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Robert Reich: The Truth About the Economy: We’re Heading Back Toward a Double Dip

Evans Liberal Politics
March 31, 2011

 

Robert Reich: The Truth About the Economy:
We’re Heading Back Toward a Double Dip

The Truth About the Economy: We’re Heading Back Toward a Double Dip, Robert Reich.org, March 30, 2011, by Robert Reich, used with permission, quoted verbatim:

Why aren’t Americans being told the truth about the economy? We’re heading in the direction of a double dip – but you’d never know it if you listened to the upbeat messages coming out of Wall Street and Washington.

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Consumers are 70 percent of the American economy, and consumer confidence is plummeting. It’s weaker today on average than at the lowest point of the Great Recession.

The Reuters/University of Michigan survey shows a 10 point decline in March – the tenth largest drop on record. Part of that drop is attributable to rising fuel and food prices. A separate Conference Board’s index of consumer confidence, just released, shows consumer confidence at a five-month low — and a large part is due to expectations of fewer jobs and lower wages in the months ahead.

Pessimistic consumers buy less. And fewer sales spells economic trouble ahead.

What about the 192,000 jobs added in February? (We’ll know more Friday about how many jobs were added in March.) It’s peanuts compared to what’s needed. Remember, 125,000 new jobs are necessary just to keep up with a growing number of Americans eligible for employment. And the nation has lost so many jobs over the last three years that even at a rate of 200,000 a month we wouldn’t get back to 6 percent unemployment until 2016.

But isn’t the economy growing again – by an estimated 2.5 to 2.9 percent this year? Yes, but that’s even less than peanuts. The deeper the economic hole, the faster the growth needed to get back on track. By this point in the so-called recovery we’d expect growth of 4 to 6 percent.

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Consider that back in 1934, when it was emerging from the deepest hole of the Great Depression, the economy grew 7.7 percent. The next year it grew over 8 percent. In 1936 it grew a whopping 14.1 percent.

Add two other ominous signs: Real hourly wages continue to fall, and housing prices continue to drop. Hourly wages are falling because with unemployment so high, most people have no bargaining power and will take whatever they can get. Housing is dropping because of the ever-larger number of homes people have walked away from because they can’t pay their mortgages. But because homes the biggest asset most Americans own, as home prices drop most Americans feel even poorer.

There’s no possibility government will make up for the coming shortfall in consumer spending. To the contrary, government is worsening the situation. State and local governments are slashing their budgets by roughly $110 billion this year. The federal stimulus is ending, and the federal government will end up cutting some $30 billion from this year’s budget.

In other words: Watch out. We may avoid a double dip but the economy is slowing ominously, and the booster rockets are disappearing.

So why aren’t we getting the truth about the economy? For one thing, Wall Street is buoyant – and most financial news you hear comes from the Street. Wall Street profits soared to $426.5 billion last quarter, according to the Commerce Department. (That gain more than offset a drop in the profits of non-financial domestic companies.) Anyone who believes the Dodd-Frank financial reform bill put a stop to the Street’s creativity hasn’t been watching.

To the extent non-financial companies are doing well, they’re making most of their money abroad. Since 1992, for example, G.E.’s offshore profits have risen $92 billion, from $15 billion (which is one reason it pays no U.S. taxes). In fact, the only group that’s optimistic about the future are CEOs of big American companies. The Business Roundtable’s economic outlook index, which surveys 142 CEOs, is now at its highest point since it began in 2002.

Washington, meanwhile, doesn’t want to sound the economic alarm. The White House and most Democrats want Americans to believe the economy is on an upswing.

Republicans, for their part, worry that if they tell it like it is Americans will want government to do more rather than less. They’d rather not talk about jobs and wages, and put the focus instead on deficit reduction (or spread the lie that by reducing the deficit we’ll get more jobs and higher wages).

I’m sorry to have to deliver the bad news, but it’s better you know.

