From the category archives:

Employment

Payrolls fall by 36,000; U.S. jobless rate steady at 9.7%

Written By: Rex Nutting

U.S. nonfarm payrolls declined for the 25th time in the past 26 months, falling by 36,000 in February to a seasonally adjusted 129.5 million, the Labor Department estimated Friday.

The nation’s jobless rate was steady at 9.7% as the number of people employed rose by 308,000, according to the household survey.

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Video: Harry Reid: Only 36,000 Lost Their Jobs Today

Oil rises to near $81 ahead of key US jobs report

Written By: ALEX KENNEDY

Oil prices rose to near $81 a barrel Friday in Asia as crude traders followed equity markets higher ahead of a key U.S. jobs report.

Benchmark crude for April delivery was up 48 cents to $80.69 a barrel at late afternoon Singapore time in electronic trading on the New York Mercantile Exchange. The contract fell 66 cents to settle at $80.21 on Thursday.

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CBO: National Deficit to Hit Nearly $10 Trillion Over Upcoming Decade

A new congressional report released Friday says the United States’ long-term fiscal woes are even worse than predicted by President Barack Obama’s grim budget submission last month.

The nonpartisan Congressional Budget Office predicts that Obama’s budget plans would generate deficits over the upcoming decade that would total $9.8 trillion. That’s $1.2 trillion more than predicted by the administration.

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Federal Workers Paid More Than Private Employees For Similar Work

Federal employees are earning considerably more than people doing similar work in the private sector, according to an analysis from USA Today — news that’s sure to rile lawmakers already concerned about the rate of federal spending.

In more than eight out of 10 occupations, federal employees earned higher salaries, the newspaper’s analysis of federal data found.

Among the higher earners are federal accountants, nurses, chemists, surveyors, cooks, clerks and janitors.

Federal workers earned an average salary of $67,691 in 2008 for jobs that exist both in government and the private sector, according to Bureau of Labor Statistics data. By comparison, the average pay for the same batch of jobs in the private sector was $60,046 in 2008, the most recent data available.

The figures don’t include health, pension and other benefits, which averaged $40,785 per federal employee and $9,882 per private employee in 2008, according to the Bureau of Economic Analysis.

The federal government spends about $125 billion each year on compensation for about 2 million civilian employees.

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Obama Begins His Assault on Your Life Savings

Written By: Terry Jeffrey

The welfare state and your life savings are two cars heading down a one-lane road in opposite directions. One must yield, or there will be a crash.

For Americans who believe in the old-fashioned virtues of hard work, self reliance and respect for private property, the solution is obvious. The welfare state must yield.

For politicians who believe in the welfare state and redistributing wealth, the solution is equally obvious. Your savings must yield.

Barack Obama is of the latter group. In the new health care proposal he outlined this week, he suggested a series of unprecedented tax increases that would extend the greedy hands of government into the life savings of hard-working Americans.

These new taxes would essentially construct a new fiscal pipeline capable of carrying money out of the savings of private citizens and dumping it into government coffers specifically for subsidizing Medicare under the new health care system Obama envisions. The White House summary of Obama’s proposal presents this would-be pipeline as a facilitator of economic justice.

“Under current law, workers who earn a salary pay a flat tax of 1.45 percent of their wages to support the Medicare Hospital Insurance (HI) trust fund, but those who have substantial unearned income do not, raising issues of fairness,” says the summary. “The Act will include an additional 0.9 percentage point Hospital Insurance tax for households with incomes exceeding $200,000 for singles and $250,000 for married couples filing jointly. In addition, it would add a 2.9 percent tax for such high-income households to unearned income including interest, dividends, annuities, royalties and rents (excluding income from active participation in S corporations).”

There are, of course, multiple unanswered questions here. For starters, wouldn’t increasing the Medicare payroll tax on “households with incomes exceeding $200,000 for singles and $250,000 for married couples filing jointly” violate Obama’s pledge that, as his campaign literature put it, he would “not raise any tax rate on families making less than $250,000 per year, period.” Plenty of single Americans, who are raising children or taking care of other dependents, file their taxes claiming “head of household” status. Aren’t they “families” covered by Obama’s tax pledge?

