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As we see the various articles today about President Obama and the “grand bargain” being offered to get Republican votes for raising the debt ceiling, we also see further indications of the total cluelessness of so many of the folks who live inside of the beltway village.

A few weeks ago, I wrote this post explaining how good jobs would attack the so-called deficit problem. This is without addressing the $3.7T plus costs of our wars since 2001 nor that the cost of the Bush/Obama tax cuts are far larger contributors to the “problem.”

The last few days, I have seen a couple of articles reinforcing for me that Pete Peterson and his acolytes are winning the battle. Just last Friday (July 1), Bloomberg had this article on the Government Accountability Office releasing a study (pdf) on how people are going to have to delay collecting Social Security and “buy an annuity” in order to pay for their retirements:

“The risk that retirees will outlive their assets is a growing challenge,” according to a study from the Government Accountability Office released today. Increased life expectancies and health-care costs coupled with declines in financial markets and home equity over the last few years have “intensified” workers’ concerns about how to manage their savings in retirement, the report said.

…snip…

“The risk that retirees will outlive their assets is a growing challenge,” according to a study from the Government Accountability Office released today. Increased life expectancies and health-care costs coupled with declines in financial markets and home equity over the last few years have “intensified” workers’ concerns about how to manage their savings in retirement, the report said.

Of course, the study does not and cannot explain how we are all supposed to be able to come up with the cash to buy an annuity nor does it explain how we’re are supposed to find insurance companies that will actually be around to pay off on the annuities, even if we could afford them.

Today’s (Thursday July 7) Washington Post continues in the same vein with this column from Michelle Singletary:

A survey by First Command Financial Services found that almost half of respondents said they plan to work into their 70s. Those participating were ages 25 to 70, with annual household incomes of at least $50,000.

Seventy-six percent who haven’t retired yet said they are likely to consider working at least part time when they do retire. Many said they planned to work longer because they need the income. Some who said they have sufficient savings wanted to keep working so they could delay pulling from their retirement nest egg for an idle period that could last 30 years or more.

…snip…

Recent research by EBRI found that even if workers delay retirement into their 80s, there is still a chance they will not have enough money in retirement.

In 2003, EBRI created a retirement security projection model to assess people’s retirement income prospects. The 2011 version added a new feature, which allows households to see whether delaying retirement past 65 could help meet their income needs. The model found that 84 is the age at which 90 percent of low-income households would have a 50 percent probability of having enough retirement income.

Once again, we seem to be missing a key ingredient here – the actual jobs that would allow people to keep working, even if they wanted to work until 84 years old.

Last Friday’s (July 1) NY Times The New Old Age blog was a bit closer to reality being faced by many of us, with the results of a second GAO study:

There’s a long list of reasons that older people suffer malnutrition and weight loss, a geriatrician recently told a Senate subcommittee on health and aging: smell and taste diminishing with age, high rates of depression, medications that that suppress appetite or upset stomachs, disabilities that make it hard to shop and cook.

But at the same hearing, an official with Government Accountability Office pointed out another, perhaps more basic problem: poverty.

What a new G.A.O. report calls “food insecurity” remains stubbornly high among seniors with low incomes. In 2009, about 19 percent of households with a low-income person over age 60 faced this problem — meaning that the older adult was uncertain of having enough food or unable to acquire enough.

Unemployment is officially at 9.1% (roughly 14M people) and underemployment is nearly double that. Social Security has been one of if not the most effective government program of all time, yet all we hear out of Washington is how there must be “shared sacrifices” (from all but the very richest of us of course) so Social Security must be “on the table” for budget discussions, even though Social Security has not contributed one dime to the “problems” with the budget.

Tuesday’s LA Times had this column with the headline, “What’s Behind GOP Attack on Product-Safety Database?” For me, I think it is just a variant of the Republican health care plan that now former Rep Alan Grayson noted:

Don’t Get Sick! And if You Do Get Sick, Die Quickly!

And because I can:

Cross posted from Just A Small Town Country Boy

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In the year plus that I have been writing about the economy and life as one of the long term un and underemployed, I’ve mentioned a few times how difficult it is to catalog all of the stupidity, cupidity, and overall cluelessness of the Beltway Village Idiots Politicians, Pundits, and Courtiers (here, here, here, and here for example). A few weeks ago, I predicted that we will have a “double-dip” recession, even though reality for many millions is we have been in a depression and there has been no recovery that would be necessary for there to be a “double-dip” in the first place. Nevertheless, over the weekend, there were a few articles premised on how the deficit/debt is the worst thing going on right now in the economy. This one from CNN yesterday (July 4) starts things off:

CNNMoney surveyed 27 economists and asked them to choose from a list of possible threats facing the economy. What scares them most? A sovereign debt default by a European country such as Greece. More than half of those surveyed ranked it as one of their top two concerns, with 10 choosing it as their number one worry.

