Average length of unemployment is at an all-time high

Catherine Rampell at NYT's Economix: The average unemployed person in America has been looking for work for 39.7 weeks, or more than nine months. That is the longest average unemployment spell since the Labor Department started keeping track in 1948:

"Republicans Are Intentionally Driving Our Economy Into a Ditch"

Winning Progressive:

In his Friday New York Times column entitled “The Mistake of 2010,” Paul Krugman cogently explained how the conservatives’ obsession with invisible bond vigilantes, fearmongering about non-existent inflation, and overwrought sky-is-falling rhetoric about deficits are serving to distract us from the real problems facing our country – joblessness and poor economic growth. 

Professor Krugman described how the conservatives’ focus is wrongheaded and threatens to repeat in 2011 the mistake of 1937, when President Roosevelt temporarily sidetracked the recovery from the Great Depression by instituting austerity measures designed to curb inflation, rather than continuing to use government spending to create jobs:

As the stimulus has faded out, so have hopes of strong economic recovery. Yes, there has been some job creation — but at a pace barely keeping up with population growth. The percentage of American adults with jobs, which plunged between 2007 and 2009, has barely budged since then. And the latest numbers suggest that even this modest, inadequate job growth is sputtering out.

So (in 2010) we have already repeated a version of the mistake of 1937, withdrawing fiscal support much too early and perpetuating high unemployment.

Yet worse things may soon happen.

"This is why the United States is doomed"

Andrew Leonard at Salon:

The Hill reports the House Republican response to Friday morning's distressing jobs report.

House Republicans pinned the blame for Friday's disappointing jobs report squarely on the White House, saying the Obama administration's "over-taxing, over-regulating and over-spending" has stifled economic growth.
"One look at the jobs report should be enough to show the White House it's time to get serious about cutting spending and dealing with our ailing economy," Speaker John Boehner (R-Ohio) said.

How many blatant untruths can a Republican speaker of the House stuff into one sentence? Quite a few!

"When I use a word," Humpty Dumpty said in rather a scornful tone, "it means just what I choose it to mean -- neither more nor less."

Greg Sargent at WaPo:

The battle over whether it’s true that the Republican plan (to replace single-payer medical insurance for seniors with capped vouchers in the private market) would “end Medicare” is about to play out in a critical way in New Hampshire.

The National Republican Congressional Committee, which oversees House races for the GOP, has written a sharply-worded letter demanding that a New Hampshire TV station yank an ad making that claim.

Whether the ad gets taken down could help set a precedent for whether other stations will air Dem TV ads making this argument, which is expected to be a central message for Dems in the 2012 elections.

Atrios:

When We Replace The Marines With A Pizza, We Will Call The Pizza The Marines.

On the GOPers who claim "We didn't create this mess!"

Titanic noted the GOP congressman who told Tres. Secy. Geithner "We didn't create this mess!" during the recent White House meeting over raising the debt ceiling.  James Kwak at Baseline Scenario has this reaction:

The frightening thing is, he probably believes it. When people hold certain ideological beliefs strongly enough, no amount of facts will get in their way. If you believe that the current deficit is the result of excessive government spending (passed by Democrats, even though they only controlled Congress and the White House for four out of the past thirty years*), no pile of charts will be big enough to convince you otherwise — just like if you believe that tax cuts increase tax revenues, that the deficit has produced high interest rates, or that Barack Obama was born on Mars, no amount of evidence will convince you otherwise.

This is just fine if you are my daughter, who is four years old — although, actually, she admits it when she makes a mess (and helps clean it up). But if you are a legislator in the most powerful country in the world –and the one whose debt is the definitionally risk-free asset against which the yield of every other financial asset in the entire world is measured — it’s not good enough.

Terrible job news

From the Financial Times (UK):
       
          US jobs data escalate fears of double dip

The US economy added just 54,000 new jobs in May, confirming fears that the recovery has hit a soft patch as the unemployment rate ticked up to 9.1 per cent.

Non-farm payrolls rose far less than the 165,000 that economists polled by Bloomberg had expected and were well below the average 220,000 gain in the previous three months, the US labour department said.

The unemployment rate rose by a tenth of a point from 9 per cent in April, disappointing hopes that it would fall back to 8.9 per cent, but the increase was due to an expanding labour pool as more Americans searched for jobs. Out of a workforce of 153.7 million, 13.9 million people are unemployed.

"Are you talkin' to me?"