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Robert Reich was the nation’s 22nd Secretary of Labor under Bill Clinton and is Professor of Public Policy at the Goldman School of Public Policy at the University of California at Berkeley. He has served in three national administrations. In 2008, Time Magazine named him one of the Ten Most Successful Cabinet Members of the century. He has written eleven books, including “The Work of Nations,” which has been translated into 22 languages. His recent book is “Supercapitalism.” For Professor Reich’s book page for Supercaptialism at Amazon, go here. Reich’s newest book, Aftershock: The Next Economy and America’s Future has been released September 21, and is available for ordering at this link (Amazon.com). The above article is from Reich’s new blog, and can be viewed here.

Robert Reich’s commentaries are available for listening to at Publicradio.com. Watch the video Aftershock: The next economy and America’s future (about his new book). Thanks to Professor Reich for permission to publish his articles on an ongoing basis.

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Fed: Household wealth plummets 23% in two years

Evans Liberal Politics
March 28, 2011

 

Fed: Household wealth plummets 23% in two years

Fed: Household wealth plummets 23% in two years, Daily Kos, March 26, 2011, by Joan McCarter, used with permission of Joan McCarter and quoted verbatim: Thank You!

This is one of the more alarming reports of the week.

NEW YORK (CNNMoney) — The average American family’s household net worth declined 23% between 2007 and 2009, the Federal Reserve said Thursday.

a pair of black eyeglasses sit on top of a foreclosure notice in this article about a Fed report on plummeting American wealth

A rare survey of U.S. households, first performed in 2007 but repeated in 2009 in order to gauge the effects of the recession, reveals the median net worth of households fell from $125,000 in 2007 to $96,000 in 2009….

Federal Reserve officials said Thursday the new report offers a look at exactly how hard the recession hit families, and how they reacted.

The numbers paint a stark picture.

Families that owned stock saw their portfolios drop by more than a third to $12,000 from $18,500, on average. The value of primary real estate holdings decreased by an average of $18,700.

And families took on more debt, pushing median total debt levels to $75,600 from $70,300. They also made less money. Media household income dropped to $49,800 from $50,100.

High unemployment, rising food and medical costs, tanking stock portfolios and complete loss of equity make for a world of hurt for American families. Which makes the single-minded focus in DC on the deficit and austerity all the more inexplicable. And frightening for our future. Krugman:

[J]obs now, deficits later was and is the right strategy. Unfortunately, it’s a strategy that has been abandoned in the face of phantom risks and delusional hopes. On one side, we’re constantly told that if we don’t slash spending immediately we’ll end up just like Greece, unable to borrow except at exorbitant interest rates. On the other, we’re told not to worry about the impact of spending cuts on jobs because fiscal austerity will actually create jobs by raising confidence.

How’s that story working out so far?

Not so great, if the Fed and its report is to be believed. Yes, the report’s data is a year old, but while stock prices have rebounded, unemployment is still unsustainable, housing prices continue to fall, and food and medical costs continue to rise.

The Republican’s Big Lies About Jobs (And Why Obama Must Repudiate Them)

Evans Liberal Politics
March 23, 2011

 

The Republican’s Big Lies About Jobs
(And Why Obama Must Repudiate Them)

The Republican’s Big Lies About Jobs (And Why Obama Must Repudiate Them), Robert Reich.org, March 22, 2011, by Robert Reich, used with permission, quoted verbatim:

And if all others accepted the lie which the party imposed – if all records told the same tale – then the lie passed into history and became the truth.

– George Orwell, 1984 (published in 1949)

House Majority Leader Eric Cantor was in town yesterday (specifically, at Stanford’s Hoover Institute where he could surround himself with sympathetic Republicans) to tell this whopper: “Cutting the federal deficit will create jobs.”

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It’s not true. Cutting the deficit will creates fewer jobs. Less government spending reduces overall demand. This is particularly worrisome when, as now, consumers and businesses are still holding back. Fewer government workers have paychecks to buy stuff from other Americans, some of whom in turn will lose their jobs without enough customers.

