Progressive Breakfast for August 1

Morning Message

Continued Jobs Growth. But Highway Bill Shows Austerity Still Hurts.

Today’s Bureau of Labor Statistics jobs report finds payroll employment increased by 209,000 in July, slightly slower growth than last month ... But many thoughtful economists are still cautioning that unemployment is far too high to start celebrating. Fed chief Janet Yellen is keeping interest rates low [and] Lawrence Summers is calling for a big expansion of infrastructure spending in order to achieve full employment ... The big danger America faces is permanent stagnation – a slow-growth economy that never produces good jobs at the rate necessary to employ all the people who lost jobs during the great recession and the new entrants into the labor force. A real growth agenda would address America’s far more massive public investment needs. The $11 billion highway bill that just barely passed only prevents us from falling backward.

House GOP Incapable Of Solving Child Migrant Crisis

“Chaos” in House after leadership pulls border bill. W. Post: “The congressional chaos ensured that President Obama’s administration will not have the resources necessary to stem the recent tide of tens of thousands of migrants from Central America, many of them children entering the United States alone, until mid-September at the earliest … As late as Thursday morning, House Speaker John A. Boehner (R-Ohio) and his allies claimed they had enough votes in the GOP-run chamber to pass a stripped-down, $659 million border bill aimed at speeding up deportations. But a revolt by hard-liners — inspired by Sen. Ted Cruz (R-Tex.) — led Boehner to pull the bill in the face of certain defeat. The retreat sparked panic among GOP moderates, who have felt marginalized and bullied during years of warfare with a small but influential tea party caucus.”

GOP also filibusters Senate version. The Hill: “Senate Republicans blocked a $2.7 billion border spending bill Thursday in a 50-44 vote. The Senate voted against waiving a budget point of order on the measure, which would have provided funding for authorities to handle a wave of child immigrants crossing the border. Sens. Mary Landrieu (D-La.) and Joe Manchin (D-W.Va.) voted against the bill. Every Republican voted against proceeding. Landrieu faces a tough reelection in November.”

GOP may try again today. The Hill: “Members of the GOP whip team hosted small meetings with rank-and-file members Thursday night as they sought to build support and approve legislation before leaving for a five-week recess. The House GOP conference is scheduled to meet at 9 a.m. Friday, where members will receive an update on their progress.”

“Republicans deliver another self-inflicted wound” says W. Post’s Dan Balz: “…looking toward November, it’s better to be in the Republicans’ position now than the Democrats’. Standing in the GOP’s path to victory, however, are perceptions of the party itself, nationally and in some of the states. How much self-inflicted damage is too much? … Republicans have been repeatedly criticized for not offering a governing agenda if they take power. What happened Thursday underscores why that has been so difficult.”

New Too-Big-To-Fail Report

GAO releases report on “too-big-to-fail.” NYT: “The report goes about its task by trying to determine whether the biggest banks are able to borrow more cheaply than smaller lenders. If big banks pay less for their funds, it would suggest that creditors and depositors believe that they still have implied government backing … The report estimates that big banks were borrowing at more advantageous rates around the crisis years of 2008 and 2009. But since then, it estimates that the difference between the borrowing costs of big and smaller banks has declined or even reversed … The industry liked much of what it saw in the report … Other skeptics said that the report suggested that large banks might again enjoy a government subsidy in future crises.”

“Too-Big-to-Fail Is Still Too Dangerous” editorializes Bloomberg: “One way to assess the too-big-to-fail problem is to estimate how much of a break big banks are getting on their borrowing costs. Last year, using a study that relied on credit-rating data from 2009, Bloomberg View put the value of the subsidy at $83 billion in a typical year for the 10 largest U.S. banks … The GAO gets a different answer largely because it uses a different approach … Suppose, though, that the GAO’s methods and numbers are right. Does it mean that Dodd-Frank reforms introduced over the past few years have ended too-big-to-fail? No, for two reasons…”

Highway trust fund extension passes Congress. The Hill: “After the House rejected Senate changes, senators held their noses Thursday and voted 81-13 for a $10.9 billion bill to fund highway projects through May 2015 … The bill now heads to President Obama’s desk for his signature. The White House has said it will accept the House legislation but would have preferred a $302 billion four-year extension of highway funding.”

Hope On Wages

Wages start to tick up. WSJ: “U.S. employers’ labor costs rose in the second quarter at the fastest rate in nearly six years, a sign that a tightening labor market may be raising pressure on companies to boost worker pay … Wages and salaries, which make up about 70% of compensation costs, rose 0.6% in the second quarter, the fastest rate of increase since the third quarter of 2008. Benefits, which include paid leave and insurance policies, rose 1% … Some economists treated Thursday’s report with caution, noting the data could include some payback from an unusually weak reading in the first quarter…”

And food stamp usage declines. Bloomberg: “About 46.25 million people were enrolled in the Supplemental Nutrition Assistance Program in April, according to the most-recent data available from the Department of Agriculture. That’s down 3.2 percent from a high of almost 47.8 million in December 2012 … The ‘gradual decline’ shows some low-income households no longer use these benefits as their finances slowly have improved, said Nicholas Colas, chief market strategist at ConvergEx Group … Almost 15 percent of the U.S. population still gets SNAP benefits, which indicates that many people continue to struggle … the modest decline could be caused in part by the program approaching its maximum number of eligible participants.”

“The Future of Minimum Wage Will Be Decided in Cities” says TNR’s Taylor Malmsheimer: “…with Congress gridlocked, federal minimum wage reform seems unlikely and unrealistic. Even at the state level, there are too many varying demographics and political leanings to make minimum wage legislation an easy process. It’s especially difficult to pass legislation in state governments that hasn’t already been tested and proven in the state’s localities or in other states. Cities, which often lean left, have become ‘policy incubators,’…”