If you read the news (God help you if your main source is TV “news”), you’ll be thoroughly confused by the conflicting economic reports. For one thing, you’ve got Tim Geithner telling you that everything A-OK and we’re on the way to complete economic recovery, albeit very slowly. Sorry guys, I voted for Obama and will again, but that just isn’t true. I can only guess CNN doesn’t have anybody who knows what to think since their coverage is about the possibility that the Fedwill mention the possibility of deflation. Their article is so pathetic I hesitate to even link to it. Krugman doesn’t yet say that it will occur, only that indicators are heading in that direction. The Fed is divided with some arguing for preemptive acts against deflation and others saying such fears are unfounded.

Of 10 current members on the committee, two are openly concerned about inflationary risks; three, now including Mr. Bullard, are somewhat worried about deflation; and five centrists, including Mr. Bernanke, have not expressed a firm leaning either way.

Now even private sector economists are getting in on it.

Mr. Hatzius is arguably Wall Street’s most prominent pessimist. He warns that the American economy is poised for a sharp slowdown in the second half of the year. That would send unemployment higher again and raise the risk of deflation. A rare occurrence, deflation can have a devastating effect on a struggling economy as prices and wages fall. He says he may be compelled to downgrade his already anemic growth predictions for the economy.

For months, Mr. Berner has been sticking to a more optimistic forecast, despite growing evidence in favor of Mr. Hatzius’s view.

In short, it’s probably the case that it’s too soon to tell. Either we have severe prolonged period of growth so slow it’s negligible or we actually have deflation. For an explanation of why that’s a bad thing, read this.

On the other hand, we do have a clear picture of what’s going on with employment. In short, it sucks.

Many economists are forecasting a further slowdown in the second half of the year, perhaps to an annual rate as low as 1.5 percent. That is largely because businesses have refilled the stockroom shelves that were whittled down during the financial crisis, and there will not be much need for additional orders.

Additionally, the fiscal stimulus measures that have propped up growth are expiring. Proposals for individual programs like another expansion of unemployment benefits have been beaten back each time they have come up in Congress.

“We need 2.5 percent growth just to keep the unemployment rate where it is,” said Christina Romer, chairwoman of the president’s Council of Economic Advisers. “If you want to get it down quickly, you need substantially stronger growth than that. That’s what I’ve been saying for the last several quarters, and that’s why I’ve been hoping that we’ll please pass the jobs measures just sitting on the floor of Congress.”

Yeah, no joke! If you keep in mind that the “recovery” was no more than an aberration brought about by the anemic stimulus package (and census hiring), we may actually be sitting on a plateau of unemployment right now. If GDP growth continues to shrink and falls significantly under that 2.5%, we’re going to see unemployment rising and rising. That’s going to be hard on people. As a matter of fact, there’s a measurement for this:

Using this measure, Hacker and his colleagues determined that the proportion of Americans economically insecure in 2009 and 2010 was higher than at any time in the last 25 years. This reflects the impact of the recession, obviously, but it’s also indicative of a long-term trend towards greater vulnerability. The percentage of insecure Americans was 13.7 percent during the recession of the early 1990s and 17 percent during the recession at the beginning of the last decade. For this recession, it’s 20.4 percent. (Note: That’s a projection, since not all the relevant data is available yet.)

Vulnerability is the key word here. There are a lot of people struggling because there simply are no jobs to be had, not even at minimum-wage fast-food joints. There’s no government work program. Not everybody can join the military (because they’re not eligible, not because of moral objection). If you lose your job in this recession, not only are there no immediate prospects; there’s no likelihood of there being any prospects at any point in the near future (and by near we may be talking in excess of five years). Nobody thinks the economy is going to turn around in the near future. Even if it did pick up, there are just a lot of jobs that have disappeared for good. The landscape of the American economy is changing and it’s going to leave a lot of people behind. I’ve discussed that before in other economic posts.

And last but not least, the suffering continues as people get dropped off of unemployment.

In June, with long-term unemployment at record levels, about 1.4 million people were out of work for 99 weeks or more, according to the Bureau of Labor Statistics. Not all of them received unemployment benefits, but for many of those who did, the modest payments were a lifeline that enabled them to maintain at least a veneer of normalcy, keeping a roof over their heads, putting gas in their cars, paying electric and phone bills.

