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Well, there they go again. Less than a week after its chief economist apologized for wrongly imposing austerity on European nations – hey, sorry about that, unemployed millions! – the International Monetary Fund is misleading another country into the miasma of austerity economics: ours.

The IMF released a report that rates nations on their “profligacy” and places the United States at or near the top. Among other things, this demonstrates that their grasp of language rivals their grasp of economics.

To be “profligate” means that you’re “wildly extravagant” and “completely given up to dissipation and licentiousness.”  Synonyms for “profligate” include ”debauched,” “degenerate,” “depraved,” “dissipated,” “dissolute,” “iniquitous,” “lax,” “lewd,” “libertine,” “licentious,” “loose,” “promiscuous,” “reprobate,” “shameless,” “unprincipled,” “vicious,” “vitiated,” “wanton,” “wicked,” “and “wild.”

I don’t think they’re suggesting that the halls of Washington rival Caligula’s court. Nobody’s marrying their sister, opening a brothel, or installing a horse in the Senate. (Although, to be fair, it couldn’t do much worse than the current minority.)

The Real Debauch

The far right (which is to say, all of the American right) will love this idea, of course. It plays into all their worst prejudices. But is the United States government really on a wild spending spree?

Poverty’s at record levels and so is unemployment.  The truth is, we don’t have a spending problem at all. Then what is our problem? This is: We’re coddling corporations and indulging the wealthy.

Repeating the IMF’s poorly-chosen label is like calling Mom and Dad “profligate” for trying to feed Grandma after their billionaire nephew stole the car, the home and the bank accounts.

We’ve got the charts to prove it.

Words Matter

The IMF report calls us “profligate” because of the imbalance between the amount of money our government collects and the amount it spends. But, as Howard Schneider notes in The Washington Post, Denmark offers much better social benefits than the U.S. and isn’t called “profligate” because it collects the revenues to pay for it.

Still, the term’s a loaded one and shouldn’t have been used. It won’t lead to a serious debate about tax revenues in this country, and we’re certainly not having one now. We’re fixated on spending, and the revenue side of the discussion has been narrowed so radically that the only debate going on in Washington is over which six-figure incomes will be taxed at a historically low rate of 39.5 percent.

Let’s go to the charts. First up:

1. We spend very little on government in this country.

And remember, we spent a trillion dollars on the wars in Iraq and Afghanistan during this period, along with a lot of other unnecessary military spending. (The Pentagon takes roughly one-fifth of the government’s budget.)

2. Government spending went up after Wall Street crashed the economy, because it had to. (Revenues went down, too.)

(via Business Insider)

3. But taxes in this country are actually low …

Source: Center for American Progress

4. … especially for the well-to-do, who are paying historically low rates …

(more…)

The private sector created 155,000 jobs in December, almost exactly the average for the 11 previous months of 2012 and for all of 2011. Once again, it is a record far too weak to produce real progress towards either an adequate recovery or decent growth in wages and salaries. At this rate of job creation, according to the Economic Policy Institute, it will take another decade to get back to the employment rate of early 2008.

According to the Labor Department, there were 7.5 million net jobs lost in the recession, and a gain of only 3.5 million net jobs so far in the recovery. We have 4 million fewer jobs now than five years ago, and a much larger labor force.

Consider the connection between these tepid job figures and the debate that still occupies center-stage in Washington — deficit reduction. Supposedly, businesses are not creating enough jobs because business leaders are anxious about the Federal debt.

For months, we have been hearing that businesses have been putting off making new investments or hiring new workers for fear that Congress would fail to cut the federal deficit. The austerity lobby helpfully put reporters in touch with businessmen who claimed that the uncertainty about the budget was dampening their willingness to expand, producing stories like this one in the New York Times last August. The Times contended:

A rising number of manufacturers are canceling new investments and putting off new hires because they fear paralysis in Washington will force hundreds of billions in tax increases and budget cuts in January, undermining economic growth in the coming months.

