Here’s what Christina Romer thinks is necessary to address unemployment:
“One targeted measure that is likely to be very effective is additional fiscal relief to the states,” she said. Another is putting money into smaller banks, as the president has proposed, to get them to lend more to small and medium sized firms. A third is more aggressive actions to open foreign markets to U.S. goods and services.
Instead, even an modest extension of unemployment benefits is filibustered. I understand the short-term politics behind the Obama administration’s decision not to push for another stimulus. But they’re starting to look very shortsighted.
Brien Jackson
I don’t think a specific stimulus bill is feasible, but I don’t see any reason they can’t put necessary funds into the budget. Are there any?
pharniel
breakup large businesses as well.
Every merger and conglomeration limits the number of ‘redundant’ jobs which tend to be well paying.
Breaking up TBTF also creates jobs as each new entity is going to require redundant functions.
and that’s a GOOD thing.
freelancer
Not to mention have foreign companies outsource here, and branch out in our markets. I for one, would love to see United and Delta shit their pants once US consumers have the choice to choose Virgin Air over their far inferior product.
jl
“very effective is additional fiscal relief to the states”
This was one of Summers’ high priority items too, both from his academic work and statements before election and first months of Obama administration.
Economically it is a no-brainer, from a Keynesian point of view.
What, or who, downsized it for the ARRA stimulus bill?
Anyway, if two of administration top economics advisors strongly back this measure, and with Obama’s promise to pursue scientific, evidence-based, policies, will we hear more about this?
Seems like mistermix is doubtful. I hope mistermix is wrong, but probably not.
Linda Featheringill
Unemployment benefits and assistance to the states are necessary but they are just bandaids.
I don’t know – does anybody really know how to fix this mess?
robertdsc
@Brien Jackson:
I read somewhere that the latest budget had 200 billion dollars marked for stimulative purposes. I don’t remember for sure what it was specifically called.
That said, any more tax cuts and I’ll scream.
Osprey
@Linda Featheringill:
Tax Cuts. Problem solved. Duh.
Sentient Puddle
@Linda Featheringill: It’s stimulus or bust, really. Which means we all damn well better be hoping that we just went through the worst of the recession, and we’re not going to experience another dip.
Thunderfome
My wife has been out of work for so long I’m tired of it. I can’t wait till our 401ks run out and we max out our credit cards. Maybe have our house foreclosed and have to go live in a trailer somewhere. Or maybe with our cat’s family under the overpass. Looking forward to when the idiots on the mall in D.C. with their personal armories all show US and take back the country from evil socialist liberals like Rupert Murdoch, Dick Armey, Dan Blankenship and all their friends who buy the lobbyists, who then buy the politicians who then screw the laws up so badly nothing will work any more. We’ll show Rush Limbaugh who’s the boss. When the government is drowned THEN we can replace it with a true blue Red-American utopia. You know, kind of like “Soylent Green” or “Escape From New York.” Mad Max anyone?
rootless-e
@jl: Problem is that aid to states will be used to fund more tax breaks to the rich and things like California’s kafkaesque bloated prison system.
Here in Tejas, Rick Perry took the money, and announced that thanks to Republican frugality, he’d balanced the budget.
Ivan Ivanovich Renko
I’m still jetlagged from a two-week business trip to China. I work for a very small company (I mean REAL FRIGGIN’ SMALL) that designs builds and markets industrial test equipment to the tire and auto industries; and the vast majority of our current sales are in India and China.
We’re a small business, struggling to grow.
We’re an exporter.
And we get fucking bupkis from our banking system. No friggin’ support whatsoever. Can’t get a dependable line of credit to keep things going between deliveries; can’t get support in negotiating and accessing letters of credit from our foreign customers… you name it, and it’s an uphill fight for us.
I thank the gods I am not the one who has to deal with the bankstas; ’cause I’d be in jail for assault and battery long since.
Tom Q
“What, or who, downsized it for the ARRA stimulus bill?”
Quick answer: Susan Collins. She went around bragging how she’d got money to the states shaved from the stimulus. I wonder if she’d like to defend that position to Gov. Schwarzenegger.
rootless-e
@Ivan Ivanovich Renko: in 2006, when bankers were throwing money at $2m 3bedroom homes in Irvine, I tried to find a line of credit for my little exporting company and wasted a huge amount of time. Essentially, I had the option of taking out a loan that would be backed the the business AND my personal assets or taking a hike. To get letters of credit processed, I had to create an asian subsidiary and open an account in HK.
