Economic Recovery

Will Workers Survive State Budget Belt-Tightening?

Susan Ozawa — Tue, 13 Jan 2009 12:30:36 -0800

Executing the Main Street Economic Recovery Program Equitably

Susan Ozawa — Mon, 22 Dec 2008 13:14:25 -0800

Given the male dominated nature of construction and heavy manufacturing involved in infrastructure projects Eileen Appelbaum, at the School of Management and Labor Relations and Director of the Center for Women and Work recommends that proposals pushing infrastructure investment include construction of child care centers and additional space to accommodate expanded pre-K programs. Appelbaum also recommends including in this investment funds targeting training historically marginalized workers and incentives alongside other mechanisms to ensure these jobs are distributed equitably.

A petition along these lines can be signed here. Progressive economists highlight the importance of the quality of the jobs created, pushing for those receiving recovery funds be held accountable to create jobs with livable wages, health insurance, paid sick days, paid holidays and vacations. Monitoring and oversight to ensure transparency is fundamental. Provisions are outlined by the National Partnership for Women & Families here.

Endorser of the Main Street Recovery Program, Randy Albelda, professor of economics and Senior Research Fellow at the Center for Social Policy at University of Massachusetts Boston, highlights the need to address our severe deficits in social infrastructure as well as physical infrastructure. The Main Street Economic Recovery Program emphasizes spending on education, health care and child care, recognizing these should be down payments on larger reforms in our domestic budget priorities.

Signatory, Robert Drago, Professor of Labor Studies and Women's Studies at Penn State University further highlights the economic benefit of child care funding. The multiplier effect embodied in services is stronger than pure construction partly because child care workers earn less, but also because infrastructure investment is capital intensive and can involve foreign inputs although the Main Street Recovery Program emphasizes procuring domestic supplies. You can find Drago’s full argument here.

Following this lead, the Direct Care Alliance has laid out a series of recommendations to President-Elect Obama here. To avoid the kinds of jobs created after Katrina, to begin to set in order our ailing economy and to redirect our comprehensive infrastructure priorities these recommendations offer sound guidance on executing a progressive Main Street Economic Recovery Program that can benefit us all.

Other Economic Recovery Plans

Susan Ozawa — Tue, 16 Dec 2008 13:19:41 -0800

Center for American Progress, How to Spend $350 Billion in a First Year of Stimulus and Recovery

The United States Conference of Mayors, MainStreet Economic Recovery Report

National Governors Association, Economic Recovery: A Federal‐State Partnership

National Environmental Coalition, Economic Recovery through Investments in our Environment, Energy System and Heritage

USAction, TrueMajority.org and USAction Education Fund, The Next New Deal: Our Plan to Invest in America’s Future

Economic Benefits of Various Stimulus Proposals

Susan Ozawa — Fri, 05 Dec 2008 15:50:28 -0800

Snapshot by Mark Zandi, Moody's Economy.com

Minsky and Economic Policy: “Keynesianism” All Over Again?

Susan Ozawa — Fri, 05 Dec 2008 15:22:34 -0800

The Shape of Fiscal Stimulus: Spending vs. Tax Cuts

Susan Ozawa — Fri, 05 Dec 2008 15:18:40 -0800

Where Will the Jobs Come From?

Robert Borosage — Tue, 20 Oct 2009 23:35:35 -0700

They are popping the bubbly on Wall Street. Million-dollar bonuses, the Dow at 10,000, the casino is open again. Forget President Obama, who says we can't go back to an economy where finance pockets 40 percent of the profits. We're already headed there.

The current-account deficit is down as Americans have cut back spending. But the deficit with China is hitting new records; companies are still shipping manufacturing jobs over there. The dollar is down, but not against the Chinese currency. Forget about Federal Reserve Chair Ben Bernanke, who warns against going back to the unsustainable trade imbalances that led us over the cliff. The old patterns are coming back.