But this turned out to be just about total baloney. During the months when the Congress and the press kept everyone on the edge of their seats wondering about the dreaded fiscal cliff, business behavior went on as normal — and a mediocre normal at that. The lousy rate of job creation hardly changed. Detroit enjoyed a good fourth quarter as very low-interest rates stimulated auto sales. Christmas sales were about what was predicted, as consumers turned to their credit cards.

To the extent that the economy has remained stuck in first gear, it has everything to do with high unemployment and lagging wages, and just about nothing to do with the fiscal cliff or worries about the debt ratio 20 years down the road.

The sluggish recovery has intensified a power shift from working people to corporations that has eroded the standard assumptions about the nature of employment. What the Labor Department calls “payroll employment” — the basis for both its statistics and assumptions — is becoming every more scarce. (more…)

The December Jobs Report is a warning to Washington:  This economy is growing – with 155,000 new jobs and 7.8 percent unemployment. But that’s barely enough to cover the new workers coming in to the workforce.

Now every working American will face an increase in their payroll taxes. Spending at the Federal level will continue to slow. With the winding down of the Recovery Act and the cuts imposed by the last debt ceiling deal, Congress and the President should stop focusing on deficits and start working to create jobs and get Americans back to work.

The deficit is already declining in relation to the economy, faster than any time since the demobilization at the end of WWII. Tax hikes and spending cuts will cost jobs.  If growth slows, the pace of deficit reduction will slow.  If the economy turns back to recession, deficits are likely to rise. The first rule of Congress should be to do no harm. (more…)

The news today from the Bureau of Labor Statistics is that the U.S. job market is treading water.

The number of new jobs created in December (155,000), and percent unemployment (7.8), were the same as the revised numbers for November.

Also, about the same number of people are looking for work (12.2 million), with additional millions too discouraged even to look.

Put simply, we’re a very long way from the job growth we need to get out of the gravitational pull of the Great Recession. That would be at least 300,000 new jobs per month.

All of which means job growth and wage growth should be the central focus of economic policy, not deficit reduction. (more…)

Part of the so-called “fiscal cliff” agreement included extending federal unemployment insurance (UI) for workers who have been jobless for more than 26 weeks.

The National Employment Law Project (NELP) details five ways extending UI benefits the economy.

Reauthorizing the Emergency Employment Compensation (EUC) program will:

1. Provide unemployment insurance for more than 2 million unemployed workers hunting for a new job and another 1 million in the first quarter of 2013. Jobless workers who receive unemployment insurance are more likely to be proactive in seeking work than those who do not receive it, devoting more hours to the job search.

2. Pump up to $30 billion into the national economy in 2013 and up to twice that in resultant economic activity. Unemployment insurance offers tremendous “bang for the buck” to the economy: every $1 the government spends on it creates $1.61 to $2 in economic stimulus—money that saves and creates jobs in communities across the country.

3. Reduce economic hardship. In 2011, unemployment insurance kept 2.3 million unemployed workers and their families out of poverty. (more…)

The job market in November performed notably better than expected, especially in light of expected damage to hiring from late October’s Hurricane Sandy.

The Bureau of Labor Statistics reported that payrolls grew by 146,000 last month and unemployment ticked down to 7.7 percent, the lowest rate since late 2008. That decline, however, was once again driven by labor force withdrawal, so it should not be taken as a sign of a tighter job market.

Analysts were expecting the impact of the storm on the most densely-packed labor markets in the country to significantly lower the job count. But the Bureau reported that their survey response rates in the affected states were in the normal range, so they don’t believe Sandy is “substantively” distorting these numbers.

Construction data may, however, reveal some storm related effects, with jobs off 20,000 in November after growing slightly in prior months as the housing market has begun to show signs of life (we’ll have to wait for the state data release later in the month to see if the losses were in affected states).

Downward revisions took 49,000 jobs off of the September and October payroll counts, so, factoring in today’s report, the average pace of payroll growth over the past three months is about 140,000 overall and 150,000 in the private sector. That pace is consistent with an economy growing at a decent clip and with a slowly declining unemployment rate. It is not, however, fast enough job growth to quickly reduce the large gaps in output, employment, and earnings that continue to hold back working families.

