As I read news sites across the toobz and see the occasional cable talking heads populated by the Beltway Village
Idiots Pundits, it is often difficult to keep myself from dissolving into a mass of protoplasm due to simple rage.
First up today is this article from Reuters on Sunday, March 27:
(Reuters) – The U.S. labor market is finally improving, just when many of the other economic indicators are wavering.
Jobs are considered a lagging indicator. They typically recover many months after the economy comes out of a recession, and this cycle was no exception. So will troubles in Japan, Libya and elsewhere push up U.S. unemployment later this year?
Friday brings the March employment report, and economists polled by Reuters are looking for growth of about 188,000 jobs, with the unemployment rate holding steady at 8.9 percent.
Any bets on how the headlines Friday will include some variant of “economists surprised“? I’m betting right now that the 188K figure will be way high for the entire economy. Of course, since the BLS jobs numbers will be first out this month ahead of the ADP Jobs reports on private sector jobs created for the previous month which appears the first Wednesday of each month, my bet will also be that the ADP report will be more positive than the BLS report so that will get all the good publicity next week and folks will forget the reality of the BLS report.
Sunday also had this article from the Boston Globe on Massachusetts going after the rail funds that Florida’s Gov Scottdemort rejected:
When the Obama administration awarded $10.4 billion for high-speed rail projects last year, Florida was a big winner, scooping up 20 times as much money as Massachusetts. But now that Florida’s new governor has rejected his state’s $2.4 billion for political reasons, Massachusetts officials are racing to make another pitch to Washington.
The competition is likely to be fierce. Officials and members of Congress from dozens of states began lobbying Transportation Secretary Ray LaHood almost as soon as Governor Rick Scott of Florida turned down his state’s funding in mid-February. Scott followed in the path of two other Tea Party movement-backed governors, in Wisconsin and Ohio, who had also rejected what they viewed as wasteful and ill-advised federal rail funds.
This month, LaHood announced a formal contest for the spurned money, with applications due April 4. The $2.4 billion can be used not only for true high-speed rail, but also for projects improving existing links or building new conventional connections between cities at least 100 miles apart.
I don’t know whether it is irony, grasping at straws, or what, but today’s (Tuesday, March 29) Milwaukee Journal-Sentinel has an article that WI Gov Scott Walker, after having previously rejected the USDOT Hi-speed rail funds, has now decided he wants to go after some of the funds after all:
Less than four months after losing nearly all of an $810 million grant, Wisconsin is again seeking federal high-speed rail money – this time to upgrade the existing Milwaukee-to-Chicago passenger line.
Gov. Scott Walker’s administration will announce Tuesday that the state will seek at least $150 million to add equipment and facilities for Amtrak’s Hiawatha line.
The upgrades apparently would not increase the speed of the 79-mph line but could provide the capacity to increase the Hiawatha’s frequency from the current seven round trips daily.
In a bizarre twist, some of the money that Walker is now seeking originally was allocated for the Milwaukee-to-Madison route he previously turned down. That money is available because a fellow Republican governor rejected it, as well.
So Rick Scott follows the lead of John Kasich and Scott Walker in rejecting the funds for Hi-speed rail but after Rick Scott rejects the funds, Scott Walker decides “Oopsies, I want this money after all.” With all due respect to the folks of WI, I do hope Transportation Secretary LaHood doesn’t allow this do-over.
Surprisingly, there have been some articles in TradMed this week pointing out some unpleasant truths to the governors crying poor all the time (not that anyone is really paying attention to the articles mind you.) First up is from McClatchy, again from Sunday, with the headline:
States broke? Maybe they cut taxes too much
WASHINGTON — In his new budget proposal, Ohio Republican Gov. John Kasich calls for extending a generous 21 percent cut in state income taxes. The measure was originally part of a sweeping 2005 tax overhaul that abolished the state corporate income tax and phased out a business property tax.
The tax cuts were supposed to stimulate Ohio’s economy and create jobs. But that never happened once the economy tanked. Instead, the changes ended up costing Ohio more than $2 billion a year in lost tax revenue; money that would go a long way toward closing the state’s $8 billion budget gap for fiscal year 2012.
A 2008 study by Arizona State University found that that state’s structural deficits could be traced to 15 years of tax cuts, mainly income-tax reductions that “were not matched by spending cuts of a commensurate size.”