But truth doesn’t seem to matter. Republicans figure if their big lies are repeated often enough, people will start to believe them.

Unless, that is, those big lies are repudiated – and big truths are told in their place.

What worries me almost as much as the Republican’s repeated big lies about jobs is the silence of President Obama and Democratic leaders in the face of them. Obama has the bully pulpit. Republicans don’t. But if he doesn’t use it the Republican’s big lies gain credibility.

Here are some other whoppers being repeated daily:

“Cutting taxes on the rich creates jobs.” Nope. Trickle-down economics has been tried for thirty years and hasn’t worked. After George W. Bush cut taxes on the rich, far fewer jobs were created than after Bill Clinton raised them in the 1990s.

To his credit, President Obama argued against Republican demands for extending the Bush tax credit on those making more than a quarter million. But as soon as Republicans pushed back he caved. And the President hasn’t even mentioned that the $61 billion Republicans are demanding in budget cuts this fiscal year is what richer Americans would have paid in taxes had he not caved.

“Cutting corporate income taxes creates jobs.” Baloney. American corporations don’t need tax cuts. They’re sitting on over $1.5 trillion of cash right now. They won’t invest it in additional capacity or jobs because they don’t see enough customers out there with enough money in their pockets to buy what the additional capacity would produce.

The President needs to point this out – not just in Washington but across the nation where Republican governors are slashing corporate taxes and simultaneously cutting school budgets. President Obama says he wants to invest in American skills, but many states are doing the opposite. Florida Governor Rick Scott, for example, says his proposed corporate tax cuts “will give Florida a competitive edge in attracting jobs.” They’ll also require education spending be reduced by $3 billion. Florida already ranks near the bottom in per-pupil spending and has one of nation’s lowest graduation rates. If Scott’s tax cuts create jobs, most will pay peanuts.

“Cuts in wages and benefits create jobs.” Congressional Republicans and their state counterparts repeat this lie incessantly. It also lies behind corporate America’s incessant demand for wage and benefit concessions – and corporate and state battles against unions. But it’s dead wrong. Meager wages and benefits are reducing the spending power of tens of millions of American workers, which is prolonging the jobs recession.

President Obama and Democratic leaders should be standing up for the wages and benefits of ordinary Americans, standing up for unions, and decrying the lie that wage and benefit concessions are necessary to create jobs. The President should be traveling to the Midwest – taking aim at Republican governors in the heartland who are hell bent on destroying the purchasing power of American workers. But he’s doing nothing of the sort.

“Regulations kill jobs.” Congressional Republicans are using this whopper to justify their attempts to defund regulatory agencies. Regulations whose costs to business exceed their benefits to the public are unwarranted, of course, but reasonable regulation is necessary to avoid everything from nuclear meltdowns to oil spills to mine disasters to food contamination – all of which we’ve sadly witnessed. Here again, we’re hearing little from the President or Democratic leaders.

Look, the President can’t be everywhere, doing everything. There’s tumult in the Middle East, we’re suddenly at war in Libya, Japan is struggling with the aftermath of disaster, and surely Latin America is an important trading partner.

But nothing is more central to average Americans than jobs and wages. Unless the President forcefully rebuts Republican’s big lies, they’ll soon become conventional wisdom.

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Robert Reich was the nation’s 22nd Secretary of Labor under Bill Clinton and is Professor of Public Policy at the Goldman School of Public Policy at the University of California at Berkeley. He has served in three national administrations. In 2008, Time Magazine named him one of the Ten Most Successful Cabinet Members of the century. He has written eleven books, including “The Work of Nations,” which has been translated into 22 languages. His recent book is “Supercapitalism.” For Professor Reich’s book page for Supercaptialism at Amazon, go here. Reich’s newest book, Aftershock: The Next Economy and America’s Future has been released September 21, and is available for ordering at this link (Amazon.com). The above article is from Reich’s new blog, and can be viewed here.