As a small aside, I reject the idea that “normalcy” is the proper word. It sounded wrong when Warren G. Harding dragged it out and it sounds wrong now. ”Normality” is what I normally use. Anyway, while you have conservatives (although what makes them conservative anymore I have no idea) and perhaps some libertarians arguing vehemently against unemployment benefits, these people are actually becoming homeless. Do you know how hard it is to get a job with no address, no phone, and no transportation? It’s pretty damn hard.

I know that we have to keep going on and plugging away regardless of whether the economy turns around any time soon or not, but it’s hard to believe we’re going to return to better times. As we finally learned to our great disappointment, the good times we were living in (well, many of us were living in) were fueled by credit. That day will not return. The low-education, high-wage jobs people had 40 years ago are gone, never to return. Education isn’t cheap (and for the best jobs it isn’t easy) which is why many people skip it on the assumption they can go out and get a job pays well. That’s not going to be possible for many people in the future. And who can be saddled with 30, 60, or even 100 thousand dollars of debt for an education when they can only get a job that pays $35,000 a year?

It’s time to face reality that the way we live is broken. It’s time to change things and yet our politicians lack the courage, conviction, or willpower to quit politicking and actually do something about it. To my liberal brethren, I say we must kick our own party members in the pants until they act for our benefit, not to further their own chances of reelection.

Given the economic downturn and the fact that our wars in Iraq and Afghanistan are finally headed to some kind of conclusions (at least in the sense of having large combat deployments in either one if not the end of garrison bases), pressure is mounting for the military to pull back on spending. As detailed in this NYT article:

Lawmakers, administration officials and analysts said the combination of big budget deficits, the winding down of the war in Iraq and President Obama’s pledge to begin pulling troops from Afghanistan next year were leading Congress to contemplate reductions in Pentagon financing requests.

Defense Secretary Robert M. Gates has sought to contain the budget-cutting demands by showing Congress and the White House that he can squeeze more efficiency from the Pentagon’s bureaucracy and weapons programs and use the savings to maintain fighting forces.

But the increased pressure is already showing up in efforts by Democrats in Congress to move more quickly than senior Pentagon officials had expected in trimming the administration’s budget request for next year.

One should keep in mind, of course, that there is always this push-and-pull over military expenditures. Congress would certainly almost always be willing to shrink the military’s budget (other than in times of war) except for the fact that most of them have some contractor that employs many of their constituents. So the battle isn’t really whether or not they cut the budget, it’s where they cut the budget. This Wikipedia article about the B-1B bomber is most illustrative of the point:

[T]he Air Force very astutely spread production subcontracts across many congressional districts, making the aircraft more popular on Capitol Hill.^[25]

Now to be sure, that’s  typically the case with weapon systems (a catchall phrase), not things like numbers of troops or the amount of gear produced for them. After all, the grunt needs boots and clothes, and he needs however many he needs. Plus which, the US pretty much provides troops from all over so one could say its a kind of national employment program. In short, nobody’s really opposed to just troops. That’s why they go looking for the big-ticket items which some member of Congress may have pushed as a pet project for his district in the first place.

All that being said, in reality, if 2/3 of the military budget goes to personnel, it only makes sense that some of the cuts (not even 2/3, but some) should go towards personnel. Every other level of government has had to do things like hiring freezes, buyouts to get people to retire early, letting positions disappear, and in some desperate cases, let people go. As we draw down in the wars, it only makes sense that we downsize our military in the absolute sense of making it smaller, not just spending less money on it. We have an incredible military that can do just about anything we need it to (aside from make peace in countries that are riven with internal conflicts). We also have an incredible debt and a military that rivals the entire rest of the world combined in size and possibly also fields more combat power than all of them together. That’s not even to mention our nuclear arsenal. It’s just not sustainable. Combined with an intelligence community that’s so large nobody knows exactly how many people it is or how much it costs, we’re spending too damn much money on ineffectual strategies. Some day there will be a power that rivals the US. There’s nothing we can do about that. If China’s GDP grew to be the same proportion of per-capita GDP the US’s is, well, our military spending would never be enough. There’s just nothing we can do about that. We obviously can run deficits in the short term, but as long as we keep our overgrown military, there’s no way we’ll ever be free and clear. It’s time to man up and cut back.

And hey, we’ve always got The Expendables!