In Texas, which faces a $27 billion budget deficit over the next two years, about one-third of the shortage stems from a 2006 property tax reduction that was linked to an under performing business tax.
In Louisiana, lawmakers essentially passed the largest tax cut in state history by rolling back an income-tax hike for high earners in 2007 and again in 2008.
The article goes on to list many other states facing the same problems due to excess tax cuts, all to ostensibly “improve the business environment.”
But how seriously is there a need to “improve the business environment?” This article from McClatchy and this article from Slate, both point out that businesses are sitting on “strong” (McClatchy) to “record” (Slate) profits. From the McClatchy article (again from Sunday):
WASHINGTON — U.S. corporations continue to post strong profits quarter after quarter, even as the unemployment rate remains high and the U.S. economic recovery plods along in fits and starts. What gives?
Corporate profits grew 36.8 percent in 2010, the biggest gain since 1950, according to Friday’s latest report from the Bureau of Economic Analysis. No sign could be more clear that U.S. companies see the so-called Great Recession in the rearview mirror.
Another explanation for strong corporate profits has been growth in productivity, or hourly output per worker. The Labor Department reported on March 3 that annual average productivity rose by 3.9 percent in 2010. Aside from that strong productivity growth, unit labor costs fell during the same period by 1.5 percent. That reflects that worker compensation didn’t keep pace with rising output. Put another way, businesses produced more than compensation rose.
Normally, companies can squeeze only so much out of workers before they must hire more of them or fall behind competitors. Many economists thought hiring would have picked up by now as productivity rose, yet job creation continues to lag.
From the Slate article (from Monday):
On Friday the federal government released the latest chapter of a year-old economic mystery: If you’re a corporation, the economy is great. If you’re a worker, the economy is still pretty horrible. According to the Bureau of Economic Analysis, real corporate profits neared an all-time high in the last three months of 2010, with companies raking in an annualized $1.68 trillion in pre-tax operating profits. (After tax, that comes to $1.25 trillion, about equal to the GDP of India.) The Federal Reserve estimates that companies are sitting on about $1.9 trillion. At the same time, unemployment remains at 8.9 percent, and job growth is still anemic.
How can the corporate economy be so profitable while the jobs economy remains so weak? Part of the answer lies in improved productivity. When the recession hit, businesses fired millions of workers then asked the rest to make up the difference—and, in many cases, they did. Productivity increased 3.9 percent in 2010, while labor costs fell. To simplify: Businesses paid fewer workers to do more. In addition, big corporations found customers overseas. Americans might not be ready to spend just yet, but consumers in Asia and elsewhere are—exports climbed 21 percent to $1.28 trillion in 2010.
But in the last quarter of 2010, the story was all about Wall Street. Profits actually decreased a bit at nonfinancial firms. But companies like investment banks and insurers saw profits climb to an annualized $426.5 billion. The financial sector now accounts for about 30 percent of the economy’s overall operating profits.
What makes America’s financial firms so profitable, so soon after the housing collapse and financial crisis? At the heart of the matter is a decrease in competition: The recession knocked out Bear Stearns, Lehman Bros., scores of banks, and dozens of other companies, leaving the survivors bigger fish in a less-crowded stream. Additionally, financial firms have enjoyed ample support from Uncle Sam. Since the recession hit, the availability of cheap cash from the Federal Reserve has helped increase banks’ margins, and thus their profits.
So it’s squeeze the workers and subsidize the banksters and the “businesses.” And what about the Unemployed? Well, Michigan is joining the states who are cutting Unemployment in order to save it (via CNN):
NEW YORK (CNNMoney) — Michigan has reduced unemployment benefits, with Gov. Rick Snyder signing into law a bill cutting the payouts by six weeks.
Snyder signed the bill late Monday, cutting extended benefits to workers to 20 weeks from 26 weeks.
Snyder, in a statement announcing the signing, said the law was necessary to maintain benefits for about 35,000 Michigan workers. He said that, as of April 1, Michigan would have no longer qualified under federal programs allowing states with high unemployment to pay extended benefits.
ARRRRRGGHGGHHHHHH!!1!1!1! I’m beginning to think that Banana Republic would be an improvement over what we have today. I guess “shared sacrifice” only applies to people with nothing anyway because it is fairly obvious that businesses, banksters, and corporations are only willing to see other people sacrifice and they are aided and abetted by so many elected officials.
And because I can:
Cross posted from Just A Small Town Country Boy