Recently in Economy Category

Calculated Risk links to a Washington Post story and graphic highlighting just how bad the 2000s were for U.S. workers.

As the Post's Neil Irwin writes:

There has been zero net job creation since December 1999. No previous decade going back to the 1940s had job growth of less than 20 percent. Economic output rose at its slowest rate of any decade since the 1930s as well.

Middle-income households made less in 2008, when adjusted for inflation, than they did in 1999 -- and the number is sure to have declined further during a difficult 2009. The Aughts were the first decade of falling median incomes since figures were first compiled in the 1960s.

And the net worth of American households -- the value of their houses, retirement funds and other assets minus debts -- has also declined when adjusted for inflation, compared with sharp gains in every previous decade since data were initially collected in the 1950s.

Heck of a job, President Bush. Thank God for those job producing and revenue producing tax cuts!

Oh. Never mind.

The Center for Budget and Policy Priorities has an excellent new report explaining the causes of the federal budget deficit.

If you guessed, as some of our Tea Bag friends appear to argue, that the deficits began only on January 20, 2009, you're wrong!

The Center for Budget and Policy Priorities rightly explains how President Obama inherited the vast majority of the deficit from his predecessor:

The events and policies that have pushed deficits to astronomical levels in the near term, however, were largely outside the new Administration's control. If not for the tax cuts enacted during the Presidency of George W. Bush that Congress did not pay for, the cost of the wars in Iraq and Afghanistan that began during that period, and the effects of the worst economic slump since the Great Depression (including the cost of steps necessary to combat it), we would not be facing these huge deficits in the near term.

Again, I will not find any deficit hawk credible if he or she did not oppose the Bush tax cuts or demand that Bush find a way to pay for the wars in Iraq and Afghanistan.

If you weren't there fighting this fight under 43's misrule, when projections of over $5 trillion in surpluses were turned into trillions of red ink, I'm not really interested in listening to your blather now.

Much will likely be made over the fact that the stock market did not gain anything during the decade of the 00s. (And if when we consider the impact of inflation, and adjust the numbers accordingly, the results will appear even worse.)

But as Calculated Risk points out, we are going to finish the decade of the 00s with fewer total jobs in the United States than we had when the decade began.

That's right: an entire decade in which total jobs were lost. Heck of a job.

And yet there are, stunningly, actual political leaders, who presumably still have functioning brains, who believe we should resort again to the same economic policies which created this calamity.

Answering Dean Baker's question, I think it should be news when the Chairman of the Federal Reserve does not correctly describe his organization's mission.

As Baker notes, full employment (actually part of the Federal Reserve's actual mission) is not the same as growth (what Bernanke told the Congressional hearing).

Atrios fears he may be making an obvious point when he notes one of the ways to fix the deficit so to make sure employment is high.

Alas, I fear it is not at all obvious as it should be to our self-proclaimed-and-quite-issue-selective deficit hawks.

The Big Picture's Barry Ritholtz is unimpressed with Treasury Secretary Timothy Geithner's announcement that that TARP program is close to concluding.

The government, first under Bush/Paulson, now under Obama/Geithner, has set a horrific precedent. Banks, Investment houses and speculators are well aware that the Federal government stands ready to intervene when the screw ups are large enough.

That was one of the lessons of the Bailouts of Bear Stearns and Lehman Brothers. Don't just mess up, bankers learned . . . but make sure your cock ups are so enormous as to threaten the entire economic system. The perverse moral hazard of the 2008 Bailouts is that it is very likely to encourage greater risk taking in the future, once the current era fades into distant memory.

Nothing good seems to come from the Obama Administration taking ownership of programs created by the Bush/Cheney regime.

From the Big Picture, here's an interactive chart from the New York Times showing what percentage of the population in each of the nation's counties are receiving food stamps. The program now feeds 1 in 8 Americans and 1 in 4 children across the country.

Michael Panzner at the Big Picture links to PNC Financial Services' annual Christmas Price Index, which computes how much the items in the "Twelve Days of Christmas" would cost each year.

Since the PNC index began in 1984, interestingly enough, the price of the items in the carol have risen only 69 percent, much less than the doubling in the headline consumer price index over that time. (And much less than the real inflation rate, which the headline CPI measures mask.)