Robert Reich’s commentaries are available for listening to at Publicradio.com. Watch the video Aftershock: The next economy and America’s future (about his new book). Thanks to Professor Reich for permission to publish his articles on an ongoing basis.

See Top 6 things Republicans consider more important than job creation, The Raw Story, March 22, 2011, by Sahil Kapur, excerpt quoted verbatim:

WASHINGTON – Republicans won dramatic victories last November by promising to mitigate high unemployment. “This coming election is about one issue: jobs,” to-be Speaker John Boehner (R-OH) said weeks before election day. “It’s about jobs that were promised to the American people by the current administration, and were never delivered.”

But in the three months since taking over the House and expanding their voices in the Senate, Republicans have yet to pass a jobs-focused bill, instead prioritizing numerous social and cultural issues that are unrelated to job creation — and have little or no chance of becoming policy.

Here are six such legislative goals they’ve been hard at work on. ….

Comment by Evans Liberal Politics owner Paul Evans: Now that the election is in the past, Republicans actually want to HURT job creation: it will be good for the 2012 elections if Obama looks bad. They are concentrating on the social issues they feel make them look good with their core voters and so keep their base energized.

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Robert Reich: The Real News on Jobs

Evans Liberal Politics
March 5, 2011

 

Robert Reich: The Real News on Jobs

The Real News on Jobs, Robert Reich.org, March 4, 2011, by Robert Reich, used with permission, quoted verbatim:

Are we making progress on the jobs front? The Bureau of Labor Statistics reports 192,000 new jobs in Februrary (220,000 new jobs in the private sector and a drop in government employment), and a drop in the overall unemployment rate from 9 to 8.9 percent.

We’re heading in the right direction but far too slowly to make a real dent in unemployment. To get the unemployment rate down to 6 percent by 2014 we’d need over 300,000 new jobs a month, every month, between now and then.
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Overall, the number of unemployed Americans – 13.7 million – is about the same as it was last month. The number working part time who’d rather be working full time – 8.3 million – is also about the same.

But to get to the most important trend you have to dig under the job numbers and look at what kind of new jobs are being created. That’s where the big problem lies.

The National Employment Law Project did just that. Its new data brief (PDF) shows that most of the new jobs created since February 2010 (about 1.26 million) pay significantly lower wages than the jobs lost (8.4 million) between January 2008 and February 2010.

While the biggest losses were higher-wage jobs paying an average of $19.05 to $31.40 an hour, the biggest gains have been lower-wage jobs paying an average of $9.03 to $12.91 an hour.

In other words, the big news isn’t jobs. It’s wages.

For several years now, conservative economists have blamed high unemployment on the purported fact that many Americans have priced themselves out of the global/high-tech jobs market.

So if we want more jobs, they say, we’ll need to take pay and benefit cuts.

And that’s exactly what Americans have been doing.

Employers have demanded wage and benefit concessions from their unionized workers and often got them. Detroit is creating auto jobs again — but new hires are getting about half the pay that auto workers were getting before. Airline workers are taking home 30 to 50 percent less than they did years ago. And so on.

Conservatives say it’s not enough. That’s why unions have to be busted – and why some governors are seeking to abolish laws requiring workers to become dues-paying union members in order to get certain jobs. Hence, the fights brewing in the Midwest.

Meanwhile, millions of non-union workers have accepted cuts in pay and benefits just to keep their jobs. Health benefits have been slashed, pension contributions from employers dramatically cut, wages dropped or “frozen.”

Millions of private-sector workers have been fired and then re-hired as contract workers to do almost exactly what they were doing before, but without any benefits or job security.

