unprepared for the requirements of the workplace:

. . . the problem with the unemployability of these young adults goes way beyond a lack of [Science, Technology, Engineering and Math] skills. As it turns out, they can’t even show up on time in a button-down shirt and organize a team project.

The technical term for navigating a workplace effectively might be soft skills, but employers are facing some hard facts: the entry-level candidates who are on tap to join the ranks of full-time work are clueless about the fundamentals of office life.

A survey by the Workforce Solutions Group at St. Louis Community College finds that more than 60% of employers say applicants lack “communication and interpersonal skills” — a jump of about 10 percentage points in just two years. A wide margin of managers also say today’s applicants can’t think critically and creatively, solve problems or write well.

Another employer survey, this one by staffing company Adecco, turns up similar results. The company says in a statement, “44% of respondents cited soft skills, such as communication, critical thinking, creativity and collaboration, as the area with the biggest gap.” Only half as many say a lack of technical skills is the pain point.

There was no “Create Poverty and Exacerbate the Division Between Rich and Poor Act” that was passed and that we could repeal. We, as a society, did this to ourselves. Mickey Kaus dissects Obama’s recent speech on income inequality and asks:

2. Where’s the Culture of Poverty? It’s especially hard to claim government can easily fix some of the disturbing social trends that seem to underlie the “coming apart” of the classes — especially the rise in single-parent, mainly fatherless, families. Amazingly, as Via Meadia notes, Obama mostly ignores these “social patterns” except in a fudge-paragraph where he associates them with poverty but doesn’t say which is causing which. To the extent government policy has influenced family structure it almost certainly made the problem mostly worse, with a welfare system that enabled a culture of single motherhood. The 1996 reform of welfare so far has not transformed the family structure at the bottom of the income distribution (though it does appear to have had some positive effect). That suggests the rise of single-parent families, like falling pay for unskilled work, may in part be the product of Larger Forces. For example, it’s not crazy to think that prosperity itself enables more people to get by without traditional families in the shorter term (with possibly damaging long-range consequences). But it’s hard to blame government inaction, and Republicans, for that.

But it’s easier to blame the opposition party, isn’t it?

Tags: Economy , Obama , Tea Parties , Poverty , Opportunity

Stocks Booming! . . . In Same Old Lousy Economy We’ve Had for Past Five Years



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From the midweek edition of the Morning Jolt . . . 

Stocks Booming! . . . In Same Old Lousy Economy We’ve Had for Past Five Years

Great news! The Dow Jones Industrial Average and S&P 500 hit record highs Wednesday!

What’s behind the boom?

After spending months alerting the public that they could begin to wind down an $85 billion-a-month bond-buying program at their September policy meeting, Federal Reserve officials got cold feet Wednesday and decided to keep the purchases in place.

The reasons: An economy that has failed to live up to the Fed’s expectations for growth and a worry that a jump in long-term interest rates over the past several months could squeeze an already weak recovery.

Oh, wait. That doesn’t sound like such good news.

Fed officials, who have been consistently disappointed by economic growth, nudged down their growth forecast for this year and next year, projecting growth between 2% and 2.3% in 2013 and between 2.9% and 3.1% in 2014.

Wait, that’s bad news. Yet traders on the floor of the stock exchange were literally roaring exuberantly when the markets closed Wednesday.

How about those corporate executives?

A new survey shows U.S. CEOs are less optimistic about the economy’s prospects for the next six months. The survey indicates that disagreements over the 2014 budget in Washington are making them cautious about hiring.

But wait, there’s more:

While the unemployment rate has fallen from 8.1 percent to 7.3 percent over the past year, even those with a job are falling behind. Real average hourly earnings rose just 0.7 percent during that time period and real weekly earnings are up only a tad more, at 1.0 percent. That means even with inflation at relatively tame levels — at least by government accounting measures — it still has beaten the growth in pay.

And speaking of inflation: The 71 food items tracked by the Bureau of Labor Statistics saw prices rise an average of 2.1 percent over the past year — not bad, but still well above the rate of pay increase.

And speaking of food: More Americans continue to utilize the Special Nutrition Assistance Program — food stamps — to deal with their grocery bills. The latest figures show food stamp rolls at just under 47.8 million — 15 percent of the total population — and 23,116,928 households, which is a record high.

Indeed, the latest Census figures released this week show the number of Americans living in poverty remains at 15 percent — representing 46.5 million people — the second straight year the number has not moved. Wealth disparity has reached its widest chasm since 1928, the year before the stock market crashed and the Great Depression began.