"I got some bad ideas in my head!"

During yesterday's dismal White House budget meeting, Paul Ryan complained to the President about the "demagogy" of describing as  "vouchers" Ryan's plan to end Medicare in favor of...uh...vouchers. 

Then there was this zinger.

"We didn't create this mess," a Republican Congressman reportedly told Treasury Secretary Tim Geithner

Ryan's whining aside, on the larger issue of who created "this mess" - of course, they did.  The Republicans advocated for the policies and/or oversaw the calamities generating the red ink that's scaring voters.

"We didn't create this mess - blame Obama!" (or Medicare) are the Big Lies of the GOP's phony deficit hysteria and a shameless evasion of responsibility.

Jobs and 2012

The New York Times has an extensive piece up today headlining that job numbers are key to President Obama's re-election.  It's sobering, to say the least. No President since Franklin Roosevelt has won another term with unemployment as high as it is today and no doubt will be next year - a historical trend that the President must overcome to keep his own job.  The central question is really will Americans believe in November 2012 that the President has done not just some of the right things to fight unemployment but all that he could.

Politics are what they are in today's climate - and have become particularly toxic and stagnant since the huge mid-term loss of Congress by the Democrats. I understand the limitations of "should" versus "could."  But, as a supporter of the President, I have to ask myself whether jobs have really been the central focus of the administration. Has everything been proposed that actually might have had a chance of passage when the Democrats controlled Congress - or that was at least worth more of a fight? And even if every proposal obviously couldn't get passed, isn't putting forward a clear policy to attack unemployment also good politics?

If an Obama supporter such as myself is not sure that attacking lingering unemployment has been at the top of the White House's economic agenda, the President has a problem. (Of course, as it happens, the Democrats have their perennial Ace in the Hole for 2012 - the GOP's lack of credible alternatives and remarkable ability to over-reach in their anti-government radicalism.  Will this blowback carry the Democrats through 2012?  Some days I think the radicalization and extremism of the GOP is all the Democrats, as a disparate coalition from Blue Dogs to Progressives, have got holding them together.)

According to the story quoted below, there is nothing of substance currently on the table - the Fed has reverted to a "priority" of fighting inflation, although core inflation (price increases not reflective of volatile shifts in global oil and agricultural  commodities markets but related to inflationary wage pressures and "too much money") is virtually non-existent.

And the White House appears to have reverted to tinkering with corporate taxes in concert with the GOP, to "restoring business confidence" - whatever that means - and promoting exports to China. That's it.

Putting Americans back to work is the central issue of 2012, and the weak record of the past several years is not reasssuring. The story this Times article tells should become a clarion call for Democrats and the White House moving forward:

Roughly 9 percent of Americans who want to go to work cannot find an employer. Companies are firing fewer people, but hiring remains anemic. And the vast majority of economic forecasters, including the president’s own advisers, predict only modest progress by November 2012.

The latest job numbers, due Friday, are expected to provide new cause for concern. Other indicators suggest the pace of growth is flagging...

But the grim reality of widespread unemployment is drawing little response from Washington.

"A Needless Housing Collapse"

Here's an antidote to the notion that has been aggressively pushed by such sources as the Wall Street Journal's op-ed page and  CNBC's Larry Kudlow that the mortgage crisis was the fault of borrowers and the government, rather than primarily a market failure and eventual collapse triggered by private lending agents who found ways to make short-term profits from aggressively pushing bad loans. The article also shows a promising policy moving forward for borrowers who are in trouble.

From Alyssa Katz at Think Progress:

John Smith's four-bedroom house stands tall on Cleveland's East Side, its tidy cream siding and green lawn oblivious to the devastation that has scarred the surrounding neighborhood. It is everything thousands of foreclosed homes in the area are not: occupied, intact, and still an asset to the family that lives in it. Smith purchased the home in 2005 through a nonprofit dedicated to repopulating the city with working- and middle-class homeowners. But Smith's investment was one of a few drops in a bucket with no bottom: The census tract he lives in, with about 600 homes, has seen more than 200 foreclosure sales in the past 15 years. "We know the inner city is the inner city, and it's no big surprise to us," Smith says. But even he is stunned at the level of devastation around him. "Whole neighborhoods are almost totally down."

The Smith family has come close to the precipice. In 2008, Smith, then 38, lost his job as a financial analyst for a bank and had trouble paying his mortgage. His credit-card debt shot into six figures. When his lender initiated foreclosure proceedings that December, the notice was a month late because the bank did not have the correct address on file for its own borrower.