Key progressive leaders participating in the October 29, 2009 "Building the New Economy" conference in Washington address what it will take to ensure that the new economy that emerges from the wreckage of the old will provide Americans with good jobs.

Bernanke has announced that the recession is over, the recovery has begun. But to date, we are looking at a reversion, not a recovery. We've stopped the free fall, but we haven't changed direction. There can be no recovery to the old economy that crashed when the housing bubble burst. That economy depended on Americans spending more then they earned, borrowing ever greater amounts, treating their homes like at ATM machine, while the Chinese lent us the money to keep interest rates down so we could buy the goods our companies made with the jobs they shipped over there.

Now that old economy didn't work very well when it was growing. We lost high-wage manufacturing jobs during the supposed "recovery" under President Bush. Most Americans lost ground even while the economy was expanding. Household debts reached new highs. Inequality soared to Gilded Age extremes.

But now we can't even get back to that performance. Americans have lost some $13 trillion in assets. They are tightening belts and trying to pay down debts, terrified as jobs are lost, hours are cut and benefits are slashed. Consumers won't drive the U.S. economy, much less the world's. And businesses aren't investing because consumers are cutting back. They are increasing profits by laying off workers and cutting back expenses. States and localities are headed into severe layoffs of teachers and police. The economy isn't going to be buoyed by soaring exports to a world in recession. The only thing holding the economy up now is the deficit-financed stimulus plan and the automatic stabilizers like food stamps and unemployment benefits.

Where will the jobs come from? Wall Street can produce another bubble, but that won't put the 15 million without jobs to work, one-third of which have been out of work for at least six months.

Recovery requires fundamental reform of America's economic strategy. The old shibboleths of the conservative era—shrink government, cut top-end taxes, free multinationals to move jobs abroad, deregulate finance, wage war on labor unions, declare that trade deficits don't matter —have failed ignominiously. They must be discarded, like yesterday's rotted fruit.

Fundamental changes are needed. Trickle-down should be supplanted by public investment-led growth—large-scale public investments in areas vital to our future such as infrastructure, research and development, education and training. These investments should be deficit-funded until the economy actually starts putting people back to work, and then sustained and paid for through progressive tax reform. Tax speculative security transactions, generating $100 billion a year in revenue to invest in a 21st-century infrastructure that would put people to work and make the economy more productive. Raise top-end taxes, reduce inequality, and invest in making college affordable and exploring the green technologies of the future.

We've pursued tax cuts, promising private investments would flourish. But much of the productive investment and lavish consumption went abroad. In reality, public investment would be far more effective. We have a staggering public investment deficit that must be met for a world-efficient economy. Public investment is more likely to be invested, more likely to be spent here, more likely to create good jobs here, and far more likely to generate new technologies and productive private investments.

We need to complement this with a bold manufacturing strategy to make certain that we help lead the inevitable green industrial revolution, so the new technologies will be created and made in America. Shed the notion that we'll benefit by exporting windmills and solar cells and electric cars subsidized by China so that they are cheaper to us. We can't exchange dependence on foreign oil with dependence on foreign-made windmills. Make the public commitment to transition, and then use our purchasing power to invite the companies with the best technology to bid on contracts so long as they make it here in America. Not simply a timid-buy America policy satisfied with the final assembly of parts and technologies made elsewhere, but moving entire supply chains so that our workers and engineers and entrepreneurs are familiar with cutting-edge technologies that our inventors can soon surpass.

Complement this with a new global trade strategy. We can't go back to current account deficits over 6 percent of gross domestic product, financed by borrowing from abroad. China, now some three-quarters of our manufactured goods deficit, is by far the hub of the problem. The president has wisely called on the international community to adjust cooperatively, challenging the Chinese and other mercantilist nations to expand domestic demand and reduce their reliance on exports, while the U.S. exports more and buys less. But that isn't going to happen so long as the Chinese are free to manipulate their currency, subsidize their exports, savage their workers and environment, and mandate global corporations transfer jobs and technology to them. So we'll need to show some bite. A bold manufacturing policy around new energy will encourage companies, including Chinese companies, to make things here. But we should be debating putting a lid on our deficits, and announcing that we will move slowly to balance our trade. If all adjust, we can have more trade, not less, but we can't go back to the old imbalances no matter what they do.