The percentage of Americans in the workforce, 63.2 percent, is the lowest in 35 years. About 75 percent of the 1 million new jobs created this year are part-time. Wages have barely budged in the past five years. Meanwhile, corporate profits are up 42 percent from 2007, and the stock market has spent much of the year at new highs . . . 

Yay.

Tags: Barack Obama , Food Stamps , Economy , Great Recession

Washington Suddenly Notices the Economy Still Stinks for Most People



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President Obama pivots to the economy . . . arguably for the second time this month. The RNC collected these “pivots” for a while, until they became as numerous as his statement expiration dates.

Sure, the unemployment rate is down to 7.6 percent, after peaking at 10.1 percent; of course, that’s a slow decline since the beginning of 2012 (8.3 percent). This is still high by historical standards (the unemployment rate was below 7 percent from June 1993 to December 2008) and the unemployment rate’s drop is fueled in part by a steep decline in the labor-force participation rate, from 66 percent of all Americans over age 16 to close to 63 percent.

If you’ve got money in the stock market, you’re enjoying a bullish run. About 30 percent of American households have $10,000 or more in stocks. But for most of the folks who suffered the biggest fall in the Great Recession’s start, back in autumn 2008, economic security is hard to find. Wages are stagnant, and actually slightly less than at the end of 2009.

Asked about the issues that will dominate the 2014 races, the heads of the NRCC and DCCC tell Chuck Todd the economy first, before Obamacare and immigration (admittedly related to the state of the economy), gun control, social issues, etc. The issue of our continuing economic troubles never went away; it’s just that the narrative-setters lost interest. To the political class of both parties, the pain is far away (Washington’s economy is comparatively thriving, even in the Age of Sequester) and their preferred options are blocked by the opposition’s role in government.

White House senior adviser Dan Pfeiffer assures us, “Over the next several weeks, the President will deliver speeches that touch on the cornerstones of what it means to be middle class in America: job security, a good education, a home to call your own, affordable health care when you get sick, and the chance to save for a secure, dignified retirement.”

What holds back the economy?

These problems are not likely to be solved by another big-spending “jobs” bill; some of them are probably beyond the capacity of Washington to solve. But the president needs to say something about it — so he will give more speeches, and assure his followers that “if those mean House Republicans would just pass another version of the stimulus I passed in 2009, everything would be fine.”

Tags: Economy , Barack Obama , Taxes , Jobs , Stimulus , Green Jobs

Modern America and the Sense that Rules Are for Suckers



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Folks on the right will find a lot to chew over and a lot to object to in this essay from George Packer in the Guardian (excerpted from his new book), but there’s probably a lot of truth to this section:

The rules and regulations of the Roosevelt Republic were aberrations brought on by accidents of history — depression, world war, the cold war — that induced Americans to surrender a degree of freedom in exchange for security. There would have been no Glass-Steagall Act separating commercial from investment banking, without the bank failures of 1933; no great middle-class boom if the US economy had not been the only one left standing after the second world war; no bargain between business, labour and government without a shared sense of national interest in the face of foreign enemies; no social solidarity without the door to immigrants remaining closed through the middle of the century.

One of the major driving attitudes on the right is a sense that the America we used to knew, the one we grew up in, is slipping away and being replaced with something more divided, nastier, more selfish, less trustworthy; a country whose populace has worse judgment, with far too many citizens incapable of taking responsibility for themselves and their actions. But whatever era you think of as “better days” — the 1950s, the 1960s, the 1980s or 1990s (anyone really want to argue the 1970s were the Golden era?), the trends we see around us make returning to that kind of society nearly impossible. Something better can replace the country we see outside our windows right now, but whatever that “better” will be, it will be different from our idea of the not-too-distant past.

Packer concludes his essay:

Much has been written about the effects of globalisation during the past generation. Much less has been said about the change in social norms that accompanied it. American elites took the vast transformation of the economy as a signal to rewrite the rules that used to govern their behaviour: a senator only resorting to the filibuster on rare occasions; a CEO limiting his salary to only 40 times what his average employees made instead of 800 times; a giant corporation paying its share of taxes instead of inventing creative ways to pay next to zero. There will always be isolated lawbreakers in high places; what destroys morale below is the systematic corner-cutting, the rule-bending, the self-dealing.
Earlier this year, Al Gore made $100m (£64m) in a single month by selling Current TV to al-Jazeera for $70m and cashing in his shares of Apple stock for $30m. Never mind that al-Jazeera is owned by the government of Qatar, whose oil exports and views of women and minorities make a mockery of the ideas that Gore propounds in a book or film every other year. Never mind that his Apple stock came with his position on the company’s board, a gift to a former presidential contender. Gore used to be a patrician politician whose career seemed inspired by the ideal of public service. Today — not unlike Tony Blair — he has traded on a life in politics to join the rarefied class of the global super-rich.