…snip…

Relatively few of the economists surveyed were worried about the other risks they had to choose from — a slowdown among emerging economies such as China, or budget cutting by federal, state and local governments.

“Austerity is a short-term risk, but will help long-term,” said David Wyss, former chief economist at Standard & Poor’s, now visiting fellow at Brown University. “The odds of too big a budget cut seems small.”

My bold and there we have it. What’s a little austerity to those who have no fear of the consequences of that austerity. Given the propensity of economists polled by news organizations to be wildly and incredibly wrong in their predictions while then expressing their continual “surprise” at being wrong, I think we can safely say that the budget cuts that are coming will be both too big and soon followed by economists chanting “Hoocoudanode?” when the negative impact becomes obvious even to the most obtuse of the Beltway Villagers.

Today, CNN had this on the proposed “debt deal”:

“It sounds as if the package is going to be all spending cuts with a few symbolic revenue increases,” said Isabel Sawhill, an economist who studies fiscal issues at the Brookings Institution and worked in the Clinton administration.

…snip…

Sawhill said the cuts are likely to be focused on non-security discretionary spending, a small section of the budget that includes funding for food inspectors, the FBI and education grants, among many other programs and services people associate with government.

Meanwhile,, last Thursday (June 30), the NY Times Economix had this from labor reporter Stephen Greenhouse:

Economists at Northeastern University have found that the current economic recovery in the United States has been unusually skewed in favor of corporate profits and against increased wages for workers.

…snip…

The study, “The ‘Jobless and Wageless Recovery’ From the Great Recession of 2007-2009,” (pdf) said it was “unprecedented” for American workers to receive such a tiny share of national income growth during a recovery.

According to the study, between the second quarter of 2009, when the recovery began, and the fourth quarter of 2010, national income rose by $528 billion, with $464 billion of that growth going to pretax corporate profits, while just $7 billion went to aggregate wages and salaries, after accounting for inflation.

The share of income growth going to employee compensation was far lower than in the four other economic recoveries that have occurred over the last three decades, the study found.

Nice to have some empirical evidence to back up the anecdotal evidence so many of us have experienced first hand.

As a companion of a sorts, the Washington Post and Bloomberg each have this Bloomberg article up from Sunday, although with differing headlines. While Bloomberg’s headline is, “Payrolls in U.S. Probably Rose at Pace That Failed to Reduce Jobless Rate” the Washington Post headline is just a tad bit misleading to say the least (as the cheerleader paper of record I guess it is to be expected though), “Employment Probably Increased in June: U.S. Economy Preview.” From the article itself:

Employers in the U.S. probably expanded payrolls at a pace that failed to reduce the unemployment rate in June as companies sought to contain costs amid slower growth, economists said a report may show this week.

Payrolls climbed by 100,000 workers after a 54,000 increase in May that was the smallest in eight months, according to the median forecast of economists surveyed by Bloomberg News ahead of Labor Department data due July 8. The jobless rate held at 9.1 percent. Another report may show growth in services cooled.

…snip…

The Labor Department employment report will also show private payrolls, which exclude government agencies, increased by 125,000 after rising 83,000 in May, according to the survey median.

Now this article is phrased as definitive but it actually is speculative as the BLS Jobs Report for June for the entire economy will be issued Friday (July 8) while the ADP report on private sector jobs will be released tomorrow (July 6). My guess is that the private sector jobs (the ADP number) will be in the 50K range while the overall economy will be 20K to 25K max. The layoffs in the states with their new budgets will be starting to come in and the weekly Initial Unemployment Claims Report is still running well over 425K per week. I hope I am wrong in my predictions. I don’t think I will be off very much. Unlike the economists who keep getting polled against all evidence of their errors.

And because I can:

Cross posted from Just A Small Town Country Boy

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I’m not an economist so this is a fairly easy prediction for me to make. I’m basing this prediction on how the weekly Initial Unemployment Claims have gone up this month (see here, here, and here plus tomorrow’s post when I write it). Or at least, the numbers have not dropped as much as anticipated. Either way, things are not improving.

Amazingly enough (economists claim to be surprised all the time, I get to claim actual surprise when something surprising really happens), there have been a few news articles from different outlets, pointing out some unpleasant economic truths. First up is this article from Monday’s (June 27) USA Today:

Whether the economic recovery in the U.S. can continue could depend on a single factor: consumer confidence. Confidence is important because consumers who are upbeat about prospects tend to spend more, driving corporate profits and job growth. Companies hire more employees, boosting spending, growth and confidence.

