Category Archives: unemployment

Three Flies in the Happy Salve of the Unemployment Numbers

U.S. Labor Secretary Perez provided a happy note on employment figures in the latest BLS release:

The economy in May continued its steady recovery from the Great Recession, and we have now added 9.4 million new private-sector jobs over 51 consecutive months. The economy generated 217,000 new jobs in May — the fourth consecutive month exceeding 200,000 new jobs — and the unemployment rate held steady at 6.3 percent.

Music to the ears of Nevadans still struggling to find jobs or full time employment.   The next portion of Perez’s remarks might also find empathic ears in the Silver State — there are still 3.4 million Americans experiencing long term unemployment.  Current estimates have approximately 20,000 Nevadans in the LTU category. [DB]

Flies in the Ointment

Long term unemployment: Efforts by Nevada’s Senators have yet to yield any positive legislative results for those having that unfortunate long term unemployment experience. [LVRJ]  The previous attempt to address the problem expired on May 31st, and Senators Heller (R-NV) and Reed (D-RI) are trying to create an acceptable bill to alleviate the problem. [NatJ]

The fate of these efforts, of course, hangs in the House of Representatives in which Speaker John Boehner has said he will not bring a bill forward unless it speaks to “job creation.” [NatJ] In Boehner parlance this has nothing to do with spending for infrastructure related employment or job training funds, the Speaker clearly means more tax cuts. For example, House Republicans considered the research and development tax credits to be Job Creators — at the cost of $156 billion over the next decade with no offset to cover the expense.  And, of course, the House GOP would like to make these and other tax extenders permanent.  The reasons should be clear when we look at what the tax extenders actually do.

“The largest tax extenders include the general research and experimentation (R&E) tax credit and a provision that allows financial services firms to defer corporate taxation indefinitely on some foreign earnings.  Other extenders allow select industries such as retail, restaurants, and movie and television production to claim greater up-front tax deductions.  In addition to these corporate provisions, there are a number of individual tax extenders, the largest of which is the deduction for state and local sales taxes, as well as a group of energy tax extenders.” [CBPP] (emphasis added)

If this begins to appear as though there are some very specific corporations and sectors lining up for some very helpful tax benefits — all of which would add to the federal deficit, and some of which aren’t all that useful to the overall economy — you’ve got the picture.

Not to be entirely too blunt about it, but the 1.3-3.4 million long term unemployed Americans including the 20,000 Nevadans, may not see any relief unless the House Republicans can get indefinitely deferred corporate taxation on foreign earnings.

Exactly how indefinitely deferring corporate taxes on foreign earnings translates into American jobs is one of those Mysteries of the Trickle Down Cult.  We are to accept on faith that when the sacrificial offering is made — education, Medicare, job training, SNAP, etc. — the smoke and  incense rising from the Capital Dome will please the megalomaniacs such that they will stop using assets to fund stock buybacks and stashing money in off shore accounts, and will, instead, expand their enterprises.  The fact that we’ve not actually seen this happen in the last 40 years only means, according to the Cultists, that we’ve not clapped our hands hard enough.

So long as the Trickle Down Cult maintains its altars in the offices of various members of Congress, and appeases the demi-gods of K Street Lobby Shops,  the prospect of any assistance for the long term unemployed remains dim.

Differentiated Rates: The unemployment rate varies by ethnicity and gender — adult males have a 5.9% unemployment rate, adult females a 5.7% rate. African Americans have an 11.5% unemployment rate, Hispanic workers a 7.7%, and Asian’s a rate of 5.3%.  Whites have a 5.4% overall unemployment rate.  African Americans constitute about 8.9% of Nevada’s population, Hispanics about 27.3% and whites some 77.1%. [Census]

It would be ever so much more helpful if the bigot brigades would lay down their epithetic weaponry and stop calling the unemployed “lazy takers,” who would rather sit on the stoop and drink beer than seek gainful employment.  If 88.5% of African Americans, for example, ARE employed, and 92.3% of Hispanic Americans ARE working then that says far more than their critics may be wont to admit. If we want to address the variations in unemployment rates then business & manufacturing locations, educational and job training opportunities, and transportation need to be included in the discussion.

Unnatural natural unemployment rate: An unpleasant feature of the unemployment discussion, whether discussing rates for long term unemployment or rates for diverse sub-communities, is that we may be looking at a “new normal”  as that pertains to the natural unemployment rate. Heretofore, we’ve assumed a natural unemployment level of about 4.5%.  When the professional forecasters from the Federal Reserve discussed the Recession and employment in 2011 the natural unemployment rate was up to 6.7%.  The rate is now reported (Q2 2014) at 5.5%. [FRED] The fact that the natural rate is dropping is good, and 5.5% certainly looks better than the 6.7% of three years ago. However, unless steps are taken which directly meet the needs of the unemployed (funding infrastructure related employment, funding public services, funding job training), we could be looking at an increase of perhaps 1.5% to 1.7% in the natural rate.  In other words, in our new normal — more people are going to be unemployed.

