Weekly Audit: Millions of Americans Could Lose Unemployment Benefits

Editor’s Note: Happy Thanksgiving from the Media Consortium! This week, we aren’t stopping The Audit, The Pulse, The Diaspora, or The Mulch, but we are taking a bit of a break. Expect shorter blog posts, and The Diaspora and The Mulch will be posted on Wednesday afternoon, instead of their usual Thursday and Friday postings. We’ll return to our normal schedule next week.

by Lindsay Beyerstein, Media Consortium blogger

According to official statistics, nearly 15 million Americans are unemployed. Between 2 and 4 million of them are expected to exhaust their state unemployment insurance benefits between now and May. Historically, during times of high unemployment, Congress provides extra cash to extend the benefits. Congress has never failed to do so when unemployment is above 7.2%. Today’s unemployment rate is above 9% and the lame duck session of Congress has so far failed to extend the benefits.

Congress has until November 30 to renew two federal programs to extend unemployment benefits, as David Moberg reports for Working In These Times. Last week, a bill to extend benefits for an additional three months failed to garner the two-thirds majority it needed to pass in the House. The House will probably take up the issue again this session, possibly for a one-year extension, but as Moberg notes, it’s unclear how the bill will fare in the Senate. The implications are dire, as Moberg notes:

The result? Not just huge personal and familial hardships that scars the lives of young and old both economically and psychologically for years to come.  But failure to renew extended benefits would also slow the recovery, raise unemployment, and deepen the fiscal crises of state and federal governments.

But wait! There’s more:

  • The Paycheck Fairness Act died in the Senate last week, as Denise DiStephan reports in The Nation. The bill would have updated the 1963 Equal Pay Act to close loopholes and protect employees against employer retaliation for discussing wages. All Republican senators and Nebraska Democrat Ben Nelson voted not to bring the bill to the floor, killing the legislation for this session of Congress. The House already passed its version of the bill in 2009 and President Barack Obama had pledged to sign it.
  • Economist Dean Baker talks with Laura Flanders of GritTV about quantitative easing (a.k.a. the Fed printing more money) and the draft proposal from the co-chairs of the deficit commission. Baker argues that we’re facing an unemployment crisis, not a deficit crisis.
  • Charles Ferguson’s documentary “Inside Job” is a must-see, according to Matthew Rothschild of The Progressive. An examination of how Wall Street devastated the U.S. economy, the film details the reckless speculation in housing derivatives, enabled by crooked credit rating schemes, that brought the entire financial system to the brink of collapse. The film is narrated by Brad Pitt and features appearances by former Governor and anti-Wall Street corruption crusader Eliot Spitzer, financier George Soros, and Prof. Nouriel Roubini, the New York University economist who predicted the collapse of the housing bubble.

This post features links to the best independent, progressive reporting about the economy by members of The Media Consortium. It is free to reprint. Visit the Audit for a complete list of articles on economic issues, or follow us on Twitter. And for the best progressive reporting on critical economy, environment, health care and immigration issues, check out The Mulch, The Pulse and The Diaspora. This is a project of The Media Consortium, a network of leading independent media outlets.

 

 

Weekly Audit: Millions of Americans Could Lose Unemployment Benefits

Editor’s Note: Happy Thanksgiving from the Media Consortium! This week, we aren’t stopping The Audit, The Pulse, The Diaspora, or The Mulch, but we are taking a bit of a break. Expect shorter blog posts, and The Diaspora and The Mulch will be posted on Wednesday afternoon, instead of their usual Thursday and Friday postings. We’ll return to our normal schedule next week.

by Lindsay Beyerstein, Media Consortium blogger

According to official statistics, nearly 15 million Americans are unemployed. Between 2 and 4 million of them are expected to exhaust their state unemployment insurance benefits between now and May. Historically, during times of high unemployment, Congress provides extra cash to extend the benefits. Congress has never failed to do so when unemployment is above 7.2%. Today’s unemployment rate is above 9% and the lame duck session of Congress has so far failed to extend the benefits.