Calouste
It would help if the US actually produced goods that the rest of the world wants to buy. Consumers in the rest of the world aren’t as swayed as Americans are by products whose design looks 20 years old and that break the day the warranty expires. Partially because overhead (taxes, retail margin) is higher and therefore the relative price difference between the cheap and the good stuff is lower, and partially because people are more environmentally minded and less inclined to throw stuff away every few years.
Edward G. Talbot
As much as I think Obama has been overly cautious, there is a 100% chance that a stimulus bill would fail to pass, any kind of stimulus bill. So I don’t see why he should push for it.
Instead, he needs to unpoison the well so to speak, by forcing tough votes on issues where he has the public behind him. the financial bill is showing signs of that, and I just hope he and Congress follow through. Other places where it would be worth pushing even if the bill lost are a jobs program and especially a simple, straightforward mortgage modification program with sufficient teeth to eliminate foot dragging by servicers and third-parties who own packaged bundles with slices of mortgages. You’d get the same hue and cry as with a stimulus bill, but the majority of the public would support it. It would lose, but the same usual suspects would keep looking worse, and it would over time change the dynamics.
A stimulus bill would be a spectacular flameout that probably couldn’t even get 50 votes in the Senate, let alone 60.
Linda Featheringill
@Osprey: You’re right. Duh. :-)
Alex S.
Can’t we fix this with vouchers, like everything else?
DougJ
I agree. They screwed the pooch on the stimulus.
mr. whipple
@DougJ:
How so?
gex
Wasn’t the stimulus back loaded though? Regardless of whether the stimulus was too small (which I think it was) there’s going to be more money pumping into the economy this year because of that, right?
Sentient Puddle
@DougJ: Eh, the stimulus was probably about as big as they could realistically get at the time. And it’s not like it didn’t do any good. The worst I can really say about it is that it should have been much bigger because we should have had the grown-ups in charge.
El Cid
@Tom Q: Actually, I think that would be a great idea.
I think there should be another live, televised Obama-led conference between Obama, the Senate leadership & relevant committee heads, and a bunch of Governors from hard-pressed states. I’d like to see the Republican & Fake “Fiscal Hawk” Dem Senators tell the Governors how proud they were and are to block funding aid to those awful, lazy, welfare cheat state governments.
The Moar You Know
OT: Moody’s is stonewalling Jerry Brown’s subpoena, he files motion to compel.
Heard him on the radio a few minutes ago, the ultimate goal is a civil lawsuit for securities fraud.
askew
I think the Dems are being smart about this. Instead of trying to push through another stimulus bill, they are breaking the stimulus items into smaller items and passing them that way.
Zifnab
@DougJ: Obama didn’t realize the political atmosphere he was getting into. And I can’t entirely blame him. Before 2009, the Republicans hadn’t completely solidified into the “Not one vote” caucus, and it wasn’t unreasonable to assume the White House could peal off a few liberal Republicans.
The first stimulus was written in the midst of a major crisis, and Obama pitched what was supposed to be a bill the entire Congress could embrace. It wasn’t meant to be heavily progressive, it was just meant to pass.
If passing a $787 billion stimulus in the middle of a major recession, rather than angling for a more effective but highly partisan bill, was a bad idea then I really don’t think you’re considering the risks of failure.
You wanted to see a better stimulus bill? Imagine no stimulus bill. A quasi-successful TARP program and a non-existent stimulus package. Do you really think the Republicans would have suddenly become more conciliator if the economy got worse? Do you serious believe the Democrats had the nation by the balls because the economy was tanking? Because, the way I see it, once Obama took office it was his balls in the vice.
Better something than nothing. The margins in the Senate, and the conserva-Dems in leadership, simply weren’t going to allow for much more than we got.
Mike Kay
@Sentient Puddle:
If there wasn’t a 60 vote margin needed to break the filibuster it would have been bigger.
The republicans don’t care about the country. They would welcome a deep depression or terrorist attack if it meant gaining power.
it’s also not the easiest sale to make to the general public. I mean how many people have ever heard of Keynesian economics. Hell, most of the newscasters, who majored in communications, didn’t understand it.
All the public knew it was another $800 billion on top of the $700 billion TARP on top of the $150 billion to bail out AIG on top of what ever it costs to bailout Fannie and Freddie on top of whatever liquidity the FED pumped in. Fatigue had set in.