…snip…

According to a monthly survey released last week by Consumer Reports, households that earn less than $50,000 have been extremely downbeat on the economy every month since the survey’s April 2008 launch. Such households make up half of the U.S. population. Meantime, affluent households — those that pull down $100,000 or more a year — have been feeling on average positive about the economy since February 2010.

The primary factor behind the disparity: jobs. Affluent households have seen little impact on job prospects overall. Meanwhile, low-income households have seen a net decline in jobs for 23 out of the past 24 months, according to the survey.

Please do click through and read the whole article as it offers a number of reasons besides those I’ve extracted to show how the affluent have benefited in this “recovery” while the rest of us have struggled.
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This weekend, the Washington Post started a series on Executive compensation. The first article highlights the compensation discrepancies between the rich and the rest of us while the second covers stock options and bonuses. From the first article:

It was the 1970s, and the chief executive of a leading U.S. dairy company, Kenneth J. Douglas, lived the good life. He earned the equivalent of about $1 million today. He and his family moved from a three-bedroom home to a four-bedroom home, about a half-mile away, in River Forest, Ill., an upscale Chicago suburb. He joined a country club. The company gave him a Cadillac. The money was good enough, in fact, that he sometimes turned down raises. He said making too much was bad for morale.

Forty years later, the trappings at the top of Dean Foods, as at most U.S. big companies, are more lavish. The current chief executive, Gregg L. Engles, averages 10 times as much in compensation as Douglas did, or about $10 million in a typical year. He owns a $6 million home in an elite suburb of Dallas and 64 acres near Vail, Colo., an area he frequently visits. He belongs to as many as four golf clubs at a time — two in Texas and two in Colorado. While Douglas’s office sat on the second floor of a milk distribution center, Engles’s stylish new headquarters occupies the top nine floors of a 41-story Dallas office tower. When Engles leaves town, he takes the company’s $10 million Challenger 604 jet, which is largely dedicated to his needs, both business and personal.

The evolution of executive grandeur — from very comfortable to jet-setting — reflects one of the primary reasons that the gap between those with the highest incomes and everyone else is widening.

And from the second article: Read the rest of this entry →

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Federal Reserve Chairman Ben Bernanke gave a speech yesterday (Tuesday, June 7) to the International Monetary Conference in Atlanta, GA. Only one speech. Yet looking around the Toobz at the various headlines at news sites on this speech, it must have been an all things to all people speech as I’ve found at least four different perspectives presented, some of them directly contradictory.

The most prevalent theme appears to be The Benbernank as cheerleader (links embedded in titles):

McClatchy: Jobs report aside, Bernanke sees rosier second half of 2011

LA Times: Bernanke predicts stronger recovery in second half of year

AP via MSNBC: Bernanke sees stronger growth later in the year

Then there are the deficit hawk headline writers:

AP via USA Today: Bernanke: We ‘urgently’ need to fix the debt problem (with the same AP article as MSNBC)

NY Times: Fed Wants Priority Put On Deficit

The almost cheerleader:

Washington Post: Bernanke: Economy can withstand recent setbacks

And finally, the seemingly contradictory:

Reuters: Bernanke glum on growth but gives no stimulus hints

Bloomberg: Bernanke Says Accommodative Policy Needed for ‘Uneven’ Economic Recovery

So taken all together, it seems that things are bad but getting better except where they aren’t; everything is going to be just fine; we need a stimulus except where we don’t; and except for that pesky jobs thing, it’s all good.

Meanwhile, in today’s ‘water is wet’ articles, Jamie Dimon whines to the Benbernank about the new banking rules:

JPMorgan Chase & Co. (JPM) Chief Executive Officer Jamie Dimon asked Federal Reserve Chairman Ben S. Bernanke whether regulators have gone too far by reining in the U.S. banking system and are slowing economic growth.
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Unlike economists, I can in no way ever claim to be surprised at all the continuing bad news on the economy (and yeah, I will continue to link to and milk that schtick). Just today, we have the Initial Unemployment Claims report (via CNN):

In the week ended May 28, 422,000 Americans filed for their first week of unemployment benefits, the Labor Department said Thursday.

While that marked a 6,000 decrease from the revised 428,000 initial claims filed the week before, it was worse than economists’ expectations for 413,000 claims.