Three flies in our happy ointment are sufficient for one day, although we do need to talk about wage stagnation, and the increase in employment which pays lower wages than what a person had previously been making.  Let’s leave that for another day, and be pleased for the moment that the private sector is adding jobs, and has been doing so for the last 51 consecutive months.

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Filed under Economy, Nevada economy, Politics, unemployment

Let Them Eat Pie In The Sky

Pie in the SkySo, the Senate version of a bill to extend unemployment benefits for the long term unemployed will be on the Senate floor on Friday (maybe), if Senate Majority Leader Harry Reid (D-NV) can move through the arcane labyrinth of the Senate Rules. [Roll Call]

The arguments emanating from the GOP side of the aisles would be easier to understand IF anyone from that quarter could explain why it was perfectly acceptable to extend long term unemployment benefits FIVE TIMES during the Bush Administration — but is somehow categorically unacceptable today.

The Incredible Moving Goal Posts

The fact that the Senate Republicans continue to move the goal posts on Senate action serves to remind us why the arguments against the extension are ultimately specious.

The Senate Republicans wanted to add amendments, amendments were allowed, but not enough amendments? Not the right kind of amendments?  The Senate Republicans wanted a Pay For, they got one — on the backs of working people — who would be required to make larger contributions to unemployment insurance programs — that was insufficient, they want MORE… of something.  Whatever. And, whatever is offered by the Democratic leadership we can all bet it will be insufficient to assuage the tender sensitivities of the Ever Outraged GOP.

Right here in the Silver State we have approximately 20,000 individuals who are among the long term unemployed. [LVSun]  They join the estimated 1.3 million [CAP] to  3.8 million now still unemployed or still looking for work in this country. [Guardian]

Let Them Eat Pie In The Sky?

At this point we get to the major question — What’s wrong with extending long term unemployment benefits for people who’ve been out of work for more than 27 weeks?

(1) The incredibly flexible Deficit Argument:

The Republicans won’t vote in favor of extending unemployment insurance benefits because that would increase the federal budget deficit (except the Pay For on offer from the Democrats) unless the Democrats add a provision increasing military retirement cost of living benefits — which would ADD TO THE DEFICIT.  [Roll Call]

Be that bit of illogical thinking what it may, the notion that unemployment benefit insurance payments are swirling into the Black Hole of The Ever Flexible Budget Deficit can’t be sustained when the actual cost to the federal government isn’t increasing. The Congressional Budget Office reported last April:

“Federal spending on unemployment insurance: Annual outlays increased from an average of $33 billion from 2004 through 2007 to $119 billion in 2009 and $155 billion in 2010; they dropped to $93 billion in 2012 and we expect them to decline further over the next few years.”

All you have to do in order to accept the GOP argument that the cost of extending unemployment insurance benefits for 1.3 million long term unemployed people is too much to sustain is simply to ignore the fact that unemployment benefit costs have been declining since 2010.  For those not connected to the Fact Based Universe this should be relatively simple.

(2) Lazy People Argument:  Here they go again!  Somewhere, out there in the Shadow Land of Make Believe there are thousands of lazy shiftless do-nothings who are perfectly happy to be the beneficiaries of public largess — who aren’t members of Congress.  First, this is a Dog Whistle argument, as if receiving unemployment insurance benefits is a form of welfare.  It isn’t, of course, workers have paid into those employment insurance programs.  However, the economic or statutory reality of a program has never stopped the anti-government crowd from splattering the ‘welfare’ label on something, anything, that might remotely help someone.

Secondly, there’s that conception amongst the uninformed that people can make more money not working than by working.  “They” can earn more on ‘welfare,” or “They” can get by not working by simply taking unemployment checks.  The people making these claims have obviously never seriously checked into the eligibility requirements of the Nevada program.

No, in this state, as in most every where else, the Shiftless One cannot refuse employment at a lower rate just because unemployment benefits might be higher — they aren’t and they don’t.   But, we know what the GOP’s thinking?  “They” are those “inner city….. people…..who sit on porch steps….” And, now we’re back at the Dog Whistle.

(3) We’re Just Here To Help You – Have Some Pie From Our Sky.  The problem with pie in the sky is that it is intrinsically  inedible.