It’s actually not Krugman this time, although he brings it to our attention:

Makin is even more gloomy, warning that we might enter deflation this year.

Which would be a bad thing, in case you didn’t know. I’ll excerpt some, but as always , read the full text if at all possible. John Makin on deflation:

As we enter the second half of 2010–the “postcrisis” year–while markets have been obsessed with Europe’s debt crisis, they have failed to notice potentially more ominous developments. The United States and Europe are heading toward–and Japan already suffers from–deflation, a classic prolonger of crises that boosts the real burden of debt and crushes profit margins.

U.S. year-over-year core inflation has dropped to 0.9 percent–its lowest level in forty-four years. The six-month annualized core consumer price index inflation level has dropped even closer to zero, at 0.4 percent. Europe’s year-over-year core inflation rate has fallen to 0.8 percent–the lowest level ever reported in the series that began in 1991. Heavily indebted Spain’s year-over-year core inflation rate is down to 0.1 percent. Ireland’s deflation rate is 2.7 percent. As commodity prices slip, inflation will become deflation globally in short order.

You want to hear a real shocker? This guy is from the American Enterprise Institute, a conservative economic think-tank. If he’s saying deflation is not only possible but probable, it might be time to listen and quit saying the economy is rosy like the bloggers over at WSJ are. It never ceases to amaze me how people can read the same things I do and just completely deny that which is factually based. I’ve been reading people who are saying that the problem is one of “lack of confidence” among American businesses. That all we need to do is believe that the economy is doing well and it will.

These are also the same people who are telling us the economy needs to contract and “correct” itself because it was overvalued to begin with. That the current deflation and contraction is a response to inflationary policies that over-inflated the market. One of the commentators on the WSJ article I posted had this to say:

It is amazing how the monetary interventionists have rear-view mirror blindness beyond the onset of deflationary crisis times. Listen to Benrnake talk about the great depression: No mention of inflationary policies prior to the crash of 1929. By the same token, Makin does not include Greenspan’s inflationary policies in his comments which caused the current crisis. Inflationary policies, mind you, designed to fight deflation.

I don’t know how anyone could pretend to understand the economy and so fundamentally misunderstand the Great Depression. The so-called “inflationary policies” were not policies so much as a runaway market that was not sufficiently regulated. This did not devalue real assets; you could speculate on land because of lax lending policies, but the vast majority of Americans were not land speculators. “Land” in the capital sense, back at that time mostly meant farmland. Remember, people in the cities had only just begun to outnumber people in the country, and a lot of that was immigration. The rural south was as rural as it ever was. The midwest was (as it still is) largely agrarian. Overvaluation on the stock market did not coincide with overvaluation of real assets because the stock market was fantasy all along. If inflation was the problem that deflation was the solution to, the poor farmers would have been helped, not hurt, by it.

To continue the Great Depression parallel, the end of it only came after massive government subsidies to the public began because of World War II. People were paid for that work. Employment ran sky high because of the massive effort the US was making in the war. Millions of men were drafted or enlisted and millions of women joined the workforce. But before all that, the country had been in a depression for a decade because the US government would not take on the burden of debt required to stimulate the economy to fruition. A deflationary trap was sprung and the US could not get itself out with a policy of austerity. This is because economic activity requires money to take place.  People need jobs to make money; businesses need people to spend money in order to make a profit. Without an infusion of cash from an outside source, how do you get this cycle started? And yes, I do expect you to believe that the normal economic cycle, once started, will actually produce wealth. That’s how business works, which, ironically, is the reason conservatives say they’re so pro-business. Business creates wealth. Of that there is no doubt, although liberals and conservatives will argue over how it should be regulated and who should get most of the wealth.

To bring this back to today, we have people telling us that we’re in for another recession and possibly a deflationary spiral. On the other hand, we have people who are telling us that we are either not heading for a recession or that it’s a correction to the economy which we need. Now, if we’re not heading for a recession, a cautious economic policy couldn’t hurt us too bad, although it could dampen growth. But if we are heading for a recession, hedging our bets could help us out a lot. And if we’re heading for deflation, perhaps now is not the time to be talking about deficits which will bankrupt us in the future. Again, people seem to forget that we have historical examples of the exact same problems we’re facing now.

Bah, I could go on about this forever, but I get tired of saying the same things when I know people won’t listen. We’re not likely to be in for good times, folks.