The GOP's "cut taxes" litany ignores reality

The GOP's knee-jerk response to every problem is "lower taxes."  We hear it over and over and over again. Tax cuts are the cure-all.  And in response to the deficits that their fetish for tax cuts has created, the notion of raising revenue is the only option that is forbidden in this dogmatic agenda. Anything else, no matter how noxious or insane, is "on the table" - which is why we've got proposals like killing Medicare being floated.

The biggest lie in the GOP's "cut taxes" litany is that high taxes are causing unemployment, and that further cutting taxes for wealthy "job creators" is the key to recovery.  But the reality is that effective  tax rates are already the lowest they've been since before the Korean War. 

Bruce Bartlett at New York Times "Economix":

Historically, the term “tax rate” has meant the average or effective tax rate — that is, taxes as a share of income. The broadest measure of the tax rate is total federal revenues divided by the gross domestic product.

By this measure, federal taxes are at their lowest level in more than 60 years. The Congressional Budget Office estimated that federal taxes would consume just 14.8 percent of G.D.P. this year. The last year in which revenues were lower was 1950, according to the Office of Management and Budget.

The postwar annual average is about 18.5 percent of G.D.P. Revenues averaged 18.2 percent of G.D.P. during Ronald Reagan’s administration; the lowest percentage during that administration was 17.3 percent of G.D.P. in 1984.

In short, by the broadest measure of the tax rate, the current level is unusually low and has been for some time. Revenues were 14.9 percent of G.D.P. in both 2009 and 2010.

Yet if one listens to Republicans, one would think that taxes have never been higher, that an excessive tax burden is the most important constraint holding back economic growth and that a big tax cut is exactly what the economy needs to get growing again.

An old-fashioned banker talks straight about the banking sector as a "virtual casino"

Joe Nocera at the New York Times on "The Good Banker":

For nearly 30 years, (Robert G.) Wilmers has run the M&T Bank, based in Buffalo. When he took it over, M&T had $2 billion in assets; today, its assets exceed $68 billion, and it’s one of the most highly regarded regional bank holding companies. It has also been one of the best performing stocks in the Standard & Poor’s 500-stock index; indeed, M&T was one of only two banks in the S.& P. 500 that didn’t cut its dividend during the financial crisis….

Wilmers, it turns out, is that rarest of birds: a banker willing to tell harsh truths about banking. That, for instance, much of the money the big banks earn comes from trading profits “rather than the prudent extension of credit that furthers commerce.”  ...   “It has become a virtual casino,” (according to Wilmers.)  “To me, banks exist for people to keep their liquid income, and also to finance trade and commerce.” Yet the six largest holding companies, which made a combined $75 billion last year, had $56 billion in trading revenues. “If you assume, as I do, that trading revenues go straight to the bottom line, that means that trading, not lending, is how they make most of their money,” he said.

"Them that's got shall get, them that's not shall lose..."

Pat Garofolo at Think Progress has it:

Between 2000 and 2009, American workers experienced a “lost decade,” with incomes falling nearly five percent... Big bank CEO’s, meanwhile, made an average of $19 million per year between 2001 and 2010 (according to) Fortune's Colin Barr... :

Over the past decade the too-big-to-fail banks have showered a staggering $1.15 billion in cash and stock on a changing cast of hard-charging if inept chief executives, according to regulatory filings. That works out to an average paycheck of $19 million a year – this in a decade in which the biggest banks ripped off everyone in sight on their way to very nearly turning the lights out on the U.S. economy...

It’s not only in the banking industry that CEO pay has come roaring back. In 2010, median CEO pay climbed 27 percent. Median CEO compensation last year was $9 million, the highest since 2007, while the average CEO bonus grew by nearly 20 percent. CEOs at America’s largest companies now earn 343 times more than the typical worker. In 1970, the average CEO earned 28 times as much as the typical worker.

This disparity is contributing towards America’s sky-high income inequality, which is currently the worst its been since the 1920s. Currently, the top one percent of households make nearly 25 percent of the total income in the country, after they made less than 10 percent in the 1970s. Between 1980 and 2005, “more than 80 percent of total increase in Americans’ income went to the top 1 percent.”

Prof. Brad DeLong's list of 13 dumb and dishonest notions circulating among politicians and/or journalists

"Maybe we should find jobs in the Beltway."