Obama doesn’t get enough credit for the shit pile he inherited with the republicans actively trying to destabilize the country and the media passively-aggressive trying to foster controversy by throwing gas on the fire.
tc125231
kay
@The Moar You Know:
He’s my new favorite. I don’t know why, but I get a huge kick out of his calm, almost bland recitations of alleged crimes.
I wish the bobbleheads would shut up, stop interrupting, and let him speak. He doesn’t talk fast enough for them, or something.
tc125231
@Calouste: Actually, the statistical failure rate on foreign made electronics is way up. Although Demmings taught the Japanese HOW to execute quality (and they initially listened, unlike the US Fortune 500), there has been a concerted move away from this, as their outlets remind them of the beauty of replacement plans.
The current thinking appears to be:
1. Hiqh quality costs a little more; and
2. When things are high quality, customers don’t buy extended warranties and replacement plans, which their outlets view as BAD
Thus, electronics quality continues to deteriorate, whether made in the US, or elsewhere
Seanly
The highway and transit funding is already 2 years behind in the next 6-year authorization. Lots & lots of congress critters support increasing the spending on highways (transit not so much), but the bill has languished in committees. Non-stimulus highway work is still relying on 2007/08 funding levels. Considering that inflation, even for the construction index, has been low this might not be too bad. However, construction prices were going way up in 04, 05 & 06. So now those 2008 levels of funding (set in 01, 02) don’t go very far.
The administration has done like almost all other administrations and put the highway funding on the back burner.
Another six year cycle of highway & transit funding provides good, long lasting jobs at all different levels of the economy.
Mike Kay
I don’t like Rahm, but some progressive focus on him more than they focus on the party of no, filibusters, and the corporate media.
The media is in the tank. Who can forget how they cheerled the invasion of iraq. This isn’t your parents or grandparents media. If they were merely even handed, we could get alot more done. But it’s not rahm who gives liz cheney an uncritical open mic on every media outlet or books McCain on every Sunday show.
Ivan Ivanovich Renko
@rootless-e: Frustrating. Painful. If I could get stimulus funds into one thing, it would be finding ways to support small companies whose products are being marketed and sold abroad.
How much of that is smart analysis and how much is self interest, I’m too tired to try to figure.
Calvin Jones and the 13th Apostle
@Tom Q: Don’t forget, Obama could have told her to shove it, except he wanted a “bi-partisan” bill. He got his wish and a less effective stimulus bill.
Calvin Jones and the 13th Apostle
@Mike Kay: Who has given Dancin’ Dave or Snuffleupagus a free pass here?
Mike Kay
@Calvin Jones and the 13th Apostle: Obama didn’t want a bipartisan bill, he needed a bipartisan bill.
In February of 2009, the Dems only had 58 senators, and they need 60 votes to break the filibuster.
In February, Franken’s election was still tied up in the courts and Spector was still in the GOP camp. And because Teddy was dying, on most days their majority was at 57. Remember, Teddy had a terrible seizure during the inauguration.
What happened to the once vaunted reality based community. Criticize Obama all you want, but don’t ignore facts because it doesn’t fit a narrative.
Calouste
@tc125231:
Doesn’t that just only apply to stuff sold in the US (and to a lesser extent the UK)? It’s been a while since I bought consumer goods in mainland Europe, but no one was bugging me then about extended warranties, nor have I heard from my contacts there that it is common practice now. It wouldn’t be too hard for the manufacturers to put crappy components in the 110 V appliances and better ones in the 240 V ones.
Irony Abounds
The part about “Goldman assuming risk in the deal” is such a crock. They only assumed risk in the deal because they didn’t have time to lay off the crap paper that was created. These deals were done so close to the time that the subprime fiasco was finally exposed that Goldman didn’t have the opportunity to dump the paper they were creating. Teabaggers are ready to lynch Obama because he has spent a lot of money to try and pull us out of the Great Recession, yet they don’t see to have any problems with the greedy scumbags at root of the whole problem. This country really have become quite a piece of work.
superdestroyer
Why would anyone want to loan money to small business when the chance of them maing a profit using the money is so slim. The Obama Administration has so many proposed regulations and entitlements in the works, there is no way for a business to make plans for the future.
Why invest or expand when some regulator can decide that that business should not exist for should not make a profit.
Democrats are back to where they were in the 1980’s when the question how does the U.S. have employees without employers?
Yutsano
@superdestroyer: ¿que?
Nick
@Calvin Jones and the 13th Apostle:
Alright brainiac, if we told Collins to shove it, where was the 60th vote for the bill?
mclaren
@Linda Featheringill: <blockquote.Unemployment benefits and assistance to the states are necessary but they are just bandaids.