These must be complemented by financial reform that curbs the gambling and forces banks to make loans to Main Street again, and by a high-wage policy—empowering workers, lifting the minimum wage, extending the public social contract. Finally, our economic policy, both monetary and fiscal, must be targeted at sustaining full employment as a priority, without letting inflation get completely out of control.

These ideas—heresies in the old conservative times—are but the beginning towards defining a new course. They will face fierce resistance from entrenched interests. But perhaps the biggest obstacle is the encrusted hold of old, bad ideas that should already have been discarded. You can see that in the calls for balancing the budget and cutting spending while unemployment is reaching new heights. Or the Republican chorus about cutting taxes, as if they had learned nothing. Or conservative Democrats railing against limited buy-American policies. Or the administration proclaiming its opposition to industrial policy. Or conservatives railing against excessive regulation.

Inertia and interest drive us to revert, not reform. Only it won't work. The old standards don't play anymore. Sure, Wall Street can generate another bubble or two. But there is no recovery on that old path—only stagnation, crushing long-term unemployment, growing inequality, a devastated middle class and a social tinderbox increasingly ready to explode. Eventually, we'll have to change our course; the only question is how much pain we have to endure before we actually learn our lessons.

The Great Recession: It Ain't Over 'Til It's Over

Robert Borosage — Wed, 23 Sep 2009 07:34:06 -0700

The world economy is growing; stock markets are up; talk of recovery, not world depression, fills the business pages. As the leaders of the 20 leading economies gather in Pittsburgh this week, they might well feel the euphoria of someone who has survived a near-death experience. (For an insightful report on Pittsburgh and the G-20, go here)

Well, hold the champagne. Don't declare victory while the enemy is still advancing. Bush's calamitous folly in Afghanistan—celebrating victory and invading Iraq while the Taliban and al-Qaeda were regrouping in the mountains—should have taught us that much. Let's not go Bush on the economy.

The question is one of jobs. The reality is companies are still shedding workers; unemployment is still rising. There is no recovery until jobs are being generated. Before the leaders deal with what comes after the recovery, they better secure it. Pittsburgh should be first and foremost a summit on jobs.

The leaders of the labor union federations from the 20 countries, led by the AFL-CIO, call the leaders to sober up in their "Pittsburgh Declaration." Unemployment is high and rising. It is slated, they report, to almost double over the next 18 months in the industrial countries, and continue rising with rates over 10 percent well into 2011. Over 200 million workers worldwide could be pushed into extreme poverty.

In the U.S., one in six workers is unemployed or underemployed. Companies are shedding jobs, not hiring. Young workers are hurt the most. Even recent college graduates struggle, with 80 percent of new college graduates—the boomerang generation—moving back in with their parents. Long-term unemployment is at record rates. Unemployment is the worst in a quarter century and rising.

High unemployment is accompanied by stagnant wages and benefits, and cutbacks in hours. This comes after a lost decade in which most families lost ground. Hard-pressed families have no choice but to tighten belts. Declining consumption means more layoffs. Declining incomes mean falling revenues for governments. State and local governments, having burned through their rainy day funds, are now laying off teachers and police.

The unprecedented intervention of the Federal Reserve to bail out the banks—interest rates near zero, purchasing over a trillion in mortgage backed securities, and much more—and the Obama recovery plan—providing aid to states and localities, bolstering low-wage workers, and beginning to generate jobs from public works programs—have managed to staunch the hemorrhaging, at least temporarily. Unprecedented in scope, they aren't yet enough to generate a recovery.