It is no wonder that more and more Americans believe the game is rigged. It is no wonder that they buy houses they cannot afford and then walk away from the mortgage when they can no longer pay. Once the social contract is shredded, once the deal is off, only suckers still play by the rules.

Packer is very critical of Republicans, but I’ll bet a lot of grassroots Republicans agree with his closing assessment . . . 

Tags: United States , Economy , Immigration

Fluff Stories Conveniently Distract from the Government Failures Around Us



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From today’s Morning Jolt

Forget the Rest of the World; President Personally Calls Some Athlete You Never Heard Of Before

Hey, remember North Korea? They’re detaining a U.S. citizen.

Unless the Syrian rebels figured out some way to fake the presence of Sarin in the bloodstream of some volunteers, the Syrian regime used chemical weapons and crossed the red line… and no one can come up with a way to demonstrate the consequences of crossing that line.

Oh, and the guys we may soon intervene to help, the Syrian rebels, may have just tried to shoot down a Russian airliner.

Remember Boston?

But U.S. Rep. Dutch Ruppersberger (D-Md.) told ABC News yesterday that the FBI is also looking into “persons of interest” in the U.S. possibly linked to the Boston bombings.

U.S. Rep. Michael McCaul (R-Texas) said he’s spoken with the FBI about the probe into possible trainers the brothers had.

“Are they overseas in the Chechen region or are they in the United States?” he said. “In my conversations with the FBI, that’s the big question. They’ve casted a wide net both overseas and in the United States to find out where this person is. But I think the experts all agree that there is someone who did train these two individuals.”

Remember Boston, again?

State lawmakers have launched an investigation into whether the suspects in the Boston Marathon bombings improperly received public benefits.

Sources who have seen the 500 pages of documents sent to the House Committee on Post Audit and Oversight told News Center 5’s Janet Wu that the Tsarnaev family — including the parents of the two bombing suspects, the two suspects themselves, their sisters, the widow of the suspect killed and their child — received “every conceivable public benefit available out there.”

Remember the economy?

We’re still stuck in the muck.

That’s the conclusion to draw from the new report on gross domestic product. The U.S. economy grew at a 2.5 percent annual rate in the first three months of the year, which was an improvement from the weak 0.4 percent of the final months of 2012… We’re muddling along at basically the same pace we’ve been at for nearly four straight years of this dismal recovery, with growth too slow to make up the lost economic ground from the 2008-2009 recession.”

National debt? $ 16,756,644,393,707.05,as of Friday. (That’s $16.7 trillion.)

Remember Obamacare?

In total, it appears that there will be 30 million to 40 million people damaged in some fashion by the Affordable Care Act—more than one in 10 Americans. When that reality becomes clearer, the law is going to start losing its friends in the media, who are inclined to support the president and his initiatives. We’ll hear about innocent victims who saw their premiums skyrocket, who were barred from seeing their usual doctor, who had their hours cut or lost their insurance entirely—all thanks to the faceless bureaucracy administering a federal law.

With all of this going on, guess what the top story was on Memeorandum, measuring what bloggers and news sites are writing about?

An NBA player coming out of the closet as gay. Wait, there’s more:

A groundbreaking pronouncement from NBA veteran Jason Collins — “I’m gay” — reverberated Monday through Washington, generating accolades from lawmakers on Twitter and a supportive phone call from President Barack Obama.

Hours after Collins disclosed his sexuality in an online article, Obama reached out by phone, expressing his support and telling Collins he was impressed by his courage, the White House said.

Collins, 34, becomes the first active player in one of four major U.S. professional sports leagues to come out as gay. He has played for six teams in 12 seasons, including this past season with the Washington Wizards, and is now a free agent.

This president can’t get squat done about North Korea or Syria, and so he doesn’t want us to focus on those far-off lands. His policies have done diddlysquat for most of the long-term unemployed. He’s not interested in throwing people off public assistance, even when they don’t deserve it, and he wants to insist that every terror attack is a one-time occurrence, instead of connected bits of an international ideological movement dedicated to killing Americans. Obamacare’s a mess, and he’s hoping you don’t notice. The debt continues to increase, even with the alleged horrors of sequestration.