Oh, how about some really wild insane ideas that have gotten me compared with the Unabomber and gotten me called a “Marxist”…
…For example, we could reinstate usury caps on interest rates. No more 35% credit card interest rates. How about that for putting some money in consumers’ pockets? Remember, back before 1982, when there was an actual limit on the interest rates banks were allowed to charge? What a concept, huh?
How about a cap on coporate CEO pay? A sharp cap. $500,000 year, all salary, no bonuses. Don’tlike it? Fine, emigrate to North Korea.
Or how about this — if a company outsources its major work, it can no longer get the advantages of being based in America. IBM wants to outsource all its jobs, fuck ’em, let them relocate to France and see how they like French tax laws, the greedy fucks.
Or how about raising the minimum wage? To a livable level? You know, like $15 per hour, and pay for it with a 90% tax rate on the top income brackets? How about that?
Now here’s a really Marxist suggestion…a guaranteed minimum income for every working man and working woman in America. Nahhhh, that’d never fly, after all only Leninist commies would propose that in America…you know, hardcore pinko communist bastards like…FDR.
Or how about unleashing the hounds of antitrust hell on the giant corporate monopolies that crush competition and bleed consumers dry and outsource American jobs?
Or how about this — federal cap on college tuition. Force every college in America to offer affordable tuition, even the Ivy Leagues. They don’t like that, no problemo, shut ’em down. Use the buildings for stables.
Or how about a massive national apprenticeship program where anyone who wants to learn a skill like operating numerical machine tools or handling a gas chromatopgrah in a medical lab can get near-zero-interest government loan to do it, and then signs a contract to work with the company that trains ’em for X number of years at a specified wage before becoming a free agent and pulling in the big bucks? You know, the kind of national apprenticeship program they have in France.
Or how about tax breaks to return manufacturing to America, instead of to outsource jobs? You know, a national manufacturing industrial policy like they have in Germany, where, when Obama mentioned to Chancellor Merkel that Germany was really doing well in the global downturn, she retorted, “That’s because we still build things here in Germany.”
I know…I’m ranting and raving. I’m another Unabomber. These are “Marxist ramblings.”
We now return you to the regularly scheduled snarls of “those unemployed bastards are lazy hippies and they deserve to starve.”
Nick
@mclaren: I’m not even sure half of that is Constitutional.
mclaren
What????
The Sherman Anti-trust act is unconstitutional?
Raising the minimum wage is unconstitutional?
A national apprenticeship program subsidized by progressive taxes is unconstitutional?
Usury caps on interest rates are unconstitutional?
????
Nick
@mclaren: A cap on CEO pay and college tuition is definitely unconstitutional, a guaranteed income sounds unconstitutional to me, but that’s debatable…besides where we would get the money to pay for that? A 90% tax rate on the rich wouldn’t be nearly enough, especially since they will never pay it, as they never did in the 50s when we actually had that rate.
And we have a national apprenticeship program, it’s called college.
frosty
@Tom Q:
I never noticed before how much “Susan Collins” sounds like “Sarah Conner”. Hmmmmm.
Wile E. Quixote
@mclaren:
No, you’re just an ignorant, angry fucktard. A leftist teabagger. You’ll probably be joining them any day now. You’ve already joined Naomi Klein in singing their praises.
Wile E. Quixote
OK: Quick survey. Who’s the weaker troll on this thread. Superdestroyer or mclaren?
Lisa K.
@jl:
That would be my senator, the bipartisan’s wet dream Susan Collins.
Lisa K.
@mclaren:
I don’t necessarily disagree with any of what you have written, but the fact is it is that as long as we are a representative democracy, it is not going to be policy.
Mmonides
1st, what Zifnab said.
2nd, we’re about 6 months away from the economic poutrage brigade looking incredibly foolish. The obamaconomy is going to surprise everyone who allows their ideology to cloud their analysis.
Lisa K.
@Wile E. Quixote:
I do not think mclaren is a bad person, but I suspect he has just fallen into the same trap that many on the right have over similar issues-he thinks if he believes it, it must be correct, and anybody who questions his belief is simply wrong. There is no compromise here. In principle, I like a lot of his ideas. In practice, I am pretty sure many of them would not work at all as imagined or would have what is euphemistically called “unintended consequences”.
Lisa K.
@frosty:
That is where the similarity ends.
Lisa K.