DeLong's Baker's Dozen of Dumb and Dumber - HERE.

Not surprisingly, GOP Budget Czar Paul Ryan tops the list.

Quote of the week (month? maybe year!)

Paul Krugman:  "(P)olicy makers are sinking into a condition of learned helplessness on the jobs issue: the more they fail to do anything about the problem, the more they convince themselves that there’s nothing they could do."

Read the entire critically important column - "Against Learned Helplessness" - HERE.

The Veterans Administration Hospitals - serving those who have served better and at less cost than for-profit medicine

Projected increases in health care costs are the biggest problem area in long-run predictions of future deficits. It's common knowledge - at least one would hope - that the US has the least efficient and cost-effective health care insurance and delivery system among peer nations.  Although a variety of systems abroad deliver far better results without reverting to "socialized medicine" - England is the prime example of a fully socialized system - we might look to one fully publicly-run example on our own shores that's working very, very well if we want a window into the option of government-provided health care.

The real first flag-raising on Iwo Jima

The Veterans Administration Hospitals are a nationwide network of - literally - fully socialized medicine in the United States. And they are consistently rated the best service centers our health care system has to offer. They spend significantly less money per patient and are rated higher than private hospitals by objective measures in numerous studies.

As a reminder of our ongoing commitment to veterans of our armed forces, for Memorial Day I'm offering a  2007 commentary by Ezra Klein on the VHA:

Over the last decade or two, the VHA system has become a worldwide leader in both the adoption and the invention of health-information technology, and it has leveraged its innovations into quantifiable gains in quality of care. As Harvard's Kennedy School noted when awarding the VHA its prestigious Innovations in American Government prize:

[The] VHA's complete adoption of electronic health records and performance measures have resulted in high-quality, low-cost health care with high patient satisfaction. A recent RAND study found that VHA outperforms all other sectors of American health care across the spectrum of 294 measures of quality in disease prevention and treatment. For six straight years, VHA has led private-sector health care in the independent American Customer Satisfaction Index.

Indeed, the VHA's lead in care quality isn't disputed. A New England Journal of Medicine study from 2003 compared the VHA with fee-for-service Medicare on 11 measures of quality. The VHA came out "significantly better" on every single one. The Annals of Internal Medicine pitted the VHA against an array of managed-care systems to see which offered the best treatment for diabetics. The VHA triumphed in all seven of the tested metrics. The National Committee for Quality Assurance, meanwhile, ranks health plans on 17 different care metrics, from hypertension treatment to adherence to evidence-based treatments. As Phillip Longman, the author of Best Care Anywhere, a book chronicling the VHA's remarkable transformation, explains: "Winning NCQA's seal of approval is the gold standard in the health-care industry. And who do you suppose is the highest ranking health care system? Johns Hopkins? Mayo Clinic? Massachusetts General? Nope. In every single category, the veterans health care system outperforms the highest-rated non-VHA hospitals."

GOP "Jobs Plan" - Tax Cuts for Dummies?

The Congressional Republicans have offered up - with great fanfare - a jobs plan that has more the characteristics of a children's book than a serious policy proposal. It's a rehash of everything we've ever heard from them before, dumbed down (if one can imagine such a thing) into a menu with tendentious prologue and peppered up with lots of pictures.

Paul Krugman notes, "There’s so little there there that the document — look at it! — has to rely on extra-large type and lots of pointless pictures to bulk it out even to 10 pages."

Nor are Jamielle Bouie, at American Prospect, and  Ezra Klein at Wonkbook impressed.
 
Bouie:

House Republicans have released their plan for "America's Job Creators," and it's underwhelming, to say the least. Clocking in at a whopping 10 pages, it begins  by indicting Democrats for high unemployment, conveniently ignoring the last four years of extreme economic hardship, and blames "taxation," "regulation," and "government takeovers of the economy" for the current mess. What follows is eight pages of silly art, large text, and "solutions" that amount to the same failed Republican playbook of tax cuts, tax cuts, and more tax cuts.

Klein has more:

Academic books pack about 600 words to a page. Normal books clock in around 400. Large-print books — you know, the ones for kids or the visually impaired — fit about 250. The House GOP’s jobs plan, however, gets about 200 words to a page. The typeface is fit for giants, and the document’s 10 pages are mostly taken up by pictures. It looks like the staffer in charge forgot the assignment was due on Thursday rather than Friday, and so cranked the font up to 24 and began dumping clip art to pad out the plan…

When I asked David Autor, an economist at MIT and a specialist on labor markets, to take a look at the substance, he pronounced it a classic case of “what Larry Summers would call ‘now-more-than-everism.’”