“God, gays and guns.” That’s what he’s got left. And that’s what he hopes stays on your mind, for as many days between now and November 2014 as possible.

Tags: North Korea , Syria , Economy , Debt , Barack Obama , Boston Marathon Bombing , Obamacare

Understaffed America



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The final Morning Jolt of the week offers a look at what Republicans can learn from Rand Paul, the comedic horror that is our half-baked “Dudes” idea, and then this reflection of a troubled economy:

Understaffed America

One of the first victims of the Great Recession was service. I don’t know about you, but with disturbing regularity I get seated in restaurants . . . and we sit there . . . waiting for someone to greet us, bring menus, ask if we want anything to drink . . . and we’re left waiting for a seemingly interminable time. It’s as if our waiter suddenly retired. Or, you know, it’s like we’re in Europe.

Peggy Noonan is noticing the same thing.

It’s not a debt and deficit crisis, it’s a jobs crisis. The debt and the deficit are part of it, part of the general fear that we’re on a long slide and can’t turn it around. The federal tax code is part of it — it’s a drag on everything, a killer of the spirit of guts and endeavor. Federal regulations are part of it. The administration’s inability to see the stunning and historic gift of the energy revolution is part of it.

But it’s a jobs crisis that’s the central thing. And you see it everywhere you look.

I’m in Pittsburgh, making my way to the airport hotel. The people movers are broken and we pull our bags along the dingy carpet. There’s an increasing sense in America now that the facades are intact but the machinery inside is broken.

The hotel has entrances on two floors. I search for the lobby, find it. Travelers are milling about, but there’s no information desk, no doorman, no bellman or concierge, just two harried-looking workers at a front desk on the second level. The man who checked me in put his phones on hold when I asked for someone to accompany me upstairs . . .

Things are getting pretty bare-bones in America. Doormen, security, bellmen, people working the floor — that’s maybe a dozen jobs that should have been filled, at one little hotel on one day in one town. Everyone’s keeping costs down, not hiring.

What that hotel looked like is America without its muscle, its efficiency, its old confidence.

There are a lot of reasons for this . . . but we’ve added one more reason for a company to try to hobble along with fewer workers than they normally would:

Under ObamaCare, employers with 50 or more full-time workers must provide health insurance for all their workers, paying at least 65% of the cost of a family policy or 85% of the cost of an individual plan. Moreover, the insurance must meet the federal government’s requirements in terms of what benefits are included, meaning that many businesses that offer insurance to their workers today will have to change to new, more expensive plans.

ObamaCare’s rules make expansion expensive, particularly for the 500,000 US businesses that have fewer than 100 employees.

Suppose that a firm with 49 employees does not provide health benefits. Hiring one more worker will trigger the mandate. The company would now have to provide insurance coverage to all 50 workers or pay a tax penalty.

. . . Under the circumstances, how likely is the company to hire that 50th worker? Or, if a company already has 50 workers, isn’t the company likely to lay off one employee? Or cut hours and make some employees part time, thus getting under the 50 employee cap? Indeed, a study by Mercer found that 18% of companies were likely to do exactly that. It’s worth noting that in France, another country where numerous government regulations kick in at 50 workers, there are 1,500 companies with 48 employees and 1,600 with 49 employees, but just 660 with 50 and only 500 with 51.

If service industries cut the staff any deeper, it’s going to start looking like the sets of The Walking Dead in this country.

Tags: Barack Obama , Economy , Jobs , Obamacare

How Can D.C. Make New Employees More Cost-Effective?



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Earlier this week we discussed the ugly truth about our economic doldrums: that companies aren’t hiring because they don’t think that the additional revenue that they can generate from a new hire is enough to cover the cost of the new employee — not merely wages and benefits, but capital expenditures, training, overhead, regulatory costs, and so on.

In this light, raising the national minimum wage to $9/hour from the current $7.25 is counterproductive. If companies are reluctant to hire people at the current cost, making them $1.75/hour more expensive isn’t going to make them a more appealing option. This may not be a huge factor, but it certainly won’t help.

In the Washington Post, Robert Shapiro, undersecretary of commerce for economic affairs in the Clinton administration, correctly identifies what should be on the minds of policymakers: “The best approach would be to directly reduce the cost for business to create more jobs.”

The problem is that his solution is pretty bad: “Congress could, for example, permanently cut the payroll tax rate for employers and make up the difference for the Social Security trust fund with a modest carbon or value-added tax.”

