First of all, I reject any attempt to pass Stimulus III, with more of the same make-work spending, pork barrel projects, thinly-disguised green energy subsidies, state government bailouts, "tax cuts" to households not paying federal income tax and other government "pushing-on-a-string" sweepstakes giveaways. The Democrats, with landslide majorities in both houses of Congress and the Presidency, last year could and should have used a scaled-down "stimulus" package to (in addition to relief spending) bolster the business side of the economy, e.g., payroll tax rebates, investment tax cuts, higher-level business income tax rate cuts, accelerated depreciation schedules, freezing Bush-era personal tax brackets for small business owners, small business loan subsidies, etc. And, of course, the President's repeated talking down the economy and threatening business with new health care-related taxes, penalties, or mandates, energy tax hikes, etc. were counter-productive. I have zero tolerance for Democrats constantly bitching about the poor hand they were dealt and absurdly asserting that throwing money at politically-favored policies and morally hazardous tax "cuts" staved off an even greater recession or depression.
We need to understand that Americans were already beginning to save more income by the spring of 2008; economists now seem to agree the recession began in late 2007, and there is a natural tendency of people to save during periods of economic uncertainty. Most of the first (Bush) stimulus package was saved, which did little to prop up the 70% of the economy dependent on consumer spending. The Democrats tried to improve over a one-time stimulus bump last year by spreading the stimulus across months; there are a couple of problems with that: the modest size of the stimulus installments and its temporary nature. I do not see any evidence the stimulus tax cuts have been effective, and I do not see the logic in extending them; their principal purpose is political rather than stimulative in nature (i.e., Obama's campaign promise of cutting taxes for 95% of workers).
The House in December passed a so-called jobs bill 217-212, which I oppose. It tried to reuse uncommitted TARP funds (which, by law, should be used to pay down part of the national debt; for me, that's not a negotiable item), adds thinly-disguised state/local bailout funds (i.e., to prevent layoffs of police, firefighters, and teachers, but money is fungible: state and local governments should make the hard decisions to establish priorities and cut costs; I do not like the moral hazard of the federal government reinforcing state/local governments not establishing rainy day funds and failing to come to grips with excess labor/benefit costs), and adds more infrastructure spending. As far as I'm concerned, it's little more than throwing good money after bad and merely an extension of last year's failed stimulus package.
The Senate seems to be following a different, more bipartisan strategy, such as in the Schumer-Hatch proposal : a combination of relief spending (e.g., extending unemployment benefits and COBRA subsidies) and business payroll tax holidays for hiring the jobless (with an additional credit on the new employee's first year anniversary) and other business-friendly incentives. This is not what I would prefer. I believe in broader-based, permanent measures; it's difficult to see how the proposed needle-threading would work in practice, because it implies a preference for the long-term unemployed, and many HR departments and recruiters treat employment gaps as red flags. And if you would have hired an unemployed person anyway, the tax break is found money. There could be different, simpler formulas, e.g., a limited-term payroll tax credit for new hires, or rehires after, say, a period of 6 months. Unions worry that this could provide a perverse incentive to fire workers, but, in fact, employers have natural incentives to retain workers, e.g., training costs, industry and business knowledge, etc.
We conservatives are naturally wary of the moral hazard associated with relief funding; it can lead to analysis paralysis in terms of making tough decisions, e.g., moving to an area with better prospects in one's profession. (I did so myself in 2004; I believe that the Chicago area lost more white-collar jobs in the early decade than any other region of the country. It's easier to defer the decision when you get a check for occasional visits to a local unemployment office or documenting occasional job search activities.) However, a smaller, more balanced Senate bipartisan package is a good start; I do hope they broaden the package, because to a job seeker, a job is a job, whether it's a small company or big company doing the hiring, and the nuanced progressive Democrats are shooting themselves in the foot by ignoring economically successful companies, because growing companies hire workers...
Unemployment Rate is 9.7%: Is This Good News?
Well, we know the general pattern is for employers to look for additional productivity from a consolidated worker base, then an uptick in the hiring of temporary workers (without benefits), and finally an expansion of employment as recovery gains firm footing. Obama is willing to look for any silver lining, and so clearly he sees a decrease from 10% to 9.7% as a step in the right direction, and the rate of job cuts has significantly slowed from a year ago. But the ambivalent reaction of the stock market to the "good news" is striking and disturbing, because the stock market seems to be signaling a possible double-dip recession.
The unemployment rate is somewhat of a convoluted concept: after all, the number of jobs actually fell (nonfarm payroll jobs fell by 20,000), so doesn't that mean more people are unemployed? In short, yes.
Just to explain: the Bureau of Labor Statistics uses the Current Population Survey (from a statistically sample of 60,000 households); the official unemployment rate reflects people without paid work whom have actively looked for work over the past 4 weeks, inclusive (e.g., answered a want ad or responded to an online job announcement). For January, this was 9.3 million people. (Note that the number of employed include the 8.3 million involuntary part-time workers.) People who have not actively looked for work over the past 4 weeks are NOT considered part of the labor force and hence are not classified as unemployed. They include 2.5 million "marginally attached" workers: 1.5 of which have actively looked for work over the last 12 months and the remainder "discouraged workers". The former group includes people not looking for work recently because they are enrolled at a college or job training program or for family reasons; the latter includes people whom simply have given up an active job search in this economy.
Thus, a newly laid off worker does show up as unemployed over the last month, while two unemployed people have stopped looking during the same period (say, we have 10 people initially in the labor force). We have 2/10 > 1/8 (instead of 3/10). Even though we've lost jobs, the official unemployment rate has decreased, even though the "real" unemployment rate has increased, an artifact of how we arbitrarily choose what constitutes the labor force.
The good news? An uptick in temporary hiring and growing overtime in manufacturing. On the down side: a number of these jobs (8.3 million) are involuntary part-time, not full-time, and the average duration of unemployment has grown roughly 80% over the past year to almost 7 months. Obama can spin the numbers any way he wants to, except he fails to point out that in only one month last year when the number of jobs increased (November) and we experienced the worst cumulative job loss in decades in 2009, despite early year passage of the stimulus bill.
Political Cartoon
Glen McCoy shows the reaction of many native New Yorkers unwilling to pay an outrageous amount of tax money so the Obama Administration can score a political point by trying to recast terrorism as criminal behavior in the proposed NYC show trial of KSM, whom undoubtedly would use the trial as a soapbox, and I'm also concerned about the government providing too much information about our intelligence programs to the enemy. I've discussed some of the distinguishing characteristics of terrorist versus criminal actions here; other relevant distinctions have been raised, including state sponsorship, well-trained/planned (vs. ad hoc, opportunistic) activities, and direct challenge to (versus evasion of) authority figures.
Musical Interlude: Willie Nelson & Waylon Jennings
"Blue Eyes Crying in the Rain"
"Luckenbach, Texas (Back to the Basics of Love)"
"Mamas, Don't Let Your Babies Grow Up To Be Cowboys"