Secondly, wouldn’t slapping these households with a new 2.9 percent tax on interest, dividends, annuities, royalties and rents also violate Obama’s tax pledge?

But the most important question is this: Would allowing the government to tap into the savings of one group of Americans to pay entitlement benefits to another group create a system of taxation that could swiftly destroy the American dream?

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AP: Obama’s Homebuyer Credit Has ‘Failed’

White House Blames Winter Weather for Potential Job Losses

The White House wants a do-over for February’s yet-to-be released jobs numbers, arguing that the blizzards that hammered the country last month also dented the economic recovery.

Though the February unemployment figures are not out yet, White House economic adviser Larry Summers is already lowering expectations and claiming that winter weather is to blame for any posted decline.

In an interview with CNBC, Summers urged the country not to make any judgments about where the economy is headed based on the upcoming statistics.

“Who knows what the next number is going to be. The blizzards that affected much of the country during the last month are likely to distort the statistics, and in past blizzards those statistics have been distorted by 100,000 to 200,000 jobs, so it’s going to be very important … to look past whatever the next figures are to gauge the underlying trends,” he said.

Summers has clearly noted the dismal weekly employment data that’s come out and is bracing for some bad news at the end of the week.

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Obama ‘Agnostic’ on Deficit Cuts, Won’t Prejudge Tax Increases

Written By: Rich Miller

President Barack Obama said he is “agnostic” about raising taxes on households making less than $250,000 as part of a broad effort to rein in the budget deficit.

Obama, in a Feb. 9 Oval Office interview, said that a presidential commission on the budget needs to consider all options for reducing the deficit, including tax increases and cuts in spending on entitlement programs such as Social Security and Medicare.

“The whole point of it is to make sure that all ideas are on the table,” the president said in the interview with Bloomberg BusinessWeek, which will appear on newsstands Friday. “So what I want to do is to be completely agnostic, in terms of solutions.”

Obama repeatedly vowed during the 2008 presidential election campaign that he would not raise taxes on individuals making less than $200,000 and households earning less than $250,000 a year. When senior White House economic adviser Lawrence H. Summers and Treasury Secretary Timothy F. Geithner suggested in August that the administration might be open to going back on that pledge, White House press secretary Robert Gibbs quickly reiterated the president’s promise.

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Bailout panel cites commercial real estate danger

Over the next several years, failed commercial real estate loans could litter American cities with empty stores and office complexes, cause hundreds of bank failures and weaken the economy, a watchdog report says.

Banks face up to $300 billion in losses on loans made for commercial property and development, according to a report released Thursday by the Congressional Oversight Panel. The panel monitors the government’s efforts to stabilize the financial system.

The report says the defaults could lead to reduced lending and cause the eviction of families from rental properties. Bank failures also could contribute to job losses and hurt the economic recovery.

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Fed in Talks With Money Market Funds to Help Drain $1 Trillion

Written By: Craig Torres and Christopher Condon

The Federal Reserve is in talks with money-market mutual funds on agreements to help drain as much as $1 trillion from the financial system as policy makers prepare for the first interest-rate increase since June 2006, according to a person familiar with the discussions.

The central bank is looking to the $3.2 trillion money- market mutual-fund industry because the 18 so-called primary dealers that trade directly with the Fed have a capacity limited to about $100 billion, estimates Joseph Abate, a money-market strategist at Barclays Capital in New York.

Money-market funds may welcome the opportunity to trade with the Fed after the financial crisis reduced the supply of safe assets in which they can invest. In one example of demand for such assets, auctions on four-week Treasury bills have attracted an average of $5.47 in bids for every dollar sold this year, compared with an average of $3.77 last year, according to Bloomberg data. Yields on the four-week bill fell to five basis points from 20 basis points a year ago.

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Job growth may not curb unemployment rate: WHouse

A new White House economic forecast showed Thursday the US economy is set to start producing job growth this year at a rate of 95,000 per month, but that the unemployment rate will remain high.

President Barack Obama’s annual economic report to Congress said the economy is on the verge of pulling out of a period of steep job losses stemming from the worst recession in decades.

But the report also said that the unemployment rate may not come down much from the current level of 9.7 percent, and may even rise because of labor market growth and the return of more discouraged workers to the labor force.