…snip…

Next up is the government’s monthly jobs report due Friday. Economists surveyed by CNNMoney say they’re expecting to see that 170,000 jobs were created in May and that the unemployment rate eased to 8.9% from 9% in April.

In case you’re wondering, that “revised” figure from last Thursday’s Initial Unemployment Claims report was revised upward from 424K. Given how woefully inaccurate the economists’ predictions have been, I will go out on a limb as I stated yesterday and predict that the BLS numbers for May will be much lower than 170K. I’m thinking more likely closer to a quarter of that (42.5K) but I do hope that I’m wrong. As far as the “unemployment rate” easing, this article from the AP (via Yahoo) this morning (Thursday June 2) goes a long way to explaining why the “official” unemployment rate may drop. Good way to make the figures look better by not counting those who get frustrated and give-up.

Now what does surprise me, still, even after all the evidence that has been provided these last few years, is the apparent drive to push most folks’ wages down to minimum wage (while trying to knock minimum wages down even lower). Back in December, I wrote a “what-if” post based on one person trying to survive living on minimum wage. Of course, the fallacy of my post is minimum wage jobs usually are not 40 hours per week, 52 weeks a year type jobs.

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Clue Game 1960 by Thrift Store Addict, on Flickr

No. It probably isn’t. Probably just some more wishful thinking on my part. Nevertheless, I was quite surprised this morning to see a few pieces around the web pointing out that a “new Republican Jobs bill” was just another tired rehash of the same failed policies of the last thirty years. Ezra Klein at the Washington Post, Paul Krugman at the NY Times, Steve Benen at Washington Monthly all pounded on the Republican “Plan” and for good reason. From the Klein link:

The best evidence that Washington has forgotten about the jobs crisis is to look at the plans emerging to address it. Yesterday’s House GOP plan was a perfect example. It was, as MIT economist David Autor told me, a classic case of “now-more-than-everism”: Everything on the agenda was also on the GOP’s agenda in 2006, in 2002, in 1987, etc. It’s lower taxes, less spending, fewer regulations, more trade agreements, more domestic oil production. You can argue about whether these proposals are good for the economy. But as Autor says, there’s “no original thinking here directed at addressing the employment problem.” 

Actually, you can argue whether those “proposals” are good for the economy as we have thirty years of evidence that they are not good for the economy.

Krugman points to how foolish it is to try to negotiate with the Republicans on these issues (as does Blue Texan at FDL this afternoon). Krugman said:

Anyway, the new “jobs plan” illustrates, once again, the foolishness of believing that we can reach any real bipartisan agreement on economic policy. The GOP stopped thinking a long time ago; all it knows how to do is parrot Reaganite rhetoric over and over. And 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. 

Benen is even less forgiving than both Klein and Krugman:

As we discussed yesterday, the jobs agenda, such as it is, is practically a conservative cliche: the GOP wants massive tax cuts for the wealthy, deregulation, more coastal oil drilling, and huge cuts to public investment. Republicans are confident this will work wonders, just as they were equally confident about the identical agenda in the last decade, and the decade before that, and the decade before that. 

Indeed, the most glaring problem with the GOP jobs agenda is that it won’t work, but nearly as painful is the realization that it’s already been tried, over and over again, to no avail. They either don’t care or can’t understand the famous axiom: “Insanity is doing the same thing over and over again and expecting different results.”

The agenda is the agenda: tax cuts for the wealthy, deregulation, cut public investments. Good times and bad, deficit or surplus, war or peace, it just doesn’t matter.

It’s as if someone bought an iPod, uploaded one song, and hit “shuffle.”

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I’m not going to act like an economist and claim to be “surprised” that folks are spinning various education pieces today. No, I am not at all surprised that it is happening, but I am a little frustrated when I see something like this from today’s (Sunday May 22) NY Times where the headline uses “grassroots” and “Bill Gates” together. The idea of anything funded from the coffers of a billionaire being considered “grass roots” is beyond ludicrous. But then, we are talking about a TradMed that willfully overlooks the funding of folks like the Koch Brothers and Dick Armey to proclaim various astro-turf organizations as “grass roots.”

To be fair, the Times article does point out a few of the problems:

INDIANAPOLIS — A handful of outspoken teachers helped persuade state lawmakers this spring to eliminate seniority-based layoff policies. They testified before the legislature, wrote briefing papers and published an op-ed article in The Indianapolis Star.

They described themselves simply as local teachers who favored school reform — one sympathetic state representative, Mary Ann Sullivan, said, “They seemed like genuine, real people versus the teachers’ union lobbyists.” They were, but they were also recruits in a national organization, Teach Plus, financed significantly by the Bill and Melinda Gates Foundation.