The current attack on public-sector workers should be seen in this light. The charge is they now take home more generous pay and benefit packages than private-sector workers. It’s not true on the wage side if you control for level of education, but it wasn’t even true on the benefits side until private-sector benefits fell off a cliff. Meanwhile, across America, public-sector workers have been “furloughed,” which is a nice word for not collecting any pay for weeks at a time.

At this rate, the unemployment rate will continue to decline. But so will the pay and benefits of most Americans.

Conservative economists have it wrong. The underlying problem isn’t that so many Americans have priced themselves out of the global/high-tech labor market. It’s that they’re getting a smaller and smaller share of the American pie.

Robert Reich was the nation’s 22nd Secretary of Labor under Bill Clinton and is Professor of Public Policy at the Goldman School of Public Policy at the University of California at Berkeley. He has served in three national administrations. In 2008, Time Magazine named him one of the Ten Most Successful Cabinet Members of the century. He has written eleven books, including “The Work of Nations,” which has been translated into 22 languages. His recent book is “Supercapitalism.” For Professor Reich’s book page for Supercaptialism at Amazon, go here. Reich’s newest book, Aftershock: The Next Economy and America’s Future has been released September 21, and is available for ordering at this link (Amazon.com). The above article is from Reich’s new blog, and can be viewed here.

Robert Reich’s commentaries are available for listening to at Publicradio.com. Watch the video Aftershock: The next economy and America’s future (about his new book). Thanks to Professor Reich for permission to publish his articles on an ongoing basis.

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U.S. Video News Roundup for March 4, 2011

Evans Liberal Politics
March 4, 2011

 

U.S. Video News Roundup For March 4, 2011

Important Video News from Around the U.S.

Unemployment Dips to 8.9 Pct.
192K Jobs Added

Wisconsin GOP are Creating
a Police State

Clinton: U.S. Sending Aid
to Refugees in Tunisia

New Polls – U.S. Liberal
On Taxes, Budget Cuts

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GOP budget cuts would kill 700,000 jobs: report

Evans Liberal Politics
February 28, 2011

 

GOP budget cuts would
kill 700,000 jobs: report

GOP budget cuts would kill 700,000 jobs: report, The Raw Story, February 28, 2011, by Sahil Kapur, used with permission, quoted verbatim: Evans Liberal Politics is pleased to partner with The Raw Story to bring you cutting edge news. (I know I said the blog below would be all today, but I just couldn’t pass up this little gem!)

WASHINGTON – The Republican budget proposal to sharply cut federal spending would cost 700,000 jobs through 2012, according to the independent analyst Moody’s.

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In a new report (PDF) obtained Monday by the Washington Post, Moody’s Analytics chief economist Mark Zandi analyzes the House Republican budget proposal cutting spending by $61 billion this year and projects that it will curtail job growth.

“The House Republicans’ proposal would reduce 2011 real GDP growth by 0.5% and 2012 growth by 0.2%. This would mean some 400,000 fewer jobs created by the end of 2011 and 700,000 fewer jobs by the end of 2012,” Zandi concluded.

The numbers challenge the GOP’s philosophy that government spending cuts help create jobs and grow the economy, a view that puts the party at odds with Democrats.

Republicans have invoked job creation as a top priority, vigorously campaigning on the issue and attacking Democrats for ostensibly being lackadaisical about unemployment. The House GOP majority labeled its measure to roll back health reform the “Repealing The Job-Killing Health Care Law Act.”

The report notes that Republicans are exercising “modest” but “meaningful” fiscal restraint, but serves as a warning that cutting government spending can sometimes hurt job growth.

“While long-term government spending restraint is vital, and laying out a credible path toward that restraint very desirable, too much cutting too soon would be counterproductive,” Zandi wrote.

House Republicans passed their budget just over a week ago by a 235-189 margin, setting up a stand off with President Barack Obama and Democrats.

See More would blame Congressional GOP than President Obama for gov’t shutdown, Daily Kos, February 28, 2011, by David Nir.