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Announcing the new U.S. policy to curb illegal immigration: Make the U.S. economy less attractive to potential illegal immigrants.

US: 7 percent fewer illegal immigrants last year

The number of illegal immigrants in the United States fell by seven percent last year to 10.8 million, coinciding with the country’s financial crisis, a Department of Homeland Security report said Tuesday.

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Polk school district to give iPods to some parents

The Polk County school district is giving away iPods to some parents.

The school district is using the device to reward parents of children with disabilities who fill out a 10-minute online survey. The district wants to know how well it’s connecting with the parents and how to get parents involved in their children’s education.

The district is spending about $350,000 in federal stimulus money for the iPods.

The district has more than 10,000 students with disabilities.

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One Year Later, America Continues to Bleed Jobs

600,000 More Jobs Lost in 2009 Than Previously Reported

Congressman Tom Price (R-GA) issued the following statement after it was reported that the United States lost another 20,000 jobs in January, while 2009 jobs losses were revised up by 617,000.

“The Obama agenda continues to provide no relief for Americans seeking recovery and stability,” said Congressman Price. “Today’s report underscores the troubling reality that the President has failed to achieve the job growth he promised. Not only did job losses continue a slide to begin 2010, but we now know that the President’s first year in office saw dramatically more jobs lost than previously reported. While the perseverance and resolve of the American people will eventually pull us out of this downturn, it is clear that this inevitability will be in spite of, rather than due to, the President’s agenda.

“American job creators remain wary to expand and hire as they see an ideologically-driven Washington looking to heap more taxes, mandates, regulations, and instability upon the economy. For robust, sustainable job growth to take hold, the President must drop his plans and provide our economy the stability needed to flourish. While the President, it seems, is running out of ideas, Republicans are ready and eager to demonstrate the principles upon which sustainable job growth is achieved.”

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Harry Reid pushes $80 billion jobs bill

Written By: LISA LERER

Several key Democrats say there is no deal on an $80 billion jobs bill — even as Majority Leader Harry Reid has been pushing for quick action in the Senate ahead of a snowstorm that has largely shut down Capitol Hill.

“There’s no agreement on what it all is yet,” said Senate Finance Committee Chairman Max Baucus (D-Mont.), who’s playing a key role in the negotiations. “We’re working as well as we can but again a lot of senators are gone and they’re just not going to make it this week.”

Reid said drafting of the bill had been completed Tuesday afternoon, and he threatened to keep the Senate in session into the weekend to get it done, even as the rest of Washington shut down for the second round of punishing blizzards.

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PROMISES, PROMISES: Jobs bill won’t add many jobs

Written By: STEPHEN OHLEMACHER

It sounds great: A big jobs bill that would hand President Barack Obama a badly needed victory and please Republicans with tax cuts at the same time. But there’s a problem: It won’t create many jobs.

Even the Obama administration acknowledges the legislation’s centerpiece – a tax cut for businesses that hire unemployed workers – would work only on the margins.

As for the bill’s effectiveness, tax experts and business leaders said companies are unlikely to hire workers just to receive a tax break. Before businesses start hiring, they need increased demand for their products, more work for their employees and more revenue to pay those workers.

“We’re skeptical that it’s going to be a big job creator,” said Bill Rys, tax counsel for the National Federation of Independent Business. “There’s certainly nothing wrong with giving a tax break to a business that’s hired a new worker, especially in these tough times. But in terms of being an incentive to hire a lot of workers, we’re skeptical.”

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New Wind Farms in the U.S. Do Not Bring Jobs

Written By: JONATHAN KARL

Despite all the talk of green jobs, the overwhelming majority of stimulus money spent on wind power has gone to foreign companies, according to a new report by the Investigative Reporting Workshop at the American University’s School of Communication in Washington, D.C

Nearly $2 billion in money from the American Recovery and Reinvestment Act has been spent on wind power, funding the creation of enough new wind farms to power 2.4 million homes over the past year. But the study found that nearly 80 percent of that money has gone to foreign manufacturers of wind turbines.

So Where Are the Jobs?