Congress has until November 30 to renew two federal programs to extend unemployment benefits, as David Moberg reports for Working In These Times. Last week, a bill to extend benefits for an additional three months failed to garner the two-thirds majority it needed to pass in the House. The House will probably take up the issue again this session, possibly for a one-year extension, but as Moberg notes, it’s unclear how the bill will fare in the Senate. The implications are dire, as Moberg notes:

The result? Not just huge personal and familial hardships that scars the lives of young and old both economically and psychologically for years to come.  But failure to renew extended benefits would also slow the recovery, raise unemployment, and deepen the fiscal crises of state and federal governments.

But wait! There’s more:

  • The Paycheck Fairness Act died in the Senate last week, as Denise DiStephan reports in The Nation. The bill would have updated the 1963 Equal Pay Act to close loopholes and protect employees against employer retaliation for discussing wages. All Republican senators and Nebraska Democrat Ben Nelson voted not to bring the bill to the floor, killing the legislation for this session of Congress. The House already passed its version of the bill in 2009 and President Barack Obama had pledged to sign it.
  • Economist Dean Baker talks with Laura Flanders of GritTV about quantitative easing (a.k.a. the Fed printing more money) and the draft proposal from the co-chairs of the deficit commission. Baker argues that we’re facing an unemployment crisis, not a deficit crisis.
  • Charles Ferguson’s documentary “Inside Job” is a must-see, according to Matthew Rothschild of The Progressive. An examination of how Wall Street devastated the U.S. economy, the film details the reckless speculation in housing derivatives, enabled by crooked credit rating schemes, that brought the entire financial system to the brink of collapse. The film is narrated by Brad Pitt and features appearances by former Governor and anti-Wall Street corruption crusader Eliot Spitzer, financier George Soros, and Prof. Nouriel Roubini, the New York University economist who predicted the collapse of the housing bubble.

This post features links to the best independent, progressive reporting about the economy by members of The Media Consortium. It is free to reprint. Visit the Audit for a complete list of articles on economic issues, or follow us on Twitter. And for the best progressive reporting on critical economy, environment, health care and immigration issues, check out The Mulch, The Pulse and The Diaspora. This is a project of The Media Consortium, a network of leading independent media outlets.

 

 

Weekly Audit: Silencing Conservative Deficit Hawks

by Zach Carter, Media Consortium blogger

The same conservatives who spent the past year senselessly screaming about the U.S. budget deficit are now demanding an extension of the Bush tax cuts for the rich. The extension simply doesn’t make sense, and the policies implied are a recipe for massive job loss in the middle of the worst employment crisis in 75 years.

Deflation nation

As William Greider explains for The Nation, the major problem facing the U.S. economy is not the budget deficit, but the prospect of deflation. Deflation was one of the driving forces behind the Great Depression. Under deflation, the value of money increases, which drives prices down. When millions of Americans are deep in debt, deflation makes those debts much larger. It also creates total economic paralysis, as Greider explains:

Deflation essentially tells everyone to hunker down and wait. Instead of buying big-ticket items, consumers wait for prices to fall further. Instead of investing in new production, companies wait for cheaper opportunities, cheaper labor.

In other words, nothing happens. And when nothing happens, the economy falls apart. Instead of spending money now while it’s still valuable, everybody just waits for it to accumulate value. Businesses lay off workers and workers don’t spend money, creating a vicious cycle in which prices fall further because nobody has any money to buy anything with.

Deflation over deficit

There are time-tested ways to fend off deflation. The Fed can cut interest rates, and the federal government can spend money—lots of money—putting people to work. But instead, conservative politicians are emphasizing the budget deficit, claiming that without immediate action to cut the deficit, the U.S. economy will collapse.

As I note for AlterNet, the deficit is only a problem if it creates very high interest rates (our current rates are at record lows) or if it leads to severe inflation, as governments print loads of money to pay off their debts. But we aren’t seeing inflation—instead, we’re getting dangerously close to deflation.