The payroll tax is 12.4 percent, with 6.2 percent paid by the employer and 6.2 percent paid by the employee. (For 2011 and 2012, the employee paid 4.2 percent.) But it’s hard to believe that high payroll taxes are a primary factor in slow hiring since 2008–09; the rate has been at 12.4 percent since 1990 and above 10 percent since 1979.

Employers may see new hires as too expensive to be worth it, but it’s not the 6.2 percent payroll tax that’s creating that perception. Most likely it’s the much higher health-care costs and training costs. Shapiro briefly mentions the traditional answers of “electronic medical records” and “preventative care.” Except that new studies about the effect of electronic medical records find “evidence of significant savings is scant, and there is increasing concern that electronic records have actually added to costs by making it easier to bill more for some services.”

As for preventative care . . . well, all those tests to detect health problems early that come back negative cost money, too: “The evidence of hundreds of studies over the past four decades has consistently shown that most preventive interventions add more to medical spending than they save.” And this is just for health problems that can be prevented; accidents, gunshot wounds, some diseases, etc.

As for the other idea, creation of a national carbon or value-added tax would make every product instantly more expensive, with horrific results for discretionary spending, purchasing power, and so on.

Tags: Economy , Minimum Wage , Payroll Taxes

The Ugly Truth About Our Economy



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Of course there’s State of the Union reaction and Rubio-mania in the Morning Jolt, but also an examination of the economic truths you didn’t hear last night, and probably won’t hear from an elected official for a while:

The Ugly Truths About the American Economy Since 2009

Okay, forget what the president said. Why has hiring been so sluggish since the Great Recession began?

I’m going to look at a post from Zero Hedge, an economics-minded blog that is always interesting and sometimes understandable. Charles Hugh-Smith argues:

Those who have spent their careers in government or academia have little idea what it takes to hire more people. Number one is a business with strong demand for one’s products or services. In a developed world with too much of everything except energy, that is no small challenge: the world is awash in over-capacity in every field except niche industries such as deepwater oil rigs.

Second, you need a process that generates so much value (specifically surplus value) that you will generate immediate profits by hiring more people.

If the value added by additional labor is low, then you have no reason to hire more employees, even if Ben Bernanke personally knocked on your door begging you to borrow a couple million dollars at low rates of interest.

If an additional unskilled worker will cost $10 an hour and might generate $100 a day in additional gross revenues, that is $20 in gross profit. But the overhead costs of operating a business are rising faster than inflation: junk fees imposed by cities, counties and states, workers compensation and disability premiums, healthcare costs (if you hire full-time workers), energy costs, and so on.

For most businesses, overhead costs 50% to 100% of total employee compensation–wages plus benefits and payroll taxes. So adding another employee to gross 20% more doesn’t make it worthwhile–it actually generates a loss once overhead costs are paid.

The only time it makes sense to hire another worker is if that worker will create 100% or more surplus value from their labor. For example, a worker paid $200 a day in total compensation generates $400 more in gross revenues–enough to not only support the added overhead but net the business a profit.

In short, the unemployed, the departed-the-workforce, the just-entered-the-workforce and soon-to-enter-the-workforce cannot be sufficiently productive to justify the expense of hiring them. And we know this pretty much has to be true, because corporations are sitting on roughly $1.7 trillion in cash right now. It’s not that they don’t have the money to hire people. They just don’t think that hiring people would generate more money than having it just sit there in their accounts, which is a phenomenally depressing conclusion.

Speaking of those about to enter the workforce, isn’t perhaps one of the fundamental problems facing our economy that we have a lot of English majors and not enough folks who can or are willing to work in fracking? What I mean is, how many of our economic doldrums stem from a fundamental mismatch between the skills of the soon-to-be-working and new workers and the actual work that needs to be done?

Allow me to set your blood to simmer, by pointing to this November Salon article:

In the John Waters-esque sector of northwest Baltimore — equal parts kitschy, sketchy, artsy and weird — Gerry Mak and Sarah Magida sauntered through a small ethnic market stocked with Japanese eggplant, mint chutney and fresh turmeric. After gathering ingredients for that evening’s dinner, they walked to the cash register and awaited their moments of truth.

“I have $80 bucks left!” Magida said. “I’m so happy!”

“I have $12,” Mak said with a frown.

The two friends weren’t tabulating the cash in their wallets but what remained of the monthly allotment on their Supplemental Nutrition Assistance Program debit cards, the official new term for what are still known colloquially as food stamps.