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Robert Reich: Who Says Republicans Have No New Ideas

Evans Liberal Politics
February12, 2011

 

Robert Reich: Who Says
Republicans Have No New Ideas

Who Says Republicans Have No New Ideas, Robert Reich.org, February 11, 2011, by Robert Reich, used with permission, quoted verbatim:

Quiz: Which of the 2012 presidential aspirants delivered the following words at the Conservative Political Action Convention, now underway in Washington?

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We have seen tax-and-tax spend-and-spend reach a fantastic total greater than in all the previous 170 years of our Republic.

Behind this plush curtain of tax and spend, three sinister spooks or ghosts are mixing poison for the American people. They are the shades of Mussolini, with his bureaucratic fascism; of Karl Marx, and his socialism; and of Lord Keynes, with his perpetual government spending, deficits, and inflation. And we added a new ideology of our own. That is government give-away programs….

If you want to see pure socialism mixed with give-away programs, take a look at socialized medicine.

If you guessed Jim DeMint, you could be forgiven. He talks a lot like this. But you’d be wrong. Newt Gingrich didn’t utter these precise words, either, although he uses much the same language and offers the same themes.

You’d also be wrong if you guessed Rick Santorum, Rick Perry, Tom Pawlenty, Ron Paul, Haley Barbour, John Thune, Mitt Romney, or Mitch Daniels. (Sarah Palin isn’t attending.)

But again, your mistake would be understandable because these words sound a lot like theirs. Any of them could have delivered this message – and all of them have, over and over again. It’s the Republican message of 2011.

The perfectly correct answer is Herbert Hoover.

Herbert Hoover didn’t deliver these words at this week’s Conservative Political Action Convention, though. He delivered them at the Republican National Convention in Chicago on July 8, 1952.

That was almost sixty years ago.

Republicans haven’t come up with a single new idea since. They haven’t even come up with a new theme.

Herbert Hoover, you may remember, didn’t have a sterling record when it came to the economy. As president, he presided over the Great Crash of 1929 and ushered in the Great Depression. He had no idea for what to do to help the nation out of the Depression except to balance the federal budget. By the time he was voted out of office in 1932, one out of four Americans was unemployed.

By 1952, Hoover had been proven irrelevant and hidebound.

After Dwight D. Eisenhower won the 1952 Republican nomination and went on to become president, he wisely disregarded everything Hoover had advised.

Under Ike, the marginal income tax on America’s highest earners was 91 percent. Eisenhower also commenced the biggest infrastructure program in the nation’s history – the National Interstate and Defense Highway Act, which replaced America’s meandering two-lane roads with 40,000 miles of straight four and six-lane highways. He signed into law the National Defense Education Act, which trained a whole generation of math and science teachers, and upgraded American classrooms for the future. The Federal Housing Authority subsidized home ownership. The Defense Department spawned future technologies in aerospace and telecommunications.

Did the U.S. suffer fascism, socialism, deficits and inflation, as Hoover predicted? No. The U.S. economy soared. The median wage rose faster than ever before. And the incomes of America’s working class and poor rose at the fastest pace of all.

Robert Reich was the nation’s 22nd Secretary of Labor under Bill Clinton and is Professor of Public Policy at the Goldman School of Public Policy at the University of California at Berkeley. He has served in three national administrations. In 2008, Time Magazine named him one of the Ten Most Successful Cabinet Members of the century. He has written eleven books, including “The Work of Nations,” which has been translated into 22 languages. His recent book is “Supercapitalism.” For Professor Reich’s book page for Supercaptialism at Amazon, go here. Reich’s newest book, Aftershock: The Next Economy and America’s Future has been released September 21, and is available for ordering at this link (Amazon.com). The above article is from Reich’s new blog, and can be viewed here.

Robert Reich’s commentaries are available for listening to at Publicradio.com. Watch the video Aftershock: The next economy and America’s future (about his new book). Thanks to Professor Reich for permission to publish his articles on an ongoing basis.

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