So, you may want to head out for the partridge and the pear tree, etc.

Digby saves me the trouble of finding former New York Governor Eliot Spitzer's quote from the Rachel Maddow Show this week about whether we should fear threats from Wall Street that regulating compensation will result in people leaving their jobs. Spitzer said:

There's an old saying, I think it was De Gaulle. 'The graveyards are filled with indispensable men.' The AIG folks who are saying they're indispensable - test them. I think it's time to call their bluff. Say to them, 'you want to leave? Go away. We will replace you at one third of the pay.' The entire structure of Wall Street pay is out of control.

Amen.

These people would have no bonuses at all without the bailout of the American taxpayer. Now, in gratitude, they want to hold us hostage?

As Digby notes, in a country of 300 million people we can find others to hold down these positions. It's time to put an end to this reckless greed. If Wall Streeters don't like it, they can go. And they should not wait for the door to hit them on their behinds as they leave.

As Professor Brad DeLong explains in his blog post headline: "The People Who Sell Their Forecasts to Paying Clients Believe the Stimulus Is Working."

But what would these liberal communist socialist sympathizers know?

I agree the stimulus package is helping the economy. But it was not enough -- and more of it should have been used on infrastructure and other projects to create jobs.

Arianna Huffington and James K. Galbraith are pessimistic about the Obama Administration's ability to handle the growing unemployment crisis.

Huffington wonders if unemployment will be President Obama's Katrina and Galbraith notes the structural barriers to enacting policies necessary to improve employment in the short term.

I am amazed that so many leading Democratic politicians continue to act and think as if they will not be blamed for unemployment over 10 percent -- and more realistic measures reaching 17.5 percent in October.

The biggest failure of the Obama Administration so far has been its reliance on advisors who insist on choosing Wall Street's desires over Main Street's needs.

In the end, many people vote their jobs. I fail to understand how this can be surprising given how many people rely on jobs for the health care -- or are one missed paycheck away from economic disaster.

A Democratic Party that cares more about protecting the bonus pools of Wall Street giants over the job situation of the average American family is destined to fail.

Bruce Bartlett posts a must-read column at Capital Gains and Games targeting all of those Republicans who today oppose health care reform but in 2003 voted for the Medicare prescription drug benefit as unbelievable deficit hypocrites. As Bartlett explains:

Just to be clear, the Medicare drug benefit was a pure giveaway with a gross cost greater than either the House or Senate health reform bills how being considered. Together the new bills would cost roughly $900 billion over the next 10 years, while Medicare Part D will cost $1 trillion.

Moreover, there is a critical distinction--the drug benefit had no dedicated financing, no offsets and no revenue-raisers; 100% of the cost simply added to the federal budget deficit, whereas the health reform measures now being debated will be paid for with a combination of spending cuts and tax increases, adding nothing to the deficit over the next 10 years, according to the Congressional Budget Office. (See here for the Senate bill estimate and here for the House bill.)

Maybe Franks isn't the worst hypocrite I've ever come across in Washington, but he's got to be in the top 10 because he apparently thinks the unfunded drug benefit, which added $15.5 trillion (in present value terms) to our nation's indebtedness, according to Medicare's trustees, was worth sacrificing his integrity to enact into law. But legislation expanding health coverage to the uninsured--which is deficit-neutral--somehow or other adds an unacceptable debt burden to future generations. We truly live in a world only George Orwell could comprehend when our elected representatives so easily conflate one with the other.

Where were all the tea partiers when the Republicans were holding open votes for three hours to pass the deficit-financed Medicare prescription drug benefit? Where were they when Republicans took large projected surpluses and turned them into debt (and a near depression) during the Bush Administration?

I'm sorry, but the Republican Party long ago lost any right to discuss fiscal responsibility. As Bartlett notes, real conservative objections to the expansion of government influence in health care exist: but cries of fiscal recklessness are not among them.

You can watch the unemployment crisis sweep across the nation by viewing an animated image tracking the unemployment rate by county from January 2007 to the present.

(Hat tip: The Big Picture)

FiveThiryEight's Nate Silver runs the numbers as he tries to project from where 60 votes for the climate legislation may come in the United States Senate.

I really hope I'm wrong about the pun in the title. Calculated Risk looks at the report and updates some scary looking charts.