Spending cuts kill jobs

As David Moberg observes for In These Times, massive spending cuts in the middle of a recession don’t reduce the deficit. Those cuts create layoffs and reduce economic growth, which results in lower tax returns for the federal government. They make the deficit worse. We’ve just watched several nations attempt to counter their budget deficit woes with “austerity”—cutting back on jobs and social services—and the result has been disastrous. Here’s Moberg:

Government austerity and cuts in workers’ wages will simply reduce demand, slowing recovery from the Great Recession or even creating a second downturn. And weak recovery will bring lower tax revenues, continued pressure for austerity and difficulty repaying debts. In short, the medicine the financial markets and their political allies prescribe will make the global economy sicker.

Spending money to make jobs

In a pair of posts for The Washington Monthly, Steve Benen notes that conservative politicians can’t even make sense when they talk about the deficit. They’re demanding action on the deficit, while also demanding an extension of the Bush tax cuts for the rich. Tax cuts make the deficit bigger, something Rep. Eric Cantor (R-VA) acknowledged in a recent interview. Cantor’s justification? We need jobs right now, and it’s okay to inflate the deficit in the pursuit of jobs.

That justification is right—but Cantor’s policies are wrong. Tax cuts for the rich don’t create jobs, because rich people just hold onto the money. The fact is, government spending is a much more effective way of creating jobs than cutting taxes. If jobs are the priority in a deep recession, Benen argues, then, we should be spending to create jobs, not funneling economically useless money to the wealthy.

The corporate agenda after Citizens United

Much of the deficit and tax-cut hysteria is being pushed by corporate executives that are looking to score tax breaks for themselves and their shareholders. So it’s profoundly disconcerting to see corporations begin pouring money into elections in the aftermath of the Supreme Court’s infamous Citizens United ruling.

As Suzy Khimm emphasizes for Mother Jones, corporations have started spending like crazy on advertising in support of conservative causes. Prior to Citizens United, corporations were banned from conducting such direct electoral advocacy, but as Khimm notes, now major retailers like Target and Best Buy are jumping into the fray.

Spending big bucks to derail the economy for profit is not okay. The best way for policymakers to fight this corporate assault is to make a strong push to actually repair the economy. Self-interested executives and corrupted politicians will make all kinds of convoluted economic arguments to enrich themselves and their backers. They’ll use the recession as an excuse. But if lawmakers actually fight the recession successfully, they can’t listen to deep-pocketed corporate miscreants.

President Barack Obama and Congress should ignore the phony deficit hysteria and push for a strong jobs agenda, filled with lots and lots of government spending to put people back to work. Creating jobs is not just an economic priority, it’s a key tool to defanging disingenuous political attacks.

This post features links to the best independent, progressive reporting about the economy by members of The Media Consortium. It is free to reprint. Visit the Audit for a complete list of articles on economic issues, or follow us on Twitter. And for the best progressive reporting on critical economy, environment, health care and immigration issues, check out The Mulch, The Pulse and The Diaspora. This is a project of The Media Consortium, a network of leading independent media outlets.

 

 

Weekly Audit: Wall Street Goes to the Movies

by Zach Carter, Media Consortium blogger

Last week, the U.S. Senate rejected a plan that would have broken up the nation’s six largest banks firms into firms that could fail without wreaking havoc on the economy. Even though the defeat reinforces Wall Street’s political dominance, there is still room for a handful of other useful reforms, like banning banks from gambling with taxpayer money and protecting consumers from banker abuses. After looting our houses, banks are now pushing for the ability to bet on movie box-office receipts, and will keep trying to financialize anything they can unless Congress acts.

Wall Street calls the shots

Writing for The Nation, John Nichols details last week’s Capitol Hill damage. Today’s financial oligarchy, in which a handful of bigwig bankers and their lobbyists are able to write regulations and evade rules they don’t like, will still be in place after the Wall Street reform bill is passed. The lesson is clear, as Nichols notes:

Whatever the final form of federal financial services reform legislation, one thing is now certain: The biggest of the big banks will still be calling the shots.