In the theoretical world of the Club For Growth and other ultra-conservative outlets, unemployment insurance benefits constitute a drag on employment by being a dis-incentive to work.  Anything which supports a person who is not currently working is automatically classified as a dis-incentive because were the support not available the person would have to work to eat, or something like that.

This also requires the corollary concept that there is work for everyone.  Except that’s not the case, there are now three job seekers for every job opening in the country. [politifact] Thus, the Pie in the Sky model of economic theory falls flat because in the real world of real numbers, two of the job seekers (with or without support) are still going to be looking for work whether there’s an incentive or not.

The second problem with this Pie in the Sky argument is that most people are working, seeking work, or getting discouraged in the process.  Consider, Nevada has an unemployment rate of 8.7%, which means that 91.3% of employment aged people ARE working.  The unemployment rate in the Reno area is 9.1%, meaning that 90.9% are working — [DETR] if the mere existence of unemployment insurance benefits, or any other safety net program,  is such a dis-incentive for working people, why are so many people doing it?

Most of the time the arguments from the ultra-right require the acceptance of a negative view of humanity, a perspective which demands acknowledgment of such furtive claims as “They” are undeserving because “They” are lazy, shiftless, bums who want to watch television and drink beer… without having to specify who “They” might be.  It’s also handy to buy into the well debunked Trickle Down Hoax, in which every tax avoided by a corporate employer, every source of funds left untaxed, and every loophole created in the tax code is magically translated into imaginary jobs.  We tried 30+ years of this and all we got was a Mortgage Meltdown compliments of the Wall Street Casino.

If there are no procedural problems other than those manufactured by the obstructionist GOP leadership in the Senate, and there are not statistical reasons not to extend unemployment insurance benefits for those who have already paid into the systems, and there are no rational economic reasons for not continuing to utilize automatic stabilizers such as the unemployment benefit insurance programs … then why not pass the bill?

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Filed under Economy, employment, Politics, Reid, Republicans, unemployment

The Post Which Should Not Have To Be Written: Labor Participation Rate in the U.S.

Presidential candidate Willard Mitt Romney:

“So it looks like unemployment is getting better, but the truth is, if the same share of people were participating in the workforce today as on the day the president got elected, our unemployment rate would be around 11 percent,” said Romney. “That’s the real reality of what’s happening out there.” [ABC]

First the birthers, and now the jobbers.  After campaigning vigorously on the theme the President’s economic policies are failures because the unemployment rate was 8% or above, when the BLS reported a downtick to 7.8% the GOP found it incredible.

Candidate Romney may be referring to the labor participation rate, also calculated by the Bureau of Labor Statistics — which some of his surrogates are now disparaging.   The labor participation rate in November 2008 was 65.8%, admittedly higher than 63.6% in the latest report.  However, it was 66% during the month before the 2008 election.  In fact, as the chart indicates, the labor participation rate has been steadily declining since January 2007.

There is also the “Alternative Measures of Labor Underutilization” report, otherwise known as Table A-15.  U1 refers to those who have been unemployed for 15 weeks or longer as a percentage of the civilian labor force; in September 2011 the number was 5.3%, in September 2012 the number dropped to 4.3%.  How about the U2’s — those who have completed temporary jobs and are now looking for work?  In September 2011 the number was 5.2%, in September 2012 the number reported was 4.2%.

Well, maybe it’s in the U4 number, since they didn’t like the 7.8% in the U3 numbers?  In September 2011 the U4 percentage was 9.6%; in September 2012 the U4 the percentage dropped to 8.3%.  OK, if it’s not the U4, then how about the U5 numbers?  U5 reports the unemployed plus discouraged workers, and in September 2011 the U5 figure was 9.6%, by September 2012 the percentage dropped to 9.3.

OK, if it’s not the U1, the U2, the U4, or the U5, maybe it’s the U6? (That’s the number of people who aren’t working for any reason.)  Nope.  The U6 report for September 2011 was 14.8%, dropping to 14.7% by September 2012.

Click on the image to go to the original chart:

In short, no matter which numbers one reports the figures illustrate what we’ve known all along.  Employment is a lagging indicator.  And, those who live in a fact-free universe are often reduced to conspiracy theories to refute news they’d rather not hear.

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Filed under 2012 election, Economy, employment, labor, unemployment

Supreme Court Rules In Favor Of ACA: Heller Kicks The Gator Ade Bucket

Senator Dean Heller (R-NV), or as the Fine Wordsmith The Gleaner calls him, “The Senator By Appointment Only,”  wants us all to know that he is not pleased by the Supreme Court’s ruling on the Affordable Care Act and Patients’ Bill of Rights.