“Most of the jobs are going overseas,” said Russ Choma at the Investigative Reporting Workshop. He analyzed which foreign firms had accepted the most stimulus money. “According to our estimates, about 6,000 jobs have been created overseas, and maybe a couple hundred have been created in the U.S.”

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Obama Doesn’t ‘Begrudge’ Bonuses for Blankfein, Dimon

Written By: Julianna Goldman and Ian Katz

President Barack Obama said he doesn’t “begrudge” the $17 million bonus awarded to JPMorgan Chase & Co. Chief Executive Officer Jamie Dimon or the $9 million issued to Goldman Sachs Group Inc. CEO Lloyd Blankfein, noting that some athletes take home more pay.

The president, speaking in an interview, said in response to a question that while $17 million is “an extraordinary amount of money” for Main Street, “there are some baseball players who are making more than that and don’t get to the World Series either, so I’m shocked by that as well.”

“I know both those guys; they are very savvy businessmen,” Obama said in the interview yesterday in the Oval Office with Bloomberg BusinessWeek, which will appear on newsstands Friday. “I, like most of the American people, don’t begrudge people success or wealth. That is part of the free- market system.”

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Hmm, let’s take a look back…

Obama Says Bonuses Are Violation Of “Our Fundamental Values”

Chinese see U.S. debt as weapon in Taiwan dispute

Written By: Bill Gertz

China’s military stepped up pressure on the United States on Monday by calling for a government sell-off of U.S. debt securities in retaliation for recent arms sales to Taiwan.

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China Wields Debt Threat

Global bank tax near, says Brown

Obama’s Lack of Business Sense

Written By: Robert P. Kirchhoefer

Some baffling comments by President Obama in today’s press conference.

Asked how how and why small business loans would help small business, President Obama replied:

“If [small businesses] can get the bank loans to boost their payroll… they will do so.” He further claimed that in his “travels” he has spoken with small business owners nationwide, and they see optimism and new customers.

I’m curious where these travels took him? A land inhabited with a fairy, children, and a flying boy in a green suit?

Unfortunately, a Presidential decree that small businesses are ready to hire, even from this President, does not make it so. In truth, small businesses are not excited about their 2010 prospects. They need to be. As a Wall Street Journal economic report states, small businesses are stymied:

“Optimism has clearly stalled in spite of the improvements in the economy in the second half of 2009,” said William Dunkelberg, chief economist for the lobbying organization. “Small-business owners entered 2010 the same way they left 2009 — depressed.”

Yet, our President advocates taking loans for the purpose of boosting payroll — in the middle of an economic draught. It just makes no sense. Unnecessary risk is not what strengthens and repairs the backbone of our economy — small business.

Going into debt for the purpose of maintaining payrolls you cannot afford is not how capitalism works. It’s not how industries recover.

It was how the Soviet Union worked, however — before it imploded.

And to think McCain was the one who claimed a weakness in economics. Would that other leaders were as honest.

Small businesses need a long term commitment to conditions necessary for growth — long term. They need to be shown that their taxes will stay low, and they need to be shown that their government will help them, by getting out of the way.

They don’t need false hope, and neither do we.

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House faces tough vote on $1.9 trillion more debt

Written By: ANDREW TAYLOR

Facing a politically excruciating vote, House Democratic leaders are counting on new budget deficit curbs to help smooth the way for a bill allowing the government to go $1.9 trillion deeper into debt over the next year – or about $6,000 more for every U.S. resident.

The debt measure set for a House vote Thursday would raise the cap on federal borrowing to $14.3 trillion. That’s enough to keep Congress from having to vote again before the November elections on an issue that is feeding a sense among voters that the government is spending too much and putting future generations under a mountain of debt to do it.

Already, the accumulated debt amounts to $40,000 per person. And the debt is increasingly held by foreign nations such as China.

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U.S. Debt to Hit Proposed Ceiling This Month

The US debt is on track to hit a congressionally proposed debt ceiling of 14.3 trillion dollars by the end of February, the Treasury said Wednesday, a day ahead of a key vote to raise it to that level.

“Based on current projections, Treasury expects to reach the debt ceiling as early as the end of February. However, the government’s cash flows are volatile, making it difficult to forecast a precise date,” the Treasury said in a statement.

The current limit on the public debt of the United States is 12.374 trillion dollars.