Yes indeed, rarely have I done three posts on the economy in just a couple of hours, but I just now read this from Paul Krugman on the idea that somehow Obama is anti-business and that it’s his fault the economy is hurting:

All the buzz lately is that the Obama administration is “antibusiness.” And there are widespread claims that fears about taxes, regulation and budget deficits are holding down business spending and blocking economic recovery.

How much truth is there to these claims? None.

…[W]hy are we hearing so much about the alleged harm being inflicted by an antibusiness climate? For the most part it’s the same old, same old: lobbyists trying to bully Washington into cutting taxes and dismantling regulations, while extracting bigger fees from their clients along the way.

Beyond that, business leaders are, as I said, feeling unloved: the financial crisis, health insurance scandals, and the catastrophe in the Gulf of Mexico have taken a toll on their reputation. Somehow, however, rather than blaming their peers for bad behavior, C.E.O.’s blame Mr. Obama for “demonizing” business — by which they apparently mean speaking frankly about the culpability of the guilty parties.

Don’t read the rest of this post without reading the rest of the article. I’m serious. It speaks directly to what I’ve been speaking about which is that the public’s gaze is being intentionally misdirected from those who are actually to blame because the corporations know there is no defense for their bad behavior.

You may object that indeed this is not the reason conservatives argue for tax reductions on business as a method of economic stimulus. That President Obama is still to be blamed for his liberal policies of “tax and spend” which only hurts the economy as they take money from those who earn it and give it to those who don’t. But to jump above the intricacies of all arguments for a moment, it’s really simple: Republicans want to hurt Obama in any way possible. Therefore they simply cannot agree that economic stimulus works. They have to have a different line, and given that half their platform is to be pro-business, this is what you get. 

Not sure I can make any point here that’s better than what Krugman himself says: “Well, C.E.O.’s are people, too — but soothing their hurt feelings isn’t a priority right now, and it has nothing at all to do with promoting economic recovery.”

I’m not going to bother quoting anything from The Wall Street Journal about how there is no “double dip” and everything is fine. If you want to bury your head in the sand, go right ahead and dig in with them over there. I also feel no compulsion at this point to fight with conservatives who think the answer is to end all taxation of everything, as if that would somehow ease the recession. We’ve seen how false that is since Reagan, but conservatives hold on and on to that falsehood as if by magic it’ll become true. Although I have to admit to some admiration for Bush Sr. for calling his predecessor’s policies “voodoo economics”. Just remember, my liberal brethren, even with a cage of rats strapped to your head, 1+1=2. Tax cuts don’t work. With that out of the way, via NPR (that bastion of wonderfully informative and unbiased reporting), comes a prediction of more frequent recessions over the next decade (thanks to Xanthippas):

Mr. ACHUTHAN: And the bigger concern, beyond what may happen in 2011, which is maybe like 50-50 chance of a new recession, the bigger concern is that in the coming decade, we are almost sure to see more frequent recessions than we’ve been used to at any time since the early 1980s. And that brings with it a huge host of problems.

RAZ: Explain why.

Mr. ACHUTHAN: Well, the business cycle is more volatile, more like booms and busts, combined with lower altitude, weaker and weaker trend growth. Ever since the 1970s, the pace of economic expansion in the U.S. has been stair-stepping down, getting weaker and weaker. And the last expansion was the weakest expansion since World War II on every single count of how strong an expansion can be.

Say what? Economic expansion in the US sucks? I’m kidding, I knew this of course, as did you if you’re a regular reader. The problem is that most people don’t realize that in the first place and think the recession we’re going through has to do with very proximal causes (such as Obama’s health-care plan) instead of very long-term trends that have little to do with the current administration’s policies. For example, check out this depressing piece about people who can’t find jobs.

For young adults, the prospects in the workplace, even for the college-educated, have rarely been so bleak. Apart from the 14 percent who are unemployed and seeking work, as Scott Nicholson is, 23 percent are not even seeking a job, according to data from the Bureau of Labor Statistics. The total, 37 percent, is the highest in more than three decades and a rate reminiscent of the 1930s.

The college-educated among these young adults are better off. But nearly 17 percent are either unemployed or not seeking work, a record level (although some are in graduate school). The unemployment rate for college-educated young adults, 5.5 percent, is nearly double what it was on the eve of the Great Recession, in 2007, and the highest level — by almost two percentage points — since the bureau started to keep records in 1994 for those with at least four years of college.