“Nevada families and businesses are already struggling in this current economic environment, and the President’s job-killing healthcare law is making a difficult situation worse. Congress spent more than a year debating healthcare legislation while Nevadans were losing their jobs and their homes. Obamacare made sweeping changes to Medicare, impacting thousands of Nevada’s seniors, and cut the program by a half trillion dollars.

“This law has now been affirmed as a colossal tax increase on the middle class, and its excessive regulations are stripping businesses of the certainty they need to hire at a time when Nevadans and the rest of the country are desperate for jobs. The President should work with Congress to find real solutions to healthcare reform so the excessive mandates and taxes in this law do not further add to our national debt or continue to stifle economic growth. This onerous law needs to be repealed and replaced with market-based reforms that will provide greater access, affordability, and economic certainty to our nation,” said Senator Dean Heller.

Let us parse:

Heller:Nevada families and businesses are already struggling in this current economic environment, and the President’s job-killing healthcare law is making a difficult situation worse.”

Coupling “job-killing” and “healthcare” is a Republican construction which doesn’t do anything more than seek to associate a change in health care statutes with something (anything) negative.  If unemployment in Nevada were at 2%, and the nation’s major problem was smog, then it would be easy to imagine that the ACA and Patients Bill of Right would be “pollution producing.”  That’s speculative, so let’s drill down a bit further.

Let’s go to that bastion of liberal thinking, Forbes, to see if the ACA/PBR is actually “job killing?”  The answer: No.  In fact, when we go to the Urban Institute’s Study the Massachusetts health care reform enacted under Governor Romney’s administration did NOT produce “job killing” results:

The graphic reduction is difficult to read, so click on the image for the full sized version in the Urban Institute’s original study.  What happens when we take a look at the right hand side of the chart?

While the U.S. was experiencing a decline in full time jobs during the Recession of 3.6%, Massachusetts saw a 2.8% drop.  While the U.S. witnessed a 0.8% increase in part time employment, Massachusetts saw a 0.9% increase.  Whether Governor Romney wants to admit it or not, the Massachusetts plan is the closest statutory comparison to the Affordable Care Act we have, and the numbers about “job losses” in Massachusetts don’t make the Republican point.

Neither do the national numbers: “Since the Affordable Care Act was signed into law, the economy has created 3.5 million private sector jobs, including 488,000 jobs in the health care industry. The unemployment rate is 8.3%, lower than it was in March 2010.”  [Hoyer] And this: “360,000 small businesses have taken advantage of tax credits that are making health insurance more affordable for 2 million workers.  As many as four million small businesses are eligible for these credits.” [Hoyer] And, again, this: “…over 2,800 employers are participating in the Early Retiree Reinsurance Program, which is helping provide coverage to 13 million early retirees who are not yet eligible for Medicare.”  [Hoyer]   Whether we look at national numbers or state numbers, or both — the health care reforms enacted in Massachusetts and in the United States are NOT job killing.

Heller:Congress spent more than a year debating healthcare legislation while Nevadans were losing their jobs and their homes.”

Yes, many things happened while foreclosure rates in Nevada were leading the nation,  and during this time what was the GOP agenda on financial reform and mortgage relief?

On October 12, 2010 Representative Eric Cantor (R-VA) laid out the GOP position on the foreclosure crisis: “Republican leader Eric Cantor chose to break his silence on the foreclosure crisis, with other Republicans quickly picking up the talking points.  And his position should come as no surprise.  Rep. Cantor came to the defense of the housing industry and laid blame squarely on the feet of the American homeowner.” [C2C]

Then, there was the infamous comment from current GOP standard bearer Governor Romney on home foreclosures: “Don’t try to stop the foreclosure process. Let it run its course and hit the bottom,” Romney said when asked what he would do to jump-start the floundering housing market.” [WashMonthly Oct 2011]

Thus, while Congress was debating, the President was signing, and then the Department of Health and Human Services was implementing the provisions of the Affordable Care Act and Patients Bill of Rights, the Republicans were blaming homeowners for the foreclosure debacles and the leader among the GOP presidential candidates was asserting that Nevadans who were in the foreclosure process should close their eyes and Think of the Free Market.  In other words, the Congress could have been debating the desirability of regulating Sea Horse Races, and the GOP wouldn’t have been much interested in legislating solutions to the housing crisis.