The US debt exceeded 12.349 trillion dollars on Monday, according to Treasury data.

The US House of Representatives will vote Thursday on whether to raise the US debt limit to a historic 14.3 trillion dollars, allowing the United States to borrow another 1.9 trillion dollars

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Deficit imperils United States’ top credit rating

Moody’s warns US of credit rating fears

Fannie, Freddie Kept Off Budget, Dividends Counted

Written By: Dawn Kopecki

President Barack Obama’s budget blueprint for the next fiscal year excludes the $6.3 trillion in liabilities of government-controlled Fannie Mae and Freddie Mac and delays for a second time a decision on restructuring the mortgage-finance companies that were seized 17 months ago.

The companies may need $54.4 billion more in U.S. Treasury Department preferred stock purchases to stay afloat in the current year that ends Sept. 30, and $23 billion more for the next fiscal year, according to calculations made from the Obama administration’s 2011 budget proposal to Congress today.

“The administration continues to monitor the situation of the GSEs closely and will continue to provide updates on considerations for longer-term reform of Fannie Mae and Freddie Mac as appropriate,” the Obama administration said.

White House budget director Peter Orszag delayed a decision on whether to bring the companies’ $1.6 trillion in corporate debt and $4.7 trillion mortgage obligations onto the federal budget. As the director of the Congressional Budget Office, Orszag criticized the Bush administration for keeping the 2008 rescue of the government-sponsored enterprises off budget.

At the time, Orszag said “the degree of federal control over Fannie and Freddie is so strong, we are incorporating them into the federal budget.”

“We continue to be on track to release a statement in the very near future” on the GSEs, Housing and Urban Development Secretary Shaun Donovan said in a conference call with reporters today.

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First-time jobless claims rise unexpectedly

Written By: Christopher S. Rugaber

New jobless claims rise unexpectedly to 480,000 as layoffs continue, jobs remain scarce

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Next in Line for a Bailout: Social Security

Written By: Allan Sloan

Don’t look now. But even as the bank bailout is winding down, another huge bailout is starting, this time for the Social Security system.

A report from the Congressional Budget Office shows that for the first time in 25 years, Social Security is taking in less in taxes than it is spending on benefits.

Instead of helping to finance the rest of the government, as it has done for decades, our nation’s biggest social program needs help from the Treasury to keep benefit checks from bouncing — in other words, a taxpayer bailout.

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Obama Budget Seeks $1.1 Trillion in Tax Hikes

President would increase taxes on some businesses and wealthy individuals by a total of about $1.4 trillion over the next decade, while cutting taxes for workers and other businesses by about $330 billion.

While President Barack Obama is proposing to cut some taxes for companies that hire workers, his budget would raise a host of other taxes on businesses and wealthy individuals.

The budget proposal released Monday would extend Obama’s signature Making Work Pay tax credit — $400 for individuals, $800 for a couple filing jointly — through 2011. But it would also impose nearly $1 trillion in higher taxes on couples making more than $250,000 and individuals making more than $200,000 by not renewing tax cuts enacted under former President George W. Bush. Obama would extend Bush-era tax cuts for families and individuals making less.

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Federal Government to Grow to 2.15 Million Employees in 2010

The Obama administration projects the number of employees on the government payroll will grow to 2.15 million this year, reportedly making it the largest federal workforce in modern history and fueling criticism over the size of government.

The Washington Times reported Wednesday that the bulk of the increase is on the civilian side, which is expected to grow by 153,000 workers in 2010.

The expansion means the workforce will top 2 million for the first time since President Clinton declared that “the era of big government is over,” according to the newspaper.

The expansion comes even as Obama calls for cutting the deficit and imposing a three-year freeze on some non-security spending.

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President Obama: “Every Economist from the Left and Right” Says Stimulus Has Saved or Created At Least Two Million Jobs

Written By: Jake Tapper

President Obama veered off script – and away from the facts – when he spoke about the stimulus bill today in Nashua, NH.

“Now, if you hear some of the critics, they’ll say, well, the Recovery Act, I don’t know if that’s really worked, because we still have high unemployment,” the president said. “But what they fail to understand is that every economist, from the left and the right, has said, because of the Recovery Act, what we’ve started to see is at least a couple of million jobs that have either been created or would have been lost. The problem is, 7 million jobs were lost during the course of this recession.”