Still worth fighting for

As I emphasize for AlterNet, Congress has made a terrible mistake here, but there is still room for reform. It took President Franklin Delano Roosevelt seven years to enact his New Deal banking laws. It took even longer to reshape public opinion of monopolies when President Theodore Roosevelt took on Corporate America in the early 1900s.

What’s still worth fighting for? We have to curb the derivatives market—the multi-trillion-dollar casino that destroyed AIG. We have to impose a strong version of the Volcker Rule, which would ban banks from engaging in speculative trading for their own accounts. We have to change the way the Federal Reserve does business and force the government’s most secretive bailout engine to operate in the open. And we have to establish a strong, independent Consumer Financial Protection Agency to ensure that the horrific subprime mortgage abuses are not repeated.

As Nomi Prins details for The American Prospect, the current reform bill will not effectively deal with the dangers posed by hedge funds and private equity firms—companies that partnered with banks to blow up the economy through investments in subprime mortgages. That means that whatever happens with the current bill, Congress must again take action next year to rein in other financial sector excesses.

The derivatives casino at the movies

As Nick Baumann demonstrates for Mother Jones, banks are doing everything they can to gobble up other productive elements of the economy. The economy crashed in 2008 in large part because banks had used the derivatives market to place trillions of dollars in speculative bets on the housing market. This wasn’t lending, it was pure gambling: Instead of using poker chips, bankers placed their bets with derivatives. But, as Baumann emphasizes, banks are now looking to expand the sort of thing they can make derivatives gambles with. The latest proposal is to allow banks to bet on the box office success of movies. That’s right, banks would be gambling on movies.

Hollywood may be shallow, but it isn’t stupid. It doesn’t want to see the banking industry repeat its destructive looting of the housing industry on the movie business, and is pushing hard to ban banks from betting on movies. But we can’t count on every industry having a powerful lobby group to counter every assault from the banking system.

Taking stock in schools

Consider the unsettling report by Juan Gonzales of Democracy Now!. Gonzales details how big banks gamed the charter school system to score huge profits while simultaneously saddling taxpayers with massive debts that make teaching kids supremely difficult. By exploiting multiple federal tax credits, banks that invest in charter schools have been able to double their money in seven years—no small feat in the investing world—while schools have seen their rents skyrocket. One school in Albany, N.Y. saw its rent jump from $170,000 to $500,000 in a single year.

About that unemployment rate…

It’s not like public schools are flush with cash right now. The $330,000 increase in rent could pay the salaries of more than a few teachers. As the recession sparked by big bank excess grinds on, even the good news is pretty hard to swallow. As David Moberg emphasizes for Working In These Times, the economy added 290,000 jobs in April, but the unemployment rate actually climbed from 9.7 percent to 9.9 percent in March. That’s because the unemployment rate only counts workers who are actively seeking a job—if you want a job but haven’t found one for so long that you give up, you’re not technically “unemployed.” All of those “new” workers are driving the official figures up.

In other words, it’s still rough out there. And likely to stay rough as state governments try to deal with the lost tax revenue from plunging home values and mass layoffs. Nearly half of all unemployed people in the U.S. have been out of a job for six months or more. And while we’d be much worse off without Obama’s economic stimulus package, that percentage is likely to grow this year, Moberg notes.

This is what unrestrained banking behemoths do. They book big profits and bonuses for themselves, regardless of the consequences for the rest of the economy. Congress absolutely must impose serious financial reform this year. After the November election, breaking up the banks must once again be on the agenda when Congress considers the future fate of hedge funds, private equity firms, Fannie Mae and Freddie Mac. If we don’t rein in Wall Street, banks will continue to wreak havoc on our homes, our jobs and even our schools. Congress must act.