Heller:Obamacare made sweeping changes to Medicare, impacting thousands of Nevada’s seniors, and cut the program by a half trillion dollars.”  We won’t go into the part in which the Ryan Budgets in their various incarnations cut massive amounts from Medicare AND sought to turn the program into a voucher/coupon program.  Let’s just deal with the blatantly misleading statement about cuts to Medicare, and see what the professional fact checkers had to say:

“Under the act, Congress voted to reduce $500 billion in projected Medicare spending over the next 10 years, not in one substantial chunk. The reductions are aimed at eliminating parts of the Medicare program seen as ineffective or wasteful. For example, the plan phases out payments to the Medicare Advantage program, an optional program set up under the George W. Bush administration, where seniors could opt to enroll in a private insurance program and the federal government would subsidize a portion of their premium.”  [PolitiFact.com, 5/10/11] (emphasis added)

Under the Affordable Care Act the savings were reinvested in the Medicare program itself, not simply cut from the budget and the program privatized.  And note — some cuts were made to the taxpayer subsidies to insurance companies offering highly profitable optional insurance.  The cuts were in areas considered wasteful, and were NOT related to basic Medicare services.

Heller:This law has now been affirmed as a colossal tax increase on the middle class, and its excessive regulations are stripping businesses of the certainty they need to hire at a time when Nevadans and the rest of the country are desperate for jobs.”   This statement is straight out of the GOP Talking Point Random Generator.

Interesting how Republicans like Senator Heller become really engaged in the problems of the Middle Class when taxes or fees might be increased, but rarely (if ever) when said Middle Class is getting pounded by corporate raiders, union busters, private equity Giant Squids, and stagnating wages.   Be that as it may, if the middle class wants a colossal tax increase — it’s more likely to come from the Republicans.

There is, for example, the tax proposal set forth by Governor Romney, about which the Christian Science Monitor reported:

“In any case, not extending the 2009 tax cuts still in effect in 2012 means that Romney’s plan would, on average, raise taxes for households in the bottom two quintiles, relative to what they’re paying this year.  Mitt Romney’s tax plan would cut taxes, by about $180 billion in 2015 alone, relative to current tax policy. And, despite all arguments to the contrary, a disproportionate share of the savings would go to households with the highest incomes.”  (emphasis added)

Ezra Klein, Washington Post columnist, added this analysis of Governor Romney’s plan:

“Note that the Tax Policy Center could only conduct a partial analysis of Romney’s tax plan. That’s because Romney’s proposal itself is incomplete. He’s said that he wants to scrap various deductions in the tax code, particularly for high earners, in order to broaden the tax base. But he hasn’t offered any details about which deductions he’d scrap or how, so there wasn’t anything for the Tax Policy Center to analyze.

Based on the details Romney has provided so far, his plan would lower tax rates for the top quintile by 5.4 percent, saving the wealthiest an average of $16,134. (The top 1 percent of earners, meanwhile, would save an average of $149,997.) The lowest fifth of earners, by contrast, would see a small tax increase of 1.3 percent under Romney’s plan, owing the federal government an additional $143 extra on average.

Obama’s tax proposal, meanwhile, would keep tax rates roughly the same except for married couples making over $250,000 per year (or single earners making more than $200,000 per year). On average, under Obama’s plan, the top 1 percent would be paying about $87,173 more per year.”

Klein offers the following illustration:

There are many “ifs” involved in the Romney tax proposal, incomplete as it is, but there are some deductions which if eliminated would have a definitely negative impact on middle income level Americans:

“Most middle-class families would get little help. About 18 million working families would actually pay higher taxes because Romney would end the American Opportunity Tax Credit for college and cut tax credits for taxpayers with children and earned income.”  [OCCD]

In fine, if one would like to see a tax structure which bestows the greatest advantages on those who already have great advantages — Governor Romney and the Republicans are your kind of people.

There’s nothing quite like tossing in a phrase like Excessive Regulations to stir the hearts of the financial and insurance sectors, both of whom dislike being told, for example, that using premium payments for CEO compensation and advertising aren’t the best use of consumer dollars.   And, the phrase tickles those who think the EPA is merely a professional thorn in the side of the energy sector — Deep Water Horizon notwithstanding.  It’s often notable that when expounding on the “excessive regulations” in the ACA, very few — if indeed any — examples are offered.

Ah, the now hoary and hirsute talking point “uncertainty and hiring” comes back for yet another encore.   The “uncertainty” allegation is a one size fits all gob-lob at any legislation or legislative proposal which might cause corporations to THINK about what they’re doing.

We’ve been told that implementing the provisions of the Dodd Frank Act on financial regulation reform creates “uncertainty.”  In this instance there’s something to be said for a bit of uncertainty — no bank should believe that it “certainly” has the latitude to use depositors funds to play around in proprietary trades, or has blanket permission to bet against the interests of its own clients, or has leave to arbitrarily play with interest rate reporting because it wants to make its own books look better.