The union leaders get it right. The recovery plans to date "are inadequate in size" and "do not sufficiently focus on employment." They urge the leaders of the G-20 not to exit from their stimulus measures prematurely. Instead they argue for another round of job-focused spending, targeted on putting people to work, and sustained until the recovery is clear.

This is heresy in this country. Our know-nothing right dismisses the recovery plan as a failure, when it is in fact what is holding up the economy. The business community and conservative economists are railing about debt, calling for cutting back the current spending plans. They fret more about the potential of future inflation than the reality of right-now misery, and the clear and present danger of continued stagnation. The big banks are gamboling back into leveraged speculation and million-dollar bonuses, and fending off efforts to shut down their casino.

Obama must stand firm against this tide. The president should make it clear to the leaders in Pittsburgh that the measure of a recovery is that people are back at work, and that wages are rising once more. He should challenge them to focus on jobs, pushing for another round of coordinated recovery plans to put people to work. Hold off on the party. There is no recovery without jobs. And no victory while unemployment is rising.

Employment Report Shows Stimulus Impact

Isaiah J. Poole — Fri, 07 Aug 2009 08:12:54 -0700

EPI economist Heidi Shierholz says that the July employment report from the Bureau of Labor Statistics shows that, f anything, the jobs report shows that Congress was wrong to bend to conservative pressure to limit stimulus spending. Shierholz explains what the report shows about the impact of the American Recovery and Reinvestment Act and the next steps congress should take to build on that impact.

Puleeze! Washington Post, Would You Stop Blaming ME For The Recession?

Chris Collins — Mon, 03 Aug 2009 10:21:30 -0700

It was Saturday morning and I had just returned from yoga class and a few minutes shopping at the local farmers market. I poured myself a cup of coffee, picked up the newspaper and went to sit on my back porch to enjoy a few more minutes of relaxation before I started in on the day’s chores.

I took a sip of coffee, opened the Washington Post, and totally lost my hard earned karma! The headline read: “Economy Turning Out of Steep Dive: Slow to Spend Again, Consumers Could Be Holding up the Recovery” (emphasis added).

Excuse me? I thought consumer spending WAS the problem! For months, we’ve been told that we were the ones who overextended ourselves, failed to read the fine print in our mortgage documents and home equity loans, bought LCD TV’s when we should have saved, etc….

And just when we’ve started to learn our lesson and cut back on our spending, we’re supposed to spend more and take on more debt?

And even if that was a good idea, exactly how are we supposed to spend more? Clearly, Neil Irwin and Ylan Q. Mui, the authors of this article, failed to talk to Michelle Singletary, who only the next day in the business section of that very same newspaper, exhorted the unemployed to “take charge” of finding a new job, and listed out the “very sobering and very real” jobless numbers:

-- 584,000 people filing first-time claims for unemployment benefits in the week ended July 25. That was an increase of 25,000 from the previous week.

-- 6.2 million people collecting unemployment checks.

-- 6.5 million jobs slashed from the labor market.

This is the only recession since the Great Depression that has wiped out all job growth from the previous business cycle, according to the Economic Policy Institute, a nonpartisan think tank. Further, with less than one job opening for every five job seekers, unemployed workers are getting stuck in unemployment for long periods. Twenty-nine percent have been jobless for more than half a year.

And, according to the Bureau of Labor Statistics, the total number of unemployed people in June was actually 14.7 million people -- in other words, another 8.5 million people are unemployed and don’t even have unemployment insurance checks to help them out.

So, with almost 1 in 10 people out of a job, and the rest of us taking furloughs, pay cuts, and looking at 401Ks that are worth only 2/3 of what they were 18 months ago, you have to wonder what world Irwin and Mui are living in to write that headline.

And then I remembered Bush’s solution to the 9/11 crisis: "Get down to Disney World in Florida," he said two weeks after the attack. "Take your families and enjoy life, the way we want it to be enjoyed."

So much for change…...