Magida, a 30-year-old art school graduate, had been installing museum exhibits for a living until the recession caused arts funding — and her usual gigs — to dry up. She applied for food stamps last summer, and since then she’s used her $150 in monthly benefits for things like fresh produce, raw honey and fresh-squeezed juices from markets near her house in the neighborhood of Hampden, and soy meat alternatives and gourmet ice cream from a Whole Foods a few miles away.

“I’m eating better than I ever have before,” she told me. “Even with food stamps, it’s not like I’m living large, but it helps.”

Mak, 31, grew up in Westchester, graduated from the University of Chicago and toiled in publishing in New York during his 20s before moving to Baltimore last year with a meager part-time blogging job and prospects for little else. About half of his friends in Baltimore have been getting food stamps since the economy toppled, so he decided to give it a try; to his delight, he qualified for $200 a month.

Title of that article? “Hipsters on Food Stamps.”

Folks, the art world and publishing world are fiercely competitive even in the very best of times, so you’re going to need a backup career just in case things don’t work out. This also applies to those who aspire to fame and fortune in journalism, professional athletics, the music industry, most of the entertainment industry, and most of the jobs that the world covets. You’ve got to be really talented, and really hard-working. And yes, lucky. I realize I’m very, very, very, very lucky to have a job that I (usually) enjoy and that allows me to make a living. Of course, I suspect those outside those fields overestimate the role of luck. My buddy Cam — now on the Sportsman Channel — will periodically hear from someone, “boy, you’re really lucky to find a job where you get to host a radio show!” and he has to bite his tongue and refrain from mentioning all the years he worked as reporter and assistant news director, driving all over the state of Oklahoma on any assignment he could get, long hours, lousy pay, and so on.

Nobody just hands you a plum job in journalism. Okay, unless you’re Chelsea Clinton, nobody just hands you a plum job in journalism.

Perhaps most unnervingly, perhaps a significant chunk of our younger workforce isn’t really well-prepared to do much of anything. As the intriguing, rarely updated blog The Last Psychiatrist suggested:

It’s hard to accept that the University of Chicago grad described in the article isn’t employable, that the economy doesn’t need him, but it is absolutely true, but my point here is that not only is he not contributing, the economy doesn’t need him to contribute. Which is good, because there’s nothing he can do for it. 1. Anything requiring science is out. 2. “He can work manual labor!” I love how people assume economics doesn’t apply to construction. The demand for those jobs is very high AND hipsters suck at them. At any wage, Gerry the hipster will always be outworked by Vinnie the son of a longshoreman, who will always be outworked by a Mexican illegal, i.e. the system will always be able to find someone who can do the job better AND with lower labor costs . . . 3. Hipsters are not good at retail or sales unless detached irony is required, which it is not, which is why they’re on food stamps.

Of course, we won’t hear many comments in this vein from our policymakers, because it would be perceived as blaming the unemployed for their grim circumstances.

Tags: Economic Collapse , Economy , Jobs

Obama: Did I Say the Economy Recovered?
I Meant I’m Still Working on It!



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The first Morning Jolt of the week features the shocking news of Pope Benedict’s resignation, a discussion of whether our culture is even capable of the earnest valorization depicted in the Paul Harvey ad, and then these two developments that will shape the political news in the week ahead:

Lindsey Graham: Until the Benghazi Truth Is Told, Your Nominees I Will Hold

A slogan that Johnny Cochran could approve:

Sen. Lindsey Graham said on Sunday he’ll block President Barack Obama’s nominees for Defense secretary and CIA director if the White House isn’t more forthcoming about its response to the attacks on the U.S. Consulate in Benghazi, Libya.

No confirmation without information,” the South Carolina Republican said on CBS’s “Face the Nation.”

Graham said he wants to know if Obama himself phoned his Libyan counterparts during the Sept. 11 attacks in Benghazi and what the results of such a call might have been. Without cooperation, Graham said he’ll try to put a hold on Chuck Hagel, the Defense nominee, and John Brennan for CIA.

“I don’t think we should allow Brennan to go forward to the CIA directorship, Hagel to be confirmed for secretary of Defense, until the White House gives us an accounting,” Graham said. “Did the president ever pick up the phone and call anyone in the Libyan government to help these folks?”

Rick Moran points out this is something of a symbolic maneuver, and one that isn’t likely to work, as long as Senate Democrats remain unified:

The hold is a senatorial courtesy, and threatening to use it is just about all the Republicans have left when it comes to leverage on the White House to get more information about Benghazi. It would be unprecedented to place a hold on a cabinet nomination, and it is likely that Majority Leader Harry Reid would demand a cloture vote in order to lift the hold and bring the nominations to the floor. Several Republicans would probably join the 55 Democrats in voting for cloture, and the president would get his up or down vote on both nominees.