And for the umpteenth time — small business hiring won’t increase until small businesses (not to be confused with Washington, DC lobby shops and hedge funds) see the demand for their goods and services increase such that their current staffing levels are insufficient to meet customer needs.   The only thing that is Certain is that middle class income and middle class jobs need to advance in order to improve aggregate demand.  This has precious little to do with the desires of the Wall Street Wizards to play cowboy with depositors dollars.

Heller:The President should work with Congress to find real solutions to healthcare reform so the excessive mandates and taxes in this law do not further add to our national debt or continue to stifle economic growth.”

Now what could be adding to the national debt?

So, if we are really serious about reducing the federal deficit — then we get rid of the Bush Tax Cuts! And, we do something to get more “growth” into the economy.  Hardly the austerity prescription being touted by Senator Heller and his Republican cohorts.

Heller:This onerous law needs to be repealed and replaced with market-based reforms that will provide greater access, affordability, and economic certainty to our nation,” said Senator Dean Heller.”

Yes, the House will make another symbolic move at “repealing” the Affordable Care Act during the week of July 9th.  Meanwhile, what are “market based reforms?”

Representative Paul Ryan has suggested some “market based” reforms which mean that Medicare recipients will get a “coupon” or voucher toward paying their private health insurance premiums.   This is essentially a government subsidy for health insurance corporations to give them an “incentive” to offer health insurance for the elderly.  Meanwhile back in the real world — the reason we have Medicare in the first place was that insurance corporations do not want to offer plans for elderly people — they get sick, and old, and old and sick.

This might be a good time to remind ourselves that it’s not a “free market” when some corporations are being subsidized by the taxpayers to offer services and products they don’t otherwise want to sell.  For those keeping score, “market based solutions” is GOP-Speak for privatization.

Not to belabor the point much further, but the GOP response to the ACA ruling as evidenced by Senator Heller is simply to offer no solutions to demonstrated problems, and demonstrations about issues of primary interest to the upper 1% of the American income earning public.  It is a tale bedecked with focus group tested buzz words and talking points, which can mean almost anything to their devoted listeners, and almost nothing to anyone seeking solutions to real American problems.

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Filed under 2012 election, Bush Administration, conservatism, Economy, employment, family issues, Federal budget, financial regulation, Foreclosures, Health Care, health insurance, Heller, Insurance, Medicare, national debt, Nevada politics, Politics, privatization, Republicans, Taxation, unemployment

Reid Suggests Compromise on Student Loan Rates

From the e-mail inbox, Senator Harry Reid (D-NV): “Washington, D.C. – In a letter to Speaker John Boehner and Minority Leader Mitch McConnell, Senate Majority Leader Harry Reid today offered two bipartisan proposals to pay for a one-year extension of student loan rates to prevent them from doubling on July 1st. The first proposal expands an offset that recently passed the Senate on a strong bipartisan vote of 74-22 as part of the transportation jobs bill. The combination offers a bipartisan path forward to break the impasse currently facing the student loan bill.”

OK, but I’m still not happy.  First, there is really no excuse for putting student loan interest rates up for revision on an annual basis.   Last time I looked it still took four years to get a college degree, and longer if the individual was interested in advanced degrees.  Advanced degrees being the kind that get a person into the 3.6% and below unemployment categories. [DoL]

Secondly, not so long ago it was declared unnecessary to put the cost of military operations in Iraq and Afghanistan  on the books, and thus the Bush Administration ran those activities via emergency supplemental appropriations without any mention of “pay fors.”  Neither was it deemed necessary to subject  the Medicare Part D program to “pay fors,” with some demonstrably budget busting results as of January 1, 2006.   However, when we’re speaking of educating our future work force — now, suddenly it’s absolutely essential we “pay for” every federal expenditure.

Granted, it is more fiscally responsible to know from whence the money is coming to pay for federal expenditures.  However, would it crush the Job Cremators so much to have a loophole for ultra-wealthy hedge fund and lobby shop operators closed? — as was suggested, and as caused Senator Dean Heller (R-NV) to issue his usual  cri de coeur for “small business.”

And thus we continue to tinker, Senator Reid offering the following:

(1)    Reforms to employer pension payment contributions. The proposal outlined by Senator Reid would create a “stabilization range” for employers to compute their pension liabilities. Instead of being forced to use the two-year corporate bond rates in computing their pension liabilities, the new proposal would allow them to compute liabilities using rates for a 25-year period within which the two-year rates must fall.  To the extent that the two-year rates fall outside this range, the company would be allowed to use a rate closest to the two-year rate that falls within the stabilization range to compute its pension funding requirements.  This more flexible approach would narrow fluctuations in computing pension contributions and result in businesses taking fewer tax deductions for contributions.