Um, it’s not true that “every economist” has said the Recovery Act has saved or created two million jobs.

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Roubini Calls U.S. Growth ‘Dismal and Poor,’ Predicts Slowing

Written By: Simon Kennedy and Erik Schatzker

New York University Professor Nouriel Roubini, who anticipated the financial crisis, called the fourth quarter surge in U.S. economic growth “very dismal and poor” because it relied on temporary factors.

Roubini said more than half of the 5.7 percent expansion reported yesterday by the government was related to a replenishing of inventories and that consumption depended on monetary and fiscal stimulus. As these forces ebb, growth will slow to just 1.5 percent in the second half of 2010, he said.

“The headline number will look large and big, but actually when you dissect it, it’s very dismal and poor,” Roubini told Bloomberg Television in an interview at the World Economic Forum’s annual meeting in Davos, Switzerland. “I think we are in trouble.”

Roubini said while the world’s largest economy won’t relapse into recession, unemployment will rise from the current 10 percent, posing social and political challenges.

“It’s going to feel like a recession even if technically we’re not going to be in a recession,” he said.

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The Meaningless GDP Growth Numbers

Written By: William L. Anderson

The latest GDP numbers were released Friday and, no, despite what the Associated Press tells us, the economy in the last three months of 2009 did not boom. Yes, 5.7% is a gaudy number, but even Paul Krugman says that it is a “blip.” (Yes, when I agree with Krugman, I put that one on, too. Broken clocks can be correct twice a day.)

The current situation, as Krugman explains, is based upon what is called an “inventory bounce.” He writes:

Such blips are often, in part, statistical illusions. But even more important, they’re usually caused by an “inventory bounce.” When the economy slumps, companies typically find themselves with large stocks of unsold goods. To work off their excess inventories, they slash production; once the excess has been disposed of, they raise production again, which shows up as a burst of growth in G.D.P. Unfortunately, growth caused by an inventory bounce is a one-shot affair unless underlying sources of demand, such as consumer spending and long-term investment, pick up.

It is interesting that Krugman brings up “long-term investment,” because at the current time, we don’t see businesses investing for the long haul, especially in this country. This is not due to myopia on part of business owners, but rather because we have a situation of what Robert Higgs in this excellent paper calls “regime uncertainty.”

During the 1930s, the Roosevelt administration was openly hostile to business owners, forcing up taxes to confiscatory levels (FDR even tried to have a 100 % tax on all income above $25,000 a year), and making open threats to seize companies or force them to shut down. Now, this made him popular with lots of voters, as “populism” does seize upon the resentments of people.

If you notice, Obama is doing the same thing. Now that many of his initiatives are being beaten into the ground with the loss of the 60th Democrat in the U.S. Senate, he is resorting to Huey Long-style threats against private enterprise. No doubt, this will please the Paul Krugmans of the world, but it also means the end of long-term investment here.

And the end of long-term investment here means that businesses will try to keep current operations going but also are going to have an exit strategy, just as they had during the 1930s. However, during that decade, they did not have the option of investing in places like China, which has shown itself to be much more friendly to capital investment than the United States.

To a Keynesian like Krugman, I might as well be speaking gibberish. Keynesians believe that all that is necessary is for the government to print lots of money, make sure that people receive it, and then watch them spend. The more people spend, the more the economy magically grows, since in the Keynesian mind, all assets are homogeneous and spending is the yeast that makes the economic bread rise.

Remember, Krugman holds that investment is useful only because it is another mechanism for spending. The concept that capital investment means more production in the future, and creates the means for people to obtain a higher standard of living simply does not exist in the Keynesian thinking. It is always spending all the time.

Fixing America: Job Growth

Written By: Elizabeth MacDonald

GDP rose 5.7% unadjusted in the fourth quarter of 2009, the second straight quarter of growth, the Commerce Department said today. But the economy shrunk by 2.4% for the year, the biggest drop since the 10.9% contraction in 1946, as more than seven million people are out of work–more than 15 million counting those who have given up.