The Genius of the GOP's "Ryancare" plan to end Medicare and push seniors into private insurance markets

Note the huge difference, not just in doubling of each senior's personal share of costs, but in total spending on health care markets per senior under Medicare vs. "Ryancare."  I'm speechless. Except to note this: anyone who endorses this plan that dramatically drives up total expenditures on an already rapidly-inflating health insurance/delivery system and claims to be a "fiscal conservative" is either a liar with a hidden agenda (privatization at any cost?)  or a moron.  It really is that simple. The non-partisan Congressional Budget Office numbers speak for themselves.

Thanks to the CBPP for another great chart.

A bit of a bright spot in manufacturing and exports?

While the numbers pale in comparison to overall job loss and continuing unemployment, over 200,000 jobs were added over the past year in the manufacturing sector. No administration has been able to match those figures in growth of manufacturing employment since Bill Clinton in 1998.  Here's a chart showing manufacturing job growth since 1997, via The Economist:

Growth in manufacturing jobs, in 1000s (charts jobs added, not totals)

According to the Commerce Department, manufacturing - which has been shrinking in this county over decades - is actually leading the recovery due to growing exports:

"The 200,000 jobs added in the past year have been concentrated in the durable goods sector, whose advance report on shipments and new orders for April will be released this Wednesday.  Exports of durable manufactured goods have jumped 13.1 percent over the year, with exports accounting for roughly 37 percent of the growth in shipments over the past year."

Overall economic news is still very bleak, but an uptick in the anemic manufacturing sector and some significant growth in our exports might well signal structural improvements in an economy that has been bleeding jobs overseas and been wildly imbalanced on the trade front for almost as many years as I can remember.

More Congressional Republicans voted to pass Medicare than voted against it

Obviously a right-wing nut...

Here's an interesting bit of historical trivia in the context of our current political discourse. Although Ronald Reagan - in his role as General Electric toastmaster - famously attacked Medicare as a scheme to "socialize medicine," Republicans were not uniformly against a government-sponsored insurance plan to cover seniors.

Reagan's words sound crazy today, warning that if a Medicare bill passed, "you and I are going to spend our sunset years telling our children and our children's children what it once was like in America when men were free."  Yeah - totally nuts and even Paul Ryan is smart enough not to go there.

But in 1965 when Medicare was actually passed, more House Republicans voted for it than against it. 70 voted yea, while 68 voted nay.  In the Senate the GOP split went in the other direction - 13 yea, 17 nay - but the divide was still close enough to indicate the bi-partisan nature of the bill's passage.

In contrast, with Medicare currently the most cost-effective segment of our admittedly problematic health insurance and delivery system, today's Republicans pushing a scheme to destroy the most efficient piece of the health insurance puzzle signifies the party as a unified front of right-wing extremism with a "cost-effectiveness be damned" privatization obsession - hardly "conservative."

A weak economy staggers along - but is anyone in Washington paying attention?

As the recovery falters and appalling unemployment numbers remain with us, politicians of both parties seem to be focused on some version of debate over the deficit and the long-term future of Medicare.  Defense of Medicare against nutty professor proposals to end it is critical, but it doesn't speak to the crisis at hand.

This political logjam is an indication of just how lacking in seriousness and skewed to the socially nihilistic Right (personified by Ayn Rand fan Paul Ryan) our political discourse has become in a time of real crisis on the jobs front. No one in Washington seems to care about the central issue of getting economic growth on track and putting Americans back to work. David Leonhardt, business and economics writer for the New York Times, sounds the alarm:

The latest economic numbers have not been good. Jobless claims rose last week, the Labor Department said on Thursday…Perhaps the most worrisome number was the one Macroeconomic Advisers released on Wednesday. That firm tries to estimate the growth rate of the current quarter in real time, and it now says annualized second-quarter growth is running at only 2.8 percent, up from 1.8 percent in the first quarter. Not so long ago, the firm’s economists thought second-quarter growth would be almost 4 percent.

An economy that is growing this slowly will not add jobs quickly. For the next couple of months, employment growth could slow from about 230,000 recently to something like 150,000 jobs a month, only slightly faster than normal population growth. That is certainly not fast enough to make a big dent in the still huge number of unemployed people.

Are any policy makers paying attention?