(2)  Change contributions to Pension Benefit Guarantee Corporation premiums. In addition, Senator Reid proposed increasing premiums paid by employers for the insurance provided by the Pension Benefit Guaranty Corporation.  Currently, employers pay a flat dollar premium of $35 per pension plan participant as well as a variable premium equal to $9 for each $1,000 that the plan is underfunded.  To help improve the PBGC’s finances, these premiums could be increased as part of this proposal.

“The combination of these two proposals will provide sufficient resources to fund both a one-year extension of the current student loan interest rate and re-authorization of the nation’s surface transportation programs.”

OK, if we adopt these proposals then we get a continuance of the 3.4% student loan rate AND the re-authorization of the surface transportation programs.  And, I can hear it now — OMG, a more flexible approach to calculating pension fund contributions will be “a plague upon Capitalism?”  Or, increasing the premiums for the PBGC will be a “onerous burden on job creators?”   The former argument is offset by the fact that BUSINESS groups are the ones asking for the recalculation of the pension funding formula. [WallStJournal]

There are reasons to be concerned about the recalculation of pension fund contributions, none of which have anything to do with plaguing Capitalism.  One major cause for careful consideration is that changing the formula could have detrimental effects on defined benefit plans.  [WallStJournal]

The Pension Benefit Guarantee Corporation is already facing some serious issues, some of which were outlined in a 2010 report from the GAO:

“Plans in the worst condition may find that the options of increasing employer contributions or reducing benefits are insufficient to address their underfunding and demographic challenges. For these plans, the effects of the economic downturn, declines in collective bargaining, the withdrawal of contributing employers, and an aging workforce will likely increase their risk of insolvency. Without additional options to address plan underfunding or to attract new employers to contribute to plans, plans may be more likely to require financial assistance from PBGC.  Additional claims would further strain PBGC’s insurance program that, already in deficit, it can ill afford.”

Economic growth, as we’ve seen in the private sector over the past 27 months, will help these issues, but asking employers to pay increased premiums to backstop an already serious issue isn’t too much to ask.  If the corporations make additional contributions, then the PBGC isn’t further behind the eight-ball when companies fail.

On the optimistic side, both suggestions from Senator Reid have received bi-partisan support in the past.  On the pessimistic side, chucking their previously held positions over the side has become a Republican art form — witness the individual mandate for health care insurance coverage, and “cap and trade” schemes for pollution elimination.

Since it’s been “campaign season” since January 20, 2009 I am a bit leery of Republican cooperation in the U.S. Senate.  Meanwhile, the clock is ticking as students and their parents try to get body and soul together concerning educational expenses for the next school term.

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Filed under Economy, education, employment, Heller, Reid, Student Loans, unemployment

Romney’s Job Creation Response: Yawn

The Romney campaign responded to reports that during Governor Romney’s tenure as the chief executive of Massachusetts he wasn’t particularly successful at creating jobs because the unemployment rate in the Bay State was 4.5% at the end of his term.   YAWN.   There are some reasons to indulge in a simultaneous inhalation of air and stretching of the ear drums followed by an immediate exhalation of breath.

#1.   2007 was also the year that Nevada had a 4.7% unemployment rate, California had a 5.7% unemployment rate, Arizona had a 3.7% rate, while Florida had a 4.0% rate — can we say “Housing Bubble?” [BLS] The national average that year was 4.6%, and that doesn’t make the 4.5% look all that impressive.

#2.  Massachusetts’ unemployment rate in 2003 was 5.8%, compared to a national unemployment average of 6.0%.  [BLS] It doesn’t look as though Mr. Romney can argue he was “starting out in a hole.”

#3.  As of 2004, the national unemployment rate was 5.5%, while the Massachusetts rate was 5.2%.  [BLS] In 2005 the national rate was 5.1% and the MA rate was 4.8%. [BLS] The national rate of unemployment in 2006 was 4.6%, while the Massachusetts rate was 4.8%. [BLS] It may not do to get too excited about the reduction of unemployment levels in a state when the outcome amounts to a +0.2% overall gain in four years.