Graham would probably not go along with a filibuster. Hagel and Brennan’s other major critics in the Senate would be equally reluctant. And what he’s asking for from the White House, he is not likely to get. The administration has successfully stonewalled, obfuscated, and brushed off requests for information until Benghazi now seems a distant memory — a bad dream that the president would like the American people to forget.

Obama: Did I Say the Economy Recovered? I Meant I’m Still Working on It!

Our old friend Byron York is a pretty even-keeled guy, but I think he finds it pretty audacious for the president to spend his State of the Union address insisting that he’s relentlessly focused on the economy and job creation, after his lone reference to the economy in his inaugural address was the declaration “an economic recovery has begun.”

You know, somewhere, just not here.

York:

White House spinners are working furiously in the final 72 hours before President Obama’s State of the Union speech. Their job: Convince the recession-scarred American public that economic recovery is Obama’s top priority — after everything he has said and done to suggest otherwise.

The unemployment rate is 7.9 percent — one tenth of a point higher than it was when Obama took office in January 2009. But the true toll of joblessness is far higher. The Labor Department’s so-called U-6 rate, which includes people who want a job but have become so discouraged they have quit looking, is 14.4 percent. And a new study, by Rutgers University scholars, shows that 23 percent of those surveyed have lost a job sometime in the last four years, while another 11 percent have seen someone in their household lose a job. That is one-third of the American people who have experienced unemployment during Obama’s time in office, along with many more who have experienced other hardships of the economic downturn.

Elsewhere, Byron points out that the president has “pivoted back” to the economy at least six times since taking office.

Actually, back in 2011, the RNC identified at least nine times the White House was telling reporters that their energies would be “pivoting” back to jobs.

When the administration recycles its talking points, you’ll forgive me for recycling my reaction:

Keep in mind that inherent in the pivot-point talking point is an inherent excuse: the reason the administration hasn’t seen much success in bringing down the unemployment rate, or is perceived to be useless in bringing down the unemployment rate, or hasn’t communicated its message about its efforts, is always a lack of time and focus. I think most of us would argue the problem isn’t really an administrative attention deficit disorder or chronic focus on other issues; the problem is the policies stink . . . “Alright, now we’re really going to pivot to jobs, just you wait and see” sounds like the oft-heard pledges of dieting and exercise and saving money and cleaning out the basement and flossing; the idea that all it’s going to take is a bit more attention to the problem and it’s going to be solved.

Tags: Barack Obama , Susan Rice , Economy , Lindsey Graham

With Everything Going So Well, Time for Another Photo-Op!



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So, looking at the headlines this morning . . .

Jobless Claims Bounce Higher

U.S. economy contracts for first time since recession

Chinese Cyber Hackers a Growing Threat

U.S. faces new Al Qaeda threat as terror group’s ‘strike map’ is revealed

Report: Iran, Hezbollah terror threat rising

Iran Is Said to Be Set to Accelerate Uranium Enrichment

Syria, Iran threaten retaliation against Israel

And what’s going on at the White House?

Mark Knoller: “Today at the White House: No public events on the president’s schedule today, though Vogue is bringing camera gear into the White House this morning.”

Beautiful day for a photo-op, isn’t it?

Tags: Economy , Iran , President Obama , Unemployment

‘Poised to Take Off’ Is the New ‘Recovery Summer’



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The Washington Examiner:

During a Bloomberg News interview this afternoon, President Obama signaled that the American economy was ready to “take off” provided Congress didn’t lead the nation into another fight about the nation’s debt limit. . . .

“I think that businesses are going to be ready to hire, we’re seeing pretty strong consumer confidence despite weaknesses in Europe and even in Asia,” Obama stated. “I think America is poised to take off.”

Looking through the financial section:

Goldman Sachs is projecting a 1 percent growth rate for the U.S. gross domestic product in the fourth quarter.

Corporate profits hit an all-time high, while wages for workers hit an all-time low as a percentage of GDP.

AP:

Citigroup on Wednesday announced plans to cut 11,000 jobs and close branches in a restructuring effort that will result in a fourth-quarter charge of about $1.1 billion.

The housing market:

Nearly two-thirds of the nation’s housing markets will see price declines for the year through next June, according to analytics firm Fiserv (FISV). Overall, the gains will be just 0.3%.

And then the upcoming jobs report . . .

Don’t look to the November jobs report for merry news this Friday.