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hawk by kfwk_lobo, on Flick

After seeing yesterday’s opinion piece at CNN from David Frum (See this blog post), I wasn’t quite as surprised to see another opinion piece today on the lack of jobs. Of course, today’s (Tuesday, April 26) from Eugene Robinson at the Washington Post probably won’t get much play because Robinson tends to be liberal and we all know liberals aren’t considered Very Serious People, so can easily be ignored. Nevertheless, Robinson does have a platform at the Washington Post, so he might get read and even acknowledged as having some right behind his words:

What is it about the word “jobs” that our nation’s leaders fail to understand? How has the most painful economic crisis in decades somehow escaped their notice? Why do they ignore the issues that Americans care most desperately about?

Listening to the debate in Washington, you’d think the nation was absorbed by the compelling saga of deficit reduction. You’d get the impression that in households across America, parents put their children to bed and then stay up half the night sifting through piles of think-tank reports on the kitchen table, trying to calculate whether there will be enough in the Social Security trust fund to pay benefits beyond 2037.

And you’d be wrong. Those parents are looking at a pile of bills on the kitchen table, trying to decide which ones have to be paid now and which can slide. The question isn’t how to manage health care or retirement costs two decades from now. It’s how the family can make it to the end of the month.

Unfortunately, Mr. Robinson will most likely continue to be drowned out by the drumbeat of the deficit hawks. Looking through the various news sites today, I found a couple of articles promoting deficit hawkery though in a rather subtle way. First up is this from USA Today:

Americans depended more on government assistance in 2010 than at any other time in the nation’s history, a USA TODAY analysis of federal data finds. The trend shows few signs of easing, even though the economic recovery is nearly 2 years old.

A record 18.3% of the nation’s total personal income was a payment from the government for Social Security, Medicare, food stamps, unemployment benefits and other programs in 2010. Wages accounted for the lowest share of income — 51.0% — since the government began keeping track in 1929.

The income data show how fragile and government-dependent the recovery is after a recession that officially ended in June 2009.

…snip…

Accounting for 80% of safety-net spending in 2010: Social Security, Medicare (health insurance for seniors), Medicaid (health insurance for the poor) and unemployment insurance.

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tell truth by arimoore, on Flickr

Today (Monday, April 25) CNN has an opinion piece from former George W. Bush staffer David Frum that shocked me, and not in a Capt Renault kind of way.

Technically speaking, the U.S. economy is recovering right now. GDP growth has been positive since the summer of 2009. Employment is growing. If you like, you can say the recession is over.

But don’t say it too loud. With 13.5 million people out of work — 6.1 million out of work for 27 weeks or more — the odds are high that one of them may hear and take offense.

The recovery is weak, and job creation is slow. Everybody knows that. But here’s something that we don’t know, or anyway don’t think about enough: Isn’t it weird that in this dismal economic situation, neither of the two great U.S. political parties is offering a plan to do anything about the job situation?

Frum goes on to note that the Republicans at least have a “plan” (Rep Paul Ryan’s “budget”), even though the “plan” does nothing to help the unemployed, nor does it actually do anything on the budget. He also notes that the Democratic “plan” consists primarily of blasting the Ryan plan.

The administration does however have a political plan: Blast the Ryan plan. Since the Ryan plan is highly politically vulnerable, the blasting will likely hurt the GOP and help President Obama. The blasting will not, however, do much for the unemployed. But then we’ve all sort of given up on them, haven’t we?

I have to give credit when it is due and right now, Frum seems to be one of the few members in presumably good standing of the Village who is actually seeing something close to the reality faced by millions of us within the US today. Annie Lowrey of the Washington Post almost got it correct yesterday before reverting to Beltway cheerleading. The rest of the Very Serious People though are ever so serious as they toil away in the alternative world where the budget deficit is the ultimate problem in the world today. From Robert Samuelson at the Washington Post we get this. Of course in Samuelson’s world, everything is the fault of social spending. How else to explain these two little ‘nuggets’?

Who deserves government subsidies and how much? About 55 percent of spending goes to individuals, including the elderly, veterans, farmers, students, the disabled and the poor.

How much, if at all, should social spending be allowed to squeeze national defense?

Social spending is squeezing national defense? Seriously? I guess if you believe that we need a few more aircraft carrier groups, more nuclear submarines, more advanced fighter jets costing billions each, all relics of the Cold War, then I guess taking care of “the elderly, veterans, farmers, students, the disabled, and the poor,” that’s a squeeze. Enjoy life in that bubble Mr Samuelson.
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