Times change. The article mostly follows a young man. His  father and grandfather didn’t need a college degree to find a job, and their jobs lasted for decades. Now, he has a degree and struggles to find a job. At the moment, there are supposedly 5 unemployed people per job opening. That’s a lot of people who are just out of luck.

I rarely write about (or care about) stock market news, but I did think this article about a prediction of an unprecedented crash in the stock market was interesting. Mostly that kind of financial news has so little to offer us real people that I’m able to ignore it completely, but if that guy is right, it actually will affect a lot of us. People who rely on retirement investments would be deeply hurt by it, not to mention I’m sure there would be massive corporate die-offs.

What path can America take to get out of this recession? Should we hope for another world war to help us out? Should we end all taxes? Should we put ourselves in another couple of trillion dollars of debt to provide economic stimulus? The first probably isn’t going to happen. The second would make about 50% of the population ecstatic until they died from drinking their filthy tapwater, but there are enough intelligent people still in office that that won’t happen either. The third won’t be allowed to happen by people who are focused on Niagara falls 30 miles away instead of the rock 10 feet in front. And so, as seems so inevitable these days, we sit and do nothing.

Surely by now you’ve heard that all the economic news is bad. Job growth is anemic, the housing market sank due to the ending of federal tax credits, and there is practically no good news to counterbalance it, other than the fact that the rich keep getting richer (I mean, if you count that as good news). But what you may or may not have heard is that a growing number of people (including some people who actually know what they’re talking about) are saying that we’re in for a second round of recession. Krugman in particular has been talking about this for a while (here). He seems to have made up his mind; he says he thinks we’re now “in the early stages of of  a third depression“.

It will probably look more like the Long Depression than the much more severe Great Depression. But the cost — to the world economy and, above all, to the millions of lives blighted by the absence of jobs — will nonetheless be immense.

Lest Krugman not be credibly enough on his own (and how dare you even think that!), (via fivethirtyeight):

Based on evidence that has always and only been observed during or immediately prior to U.S. recessions, the U.S. economy appears headed into a second leg of an unusually challenging downturn.

(Read the rest here.) While I always recommend reading the full articles, this one’s a bit more challenging so I’d hit the highlights if I were you.

In a recent article from the NYT, this may be considered as evidence of this trend:

The United States added just 83,000 private sector jobs in June, according to the monthly statistical snapshot released by the Labor Department. The unemployment rate declined to 9.5 percent, from 9.7 percent in May. But that was a largely illusory decline, as 652,000 Americans left the work force.

Yet despite this news, Obama’s talk of the need for more stimulus brings rounds of derision. You have people out there who are honestly more focused in a Niagara falls of a crisis instead of the rapids we’re currently in. I suppose in an honest intellectual debate, they have a point that we will probably survive the current crisis whereas if we do nothing to eliminate deficit spending we’ll eventually run into a situation where all our capital is sucked into a vortex of debt payments anyway and recovering from this crisis at the cost of that future is simply unacceptable. I think though, that in the political arena, once again libertarian arguments are being leveraged by Republicans as a reasonable sounding counter against deficit spending in the short term. There are two reasons they can do this: one, there are plenty of people who want to believe in conservative arguments whether they make sense or not (e.g. Rush Limbaugh listeners) and two, there are plenty of people who are simply not economically knowledgeable enough to really make an argument about it and there is not enough push from the liberal base to really argue otherwise. Mostly it’s made out by the Republicans as handouts to people who are too lazy to find work etc. whereas the Dem arguments are, well, largely absent as far as I’m aware. Besides President Obama himself, that is.
 
Liberal arguments for economic stimulus basically go like this (although this is super-simplified so don’t quote me in some online argument): the one and only entity that can infuse the economy with cash in the short term in vast quantities is the federal government. If the federal government does not do that, nobody else will. Banks have no impetus to lend money when interest rates are near 0%, although setting them that low 1) keeps debt from swallowing too much of consumer’s money and 2) is supposed to encourage them to take out loans. At the same time, the whole problem in a recession is that consumers aren’t consuming enough (they couldn’t if they wanted to). This hurts producers and everything that relies on the cycle of consumption and production. Banks obviously aren’t going to make loans to people to buy a television if they can’t be assured that person will have a job in 12 months. Thus, the only way to really get people spending again is if they can get tons of credits which they will use on silly consumer products like tvs and whatnot.
 