The highly anticipated report is likely to show a weak month of jobs growth, skewed dramatically by temporary effects from Superstorm Sandy.

Economists surveyed by CNNMoney predict the Labor Department report will show the U.S. economy added only 77,000 jobs in November, a steep drop from the 171,000 jobs created a month earlier.

“Poised to take off” is the new “Recovery Summer.”

Tags: Barack Obama , Economy

Meanwhile, the Economy Screams, ‘STALL! STALL!’



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From the Tuesday edition of the Morning Jolt:

Astronomical Debt Overshadowed By Geological Age Debate

Hey, news world, let’s analyze Marco Rubio’s comment about the age of the earth for days and days!

. . .  

. . .  eh, let’s not, and say we did, because some really much more important news is going on. How old is the earth? Slightly older than the tradition of the media asking Republicans questions about evolution and Creationism that they never seem to ask any stripe of Democrat.

So, that much more important news that’s going on includes this:

U.S. companies are scaling back investment plans at the fastest pace since the recession, signaling more trouble for the economic recovery.

Half of the nation’s 40 biggest publicly traded corporate spenders have announced plans to curtail capital expenditures this year or next, according to a review by The Wall Street Journal of securities filings and conference calls.

Nationwide, business investment in equipment and software—a measure of economic vitality in the corporate sector—stalled in the third quarter for the first time since early 2009. Corporate investment in new buildings has declined.

At the same time, exports are slowing or falling to such critical markets as China and the euro zone as the global economy downshifts, creating another drag on firms’ expansion plans.

You know those automated “STALL! STALL!” warning voices that pilots hear from the aircraft system? Well, one of those is going off in the Treasury Department.

“In addition to the economic woes overseas they also cited the looming fiscal cliff and coming tax increases,” notes the Lonely Conservative. “Then we have Obamacare and the regulations from Dodd Frank which only make things worse. The left will argue that these companies are just being greedy, but actually they’re being realistic, and if they aren’t investing they won’t be hiring.”

Bruce McQuain:

As before the election, an unstable business climate persists which does not provide any incentive to expand, spend or hire.  In fact, as indicated above, it is providing precisely the opposite incentives.  It’s one reason the GDP forecast for the country has been downgraded again to 1.5% (Mexico, for heaven sake, has GDP growth of 3.2%). But when you vote for the status quo, well, you get what you vote for — enjoy.

Erika Johnsen, at Hot Air:

There’s a distinct lack of optimism about the prospects in a continuing global economic slowdown and the uncertainty of the United States’ pending policy decisions, so companies and investors are going small rather than risking big. If the government manages to navigate us around the fiscal cliff, there may be a short-term burst of pent-up investment energy, but how long can that last? With global governments still trying to solve their massive fiscal problems by Robin-Hooding the wealthy instead of balancing their budgets, how long can any of it last?

“Hopefully, Washington will reach a solution to the (entirely self-inflicted and unnecessary) fiscal cliff problem,” writes Walter Russell Mead. “Hopefully, that will show that fear and uncertainty over the consequences were the real reasons for the collapse. Hopefully, in other words, the roots of the slowing demand aren’t deeper than the foolish political brinkmanship on display in Washington. But, laying aside our hopes for a moment, if, as has happened first in Japan, then the UK, and next the whole eurozone, we were going to have a double dip recession, a collapse in business investment would be one way it would start.”

Over at The Atlantic, Derek Thompson argues the biggest problems are overseas, not at home:

For the moment, imagine two American economies. The Home Economy and the Away Economy. In the Home Economy, there is mostly good news to report, so long as Washington doesn’t screw it up. GDP growth and job growth have been steady, if slow, for more than three years. Consumer spending is healthy. Housing indicators are turning up all over the place, like home prices, home starts, home sales, and construction employment. It adds up to the possibility of accelerating job growth and a recovery worthy of its name in 2013. Small businesses’ sentiment, which relies less on world markets and more on the animal spirits of the neighborhood, is still higher than it was for most of 2011.

Meanwhile, in the Away Economy, there is a world of precarious, scary, and outright depressing news, which is weighing on large corporations that tend to make more than half of their income from customers outside the U.S. GE and Pfizer, for example, are listed in U.S. stock indices. When their prices fall, it looks like a reflection of the U.S. economy. But both companies make more than 50% of their revenue abroad, and Apple makes more than 60% outside the Americas. When the world catches a cold, multinationals sneeze … even if the typical U.S. household is feeling alright.

That strikes me as a particularly cheery take on the domestic picture, but maybe I’m too gloomy . . . 

Tags: Economy

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