#4. The job creation Romney promised in Massachusetts never really materialized.  “By the time Romney left the State House, Massachusetts had generated 24,400 net new jobs, according to an analysis by Moody’s Economy.com, an independent research group. The state had only an 0.8 percent increase in employment, giving it the fourth-weakest rate of job growth among all states over that time.”  [Boston Globe]

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Filed under 2012 election, employment, Nevada economy, Politics, Romney, unemployment

Coffee and the Papers

Money Money Money: The Las Vegas Sun offers a breakdown of the campaign coffers of leading Nevada Congressional candidates. Republican candidate Danny Tarkanian contends the $17 million judgment against him is the result of “fraud.” [NNB]  Can we add that to “practicing law without a license” in which he also said he was confused and misled? [LVRJ]  Or, his confusion about the 1Q filing requirement with the FEC? [NNB]

The Homeowners Association mess in Clark County continues:  A federal judge is taking guilty pleas [RGJ] as … “New details surfaced Thursday — including on the role of real estate agents — in the long-running criminal investigation into fraud and corruption at Las Vegas-area homeowner associations.” [Las Vegas Sun]

Jobs Jobs Jobs:   The employment figures are out, and they aren’t all that ‘Summery.’   Economist Chris Rupkey (BTM) advises a bit of restraint:

The unemployment rate went up a tenth today, but at least we don’t have to hear about how people are dropping out of the labor force.  The labor force had fallen in March and April, those not in the labor force had risen.  No jobs for them so they dropped out was the argument.  But today, the labor force went up 642K, 422K of them found jobs, employment up, and 220K of them did not find jobs, so the unemployment level went up to 12.7 million.  We cannot be too bearish then on the 8.2% unemployment rate, and this is especially true as unemployment claims are still low.

Back to payroll jobs of 69K, a disappointment, but we do not view this crawl speed as a stall speed reading for the labor market.  We don’t think jobs will actually decline, say next month, and keep in mind a double-dip or recession for the economy is signaled by three consecutive declines in payroll jobs.  (emphasis in original) [Business Insider]

There’s more:  Calculated Risk adds,

“If we average over the first five months of the year, the economy has added 164,600 jobs per month (169,400 private sector per month). At this pace, the economy would add around 2 million private sector jobs in 2012; about the same as in 2011.”

“There were 69,000 payroll jobs added in May, with 82,000 private sector jobs added, and 13,000 government jobs lost. The unemployment rate increased to 8.2%. The household survey showed a strong increase in employment (422,000 jobs added), but the participation rate increased too (from 63.6% to 63.8%) so that pushed up the unemployment rate.” [CR]

The scary part is not necessarily the overall jobs numbers, but what’s NOT happening to family earnings.  Angry Bear takes the latest DoL report as dismal news indeed, and notes:

“…the average work week fell from 33.5 to 33.4.  In combination with the weak employment increase this generated a significant drop of 0.2% in aggregate hours worked.  This reversed the recent strengthened in the index of hours worked as it fell back below the trend for this cycle. […] Average  hourly earnings rose less than 0.1% from $23.39 to $23.41.  The year over year gain is back to an all time record low of 1.39% […] With the drop in hours worked, average weekly earnings fell $806.96 to $805.30.”

It’s really difficult to get an economy rolling at speedier revival rates when the people who are supposed to be purchasing the goods and services have less money to spend.  There are some weeds to be explored in the data that should have a post of their own.

Hey Kids Your Student Loan Rates Are About To Double?  Interesting that the House GOP never balked at credit card conservatism when the Bush Administration kept the costs of operations in Iraq off the books, and there were no “pay fors” attached to military spending, but “college students,” well, that’s another matter.  The House is now offering it’s third proposal to “pay for” the cost of cutting the middle-men Bankers out of the Stafford Student Loan program.

“One of those proposals would raise the required federal employee contribution toward retirement benefits by 1.2 percent of salary over three years in equal portions starting in 2013. That increase was in the budget plan the White House proposed earlier this year.”  [WaPo]

The battle does seem to be heating up. [NYT]

Recommended Reading:   The headline says it all – “Michelle Rhee, Go-to Girl For Scott Walker’s Union-Busting Ways” [Crooks and Liars] What do we want to talk about during this campaign season? “Mitt Romney’s Massachusetts Record Shows Why He’d Rather Talk about Bain” [Politicususa] The Big Dog is in the house — Bill Clinton supports recall efforts in Wisconsin. [TalkingPointsMemo]  Not to be missed: “Mitt’s Massachusetts Excuse,” [Perrspectives]

Closer to home: “Los Desperados” [NVProgressive] and “America is in the midst of a student loan crisis,” [NVRDC] ICYMI: “Heller — I’m no stockbroker!” [SlashPolitics]  “The Feminist Files” [SinCitySiren]

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Filed under 2012 election, education, employment, Nevada economy, Nevada legislature, Nevada politics, Politics, unemployment