That’s pretty much the essence of the idea of behind stimulus. There are a lot of complex arguments to be made for and against it, but I think most of those are bogus. Anybody talking about hyperinflation is just a blowhard who wants to sound like he knows what he’s talking about and anybody saying stimulus should go to the private sector is more than likely a business-owner who thinks that by opening another store or buying another property they can save the economy, never mind the fact that there are millions of jobless people and nobody would have money to buy anything anyway. All in all, the real reason people don’t like it is becuase it sounds like handouts, which it is, but nobody has the balls to stand up and say that right now we need handouts. Except for President Obama and some stalwarts. So liberals, once again we’re on the precipice. It’s time to stand up for your principles and act like you actually believe all that stuff you spout off about being for the people!

The New York Times just published an article about a coming crisis in public pension funds.

Ever since theWall Street crash, there has been a bull market in Google hits for “public pensions” and “crisis.” Horror stories abound, like the one in Yonkers, where policemen in their 40s are retiring on $100,000 pensions(more than their top salaries), or in California, where payments to Calpers, the biggest state pension fund, have soared while financing for higher education has been cut. Then there is New York City, where annual pension contributions (up sixfold in a decade) would be enough to finance entire new police and fire departments.

This follows a Time Magazine article in the same vein:

The tone of the New Jersey budget battle may be distinctive, but many of the same notes can be heard in state capitals across the country. From Hartford to Honolulu, once sturdy state governments are approaching the brink of fiscal calamity, as the crash of 2008 and its persistent aftermath have led to the reckoning of 2010. Squeezed by the end of federal stimulus money on one hand and desperate local governments on the other, states are facing the third straight year of staggering budget deficits, and the necessary cuts will cost jobs, limit services and touch the lives of millions of Americans. Government workers have been laid off in half the states plus Puerto Rico. Twenty-two states have instituted unpaid furloughs. At least 28 states have ordered across-the-board budget cuts, with many of them adding deeper cuts in targeted agencies. And massive shortfalls in public pension plans loom as well. 

Excluding federal workers, more than 14 million public servants and 6 million retirees are owed $2.37 trillion by more than 2,000 different states, cities, and agencies, according to recent studies. In 2003 alone, states and municipalities poured some $46.2 billion into these plans, according to the National Association of State Retirement Administrators, a 19% jump from the year before. Excluding federally funded programs, pensions went from 2.15% of all state and local spending in 2002 to approximately 2.44% in 2003. But the largest state and city funds were still short $278 billion in 2003 — approximately 20% of state and municipal revenue excluding federal funds. That’s twice the $123 billion pension hole Wilshire Associates found at the companies in the Standard & Poor’s (MHP ) 500-stock index that year.

As much as states are throwing into pensions, they may owe even more. Despite a 2004 stock market rise that should narrow some of the gap, pension experts at Barclays Global Investors (BCS ) say that if public plans calculated their obligations using the more conservative math that private funds do, they would not be $278 billion under, but more than $700 billion in the red.

As always, I recommend reading the stories in full, but it boils down to the same thing: state and local governments are committed to too much in payouts to retirees. I object to the characterization put forth in at least the NYT and Time articles which seem to frame the issue as if all of these municipal governments acted irresponsibly and handed out million dollar retirements.

The various articles I’ve read about the situation routinely fail to mention that even the well-managed, well-funded plans are in trouble because the funds are invested privately, not in a government fund like Social Security. Although to be fair, the Business Week article is pretty decent. The routine dips of the market damage retirement funds immensely. For example, many retirement funds have taken huge hits because they had a lot invested in BP.

Plus which, cities are squeezed because unlike SS, they don’t rely on multiple people paying into the fund to support current and future retirees; the city pays in at some proportion to the employee contribution (Irving, TX is 2:1 for example), which means a lot of tax money is going to retirement, and when times are bad like this and taxes may actually shrink, those pensions can’t easily be cut so it grows as a proportion of total expenditures.

Obviously this will impact not only the city’s ability to operate, but also how they finance their debt. Even Irving, which has been wise enough not to spread debt out into the future can be severely impacted because that is an absolutely fixed expenditure. In other words, it’s not the fault of unions or city councils who want votes or anything ridiculous like that, it’s