This post features links to the best independent, progressive reporting about the economy by members of The Media Consortium. It is free to reprint. Visit the Audit for a complete list of articles on economic issues, or follow us on Twitter. And for the best progressive reporting on critical economy, environment, health care and immigration issues, check out The Mulch, The Pulse and The Diaspora. This is a project of The Media Consortium, a network of leading independent media outlets.

Weekly Audit: Jobs, Jobs, Jobs

By Zach Carter, Media Consortium Blogger

President Barack Obama invited leading economic thinkers to a job creation summit on Thursday to help combat the worst unemployment crisis in decades. The stakes couldn't be higher: If Obama can't build momentum for robust legislation that will create jobs, the unemployment rate could remain in double-digits all the way through 2011.

In Salon, Andrew Leonard highlights some positive comments Obama made at the jobs summit. In an exchange with The American Prospect's Robert Kuttner, Obama said that the long-term budget deficit is an issue, but that the best way to reduce that deficit is to spur economic growth. When the economy is growing, the same tax rates reap greater returns for the government.

If the U.S. dramatically slashes economic support programs to clamp down on the deficit in the short-term, the economy is going to shrink. About two-thirds of the economic growth in the third-quarter of 2009 came from intiatives related to Obama's economic stimulus plan. If we cut back on stimulus, we lose more jobs and make the long-term deficit worse by hampering growth.

We've faced this kind of dilemma before and seen what happens when you focus too much on the deficit,  as Katrina vanden Heuvel emphasizes in a column for The Nation. "In 1937, just as there was some recovery from the Depression, the debt hawks swooped in and there was a return to the deficit reduction model," vanden Heuvel writes. "Things went south again. We don't need a repeat of that."

So Obama doesn't want to attack the deficit at the expense of jobs, which is good. But it's problematic that the President is still at the summit stage on the most politically pressing issue for Democrats, as Terence Samuel explains for The American Prospect. If the labor market doesn't start getting better soon, voter dissatisfaction with Obama's economic platform will impact other critical policy initiatives, from health care to climate change.

"The president is up against an unpredictable clock," Samuel writes. "With his approval rating hovering around 50%, he can't be sure how long Democrats in Congress will stick with him on anything if there is not some noticeable improvement in the jobs picture soon. The urgency on the job situation is not lost on Democrats in the House and Senate who must defend the seats of 18 Democrats in 2010."

Most of the pressure Obama now faces is to create jobs, not just save them. That's because his stimulus helped get the unemployment rate under control--we're still losing jobs, but not as fast as we were in January. But as Aaron Glantz notes for New America Media, the risk of heavier job loss is still present.

State governments are up against very difficult budget constraints, thanks to tax losses related to widespread layoffs and foreclosures. If they don't get help from the federal government, states will be forced to cut expenses, which means shedding more jobs. Glantz highlights a recent conference call with AFL-CIO leaders who warned that state and local governments could be forced to cut up to one million jobs in 2010 if Congress and President Obama fail to enact a major jobs bill.

David Moberg envisions an ideal jobs bill for Working In These Times. We need a major aid package to state governments, modernizing our schools and transportation network, a public-sector job program to fund important work in our communities, and a tax credit for companies that hire workers. The whole thing would only cost $400 billion and would create 4.6 million jobs. That could be enough money to move unemployment out of crisis-mode. Right now, about 15.4 million workers are out of a job. Half those workers have been put out of work over the course of the recession. Creating 4.6 million jobs would make an enormous difference.

And while the $400 billion price tag may sound like a big number, it's a drop in the bucket compared to our $9 trillion fiscal deficit. Going back to The Nation: As vanden Heuvel notes, the whole package could be paid for with a modest tax on risky Wall Street securities trading.

This post features links to the best independent, progressive reporting about the economy by members of The Media Consortium. It is free to reprint. Visit the Audit for a complete list of articles on economic issues, or follow us on Twitter. And for the best progressive reporting on critical economy, environment, health care and immigration issues, check out The Mulch, The Pulse and The Diaspora. This is a project of The Media Consortium, a network of leading independent media outlets.

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