A few details:

• Average weekly hours held steady, another unexpectedly positive result given Sandy’s impact.
• I’ve been closely watching the wage gauges for evidence that the persistently high unemployment rate is continuing to hack away at wage growth. Today’s numbers show nominal wages of middle-wage workers growing only 1.3 percent, year-over-year, an historically very low rate and well behind inflation, which is running above 2 percent — so real paychecks are declining for many in the workforce. (more…)

Do you remember the last time the unemployment and job numbers were published? Do you remember that former GE CEO Jack Welch blasted the Bureau of Labor Statistics (BLS) for political bias because the numbers showed a sudden and significant drop in unemployment to 7.8 percent or two tenths of a percent below the critical 8 percent threshold?

Do you remember that Jack said the movements then reflected in the numbers were impossible and that the way the numbers were collected and calculated was illogical and basically said the political fix was in?

Well the numbers came out again Friday morning. They show an increase of 175,000 jobs but also an increase in the unemployment rate from 7.8 to 7.9 percent. Now at first glance that seems a little odd. Jobs are increasing and the unemployment rate is rising? (more…)

YES – 35 Ways!

In every presidential election, candidates ask the electorate: “Are you better off now than four years ago?” The last time that question was asked – November, 2008 — may seem long ago, but that is because we quickly forget how much we have recovered.

Four years ago, the economy had tanked, banks were broke and our manufacturing industry on the brink of collapse. Unemployment was high, growing by leaps and bounds. Working Americans were losing their homes and health coverage at unprecedented rates. Small businesses lacked access to credit and college students couldn’t find loans.

Four years later, more Americans are working and prospects for further growth are in place. Banks have stabilized and manufacturing is on the rebound. The Iraq War is over and Osama Bin Laden is dead. Veterans have better care, workers have more training opportunities and small businesses have access to credit. Unemployment and foreclosure rates have dropped drastically and more people than ever have access to quality health care. Did we mention that the stock market is up 67% as well?

Below are 35 ways we are better off since President Obama was sworn into office. Take a look and remind yourself how far we have come. Share them with friends and family. Not only is the car out of the ditch, but it is back on the road picking up speed, moving forward toward a better future for all Americans. (more…)

Four years ago, hundreds of thousands of people were applying for unemployment insurance benefits each week.  In the third week of October 2008, nearly half a million people filed initial claims, signaling that they had recently lost their jobs.  By the first quarter of 2009, every week more than 600,000 people were filing initial claims.

Now, instead, the labor market is improving.  In the week that ended Oct. 6, the number of workers filing new claims for jobless benefits fell to its lowest level in four and a half years.  More importantly, the number of new unemployment claims has steadily decreased since the spring of 2009.

The number of initial claims is an important indicator of economic health.  It is more precise than looking at the total number of workers who are receiving unemployment benefits because the total can be artificially depressed by workers whose unemployment benefits have run out. The number of new claims measures only those who have recently become unemployed, making it a much more accurate gauge of employment trends.  Reductions in initial claims over the past three years show that the rate of job loss has significantly dropped, meaning the economy is becoming stronger.

Reversing the rising unemployment of four years ago took substantial investment by the federal government.  The economic stimulus, passed in 2009, extended unemployment benefits, which gave furloughed workers additional time to find new jobs and gave them a few more bucks to spend, which, in itself, stimulated the economy. Just as importantly, the stimulus helped curb unemployment by supporting businesses.  $51 billion of the stimulus went toward stabilizing companies affected by the failing economy so that they would not be forced to lay off more workers.  (more…)

ABC News, the Wall Street Journal and other news media have reported on details, uncovered by the nonpartisan Congressional Research Service, of how thousands of people with annual incomes exceeding one million dollars have applied for and receive unemployment benefits.  The number of households with annual incomes in excess of $100,000.00 receiving unemployment benefits is many times larger.

This would definitely seem to put a lie to right-wing propaganda regarding government “benefits” and “entitlements.”  It isn’t just the needy who use them.

I am not an economist, but I’ve always regarded unemployment benefits as a “scarce resource.”  Consequently, of perhaps a half
dozen times when I would have qualified for unemployment compensation, I applied only one time (and was granted benefits). After a few short weeks I found a job and the benefits stopped.

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