@Calvin Jones and the 13th Apostle:
Except that she would have taken Snowe and Specter with her.
mclaren
Those who object to an increase in the minimum wage on the alleged grounds that it would lead to an increase in unemployment are uninformed about contemporary economics.
“The Consequences of Minimum Wage Laws: Some New Theoretical Ideas,” James B. Rebitzer and Lowell J. taylor, Journal of Public Economics, Volume 56, Issue 2, Febuary 1995, pp. 245-255.
“Myth and Measurement: The New Economics of the Minimum Wage,” David Card and Alan B. Krueger, 1997.
Since the national apprenticeship programs proposed above duplicate existing national apprenticeship programs already in place and successful in France and Germany, it is unnecessary to provide empirical evidence that those economic programs work, since they have been working successfully in Europe for many years.
The claim “America already has a national apprenticeship program: it’s called college” offers a typical example of American arrogance and ignorance and incompetence. In fact, there exist a large class of high-paying jobs in America which do not require a college education, but which do require extensive training and high skills. Such jobs include CAD/CAM operators, numerical machine tool operator, linux sysadmin, and so on. There is at present no national apprenticeship program in America that leads people with a high school education through the process of gaining the skills required for these jobs without getting an unnecessary and extremely expensive (now costing typically $10,000 per year for four years) college degree.
In contrast, every other first world country (and many countries in the developing world, like Singapore and Taiwan) already boast such national apprenticeship programs.
Keep on screaming hysterical obscenities, Coyote — I’ll keep on citing peer reviewed journal articles from the scholarly literature.
mclaren
@Mmonides:
No one ever seems to want to publicly say “I don’t know” in answer to these kinds of questions. But in this case, I don’t know whether we’re 6 months away from an uptick in the economy, or whether Tim Geithner (and many others, including Paul Krugman and Brad deLong) are correct that America’s economic situation today parallels Japan’s “lost decade.” No one knows.
We just don’t know.
We have passed through the economic equivalent of a singularity, an unprecedented event for which we have no data from previous similar situations to guide us. There has not been a global economic collapse of precisely this type, with this severity, in previous history. The last close analogy, the Great Depression of 1929, arose from very different causes. There was no “shadow banking system” in 1929 with assets 6 times those of the conventional regulated economy. During the Great Depression of the 1930s, there was plenty of productive capacity and huge amounts resources (including, crucially, oil) but the mechanisms for developing and exploiting those resources economically had seized up.
Today, the situation is quite different — we face a global shortage of resources, including oil, while the economic mechanisms for developing and exploiting those resources are highly developed and working well. In other words, today the problem isn’t that we lack capital to drill for oil, it’s that the world is globally running out of oil to drill. Likewise, today the problem isn’t that global fishing fleets lack the technology or the capital to catch vast numbers of fish, the problem is that today we’re starting to fish many species of fish to extinction. And this is occurring in a wide spectrum of natural resources.
So the situation today is in many respects wholly different from the economic collapse of the 1930s.
Today, reputable economists have made convincing arguments for both scenarios — some, like Nouriel Roubini and Tim Geithner, have warned that America’s economy is acting like Japan in the 1990s. In this scenario, we have made the same mistakes Japan did by using too small a stimulus package. When the stimulus monies run out later this year, economists like Roubini warn that the U.S. economy will slump again and we’ll enter a protracted recession for a decade or more.
Other economists, like Kudlow et al., claim that this is just another normal recession and we’ll soon bounce back to full employment.
At this point no one can tell which group of economists is correct. We have no experience with a global economic meltdown of this type, caused by these particular problems.
So right now nobody knows what will happen in the next several years. Convincing arguments point to huge problems in the commercial real estate market and skyrocketing municipal debt. If we get a wholesale collapse of the commercial real estate market due to massive overbuilding, the economic consequences would be worse than the home mortgage collapse in 2007. And if cities all over America default on their debt because tax receipts have dried up, this could be worse than the Great Depression.
So nobody knows what will happen to America’s economy in the near future. It might get much worse, with a double-dip recession and a prolonged collapse like Japan’s “lost decade” of the 90s. Or the U.S. economy could improve. We just don’t know.
What we do know is that the suggestion that the U.S. government should just stand by and do nothing and let “the magic of the market” work has been tried before. This “magic of the market” crap has been tried in America a number of times…and it’s always failed.
Always.
Letting “the magic of the market” take its course has never worked since 1929. In every severe recession, failure by the government to provide adequate stimulus to the economy has resulted in prolonged recession and massive job loss.
The question we need to ask ourselves right now is: Why would it be any different this time?