President Barack Obama is talking about spending more money on a big jobs push, as the Democratic-controlled Senate approved raising the government borrowing limit by $1.9 trillion.

The debt ceiling was just raised last November beyond $12 trillion—government spending is now about the size of the U.S. economy. The U.S. collects $2.4 trillion annually in total tax receipts. Which is why the massive borrowing. Foreign central banks in China, Japan, the UK and Saudi Arabia now own more of the U.S. debt than ever before.

Meanwhile unemployment continues to stay stickily, stubbornly high, at around 10%, with weekly jobless insurance claims stuck around 478,000. Economists say hitting 440,000 on the four-week moving average is typically when you’ll see a solid economic turnaround.

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TARP Cop: Some Bailout Goals Still Unmet

By Peter Barnes, Senior Washington Correspondent

The government’s top bailout cop said Sunday that more than a year after the financial crisis hit, many of the goals of Washington’s $700 billion bank rescue program remain unmet and that policymakers still have not addressed fundamental problems that triggered the crisis, leaving the financial system vulnerable to another collapse.

In a 224-page quarterly report to Congress, Neil Barofsky, the Special Inspector General of the Troubled Asset Relief Program (TARP: undefined, undefined, undefined%), acknowledged that TARP had stabilized the financial system. But he said that it has so far failed to restore consumer and business lending and to significantly prevent home foreclosure.

And in a slap at Congress and the Obama Administration, Barofsky said that “it is hard to see how any of the fundamental problems in the system have been addressed to date.”

He said the bailout “will have been for naught if we do nothing to correct the fundamental problems in our financial system and end up in a similar or even greater crisis in two, or five, or ten years’ time.”

You can read Barofsky’s new report here

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Economy soars 5.7 percent in Q4, fastest in 6 years

(Reporting by Lucia Mutikani; Editing by Neil Stempleman):

The economy grew at a faster-than-expected 5.7 percent pace in the fourth quarter, the quickest pace in more than six years, as businesses reduced inventories less aggressively, the Commerce Department said on Friday.

The first estimate put fourth-quarter gross domestic product growth at its fastest pace since the third quarter of 2003. The economy expanded at a 2.2 percent annual rate in the third quarter.

Analysts polled by Reuters had forecast GDP, which measures total goods and services output within U.S. borders, growing at a 4.6 percent rate in October-December period.

Growth was boosted a sharp slowdown in the pace of inventory liquidation, a factor that could mask the strength of the economic recovery from the longest and deepest downturn since the Great Depression.

But even stripping out inventories, the economy expanded at an annual rate of 2.2 percent, accelerating from the 1.5 percent increase in the third quarter, reflecting relatively strong performance from other segments of the economy.

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Senate Democrats Propose $1.9T Increase to U.S. Debt Limit

Senate Democrats on Wednesday proposed allowing the federal government to borrow an additional $1.9 trillion to pay its bills, a record increase that would permit the national debt to reach $14.3 trillion.

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Jobless rates seen high for many more years

Unemployment rates will likely peak in most U.S. cities in 2010, but it will be many more years before jobless rates hit their lows of the last decade, a report released by a U.S. mayors group shows.

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Obama is killing the economy

Forecast: Debt to dwarf GDP

A blue-ribbon panel that includes three former heads of the Congressional Budget Office is telling President Obama and the Democrat-controlled Congress that the federal deficit must be cut now or the national debt within about two generations will be 600 percent of the gross domestic product.

“The debt level of the United States is unsustainable, something has to give,” said Rudolph Penner, former head of the CBO and co-chairman of a report issued last week by the National Research Council and the National Academy of Public Administration.

The report concludes federal deficit spending is so out of control that unless Obama and Democrat leaders on the Hill make changes now, debt in 2080 will be six times what the nation produces.

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Obama to Nationalize Student Lending with Pending Budget Bill

A bill currently before the Senate would empower the Obama administration to nationalize the student lending industry, eliminating the federally subsidized private loans millions of university students rely on to finance their educations.

The Student Aid and Fiscal Responsibility Act – currently being considered by the Senate Health, Education, Labor, and Pensions (HELP) Committee – would eliminate the Federal Family Education Loan (FFEL) program. FFEL loans are federally subsidized and make up approximately 80 percent of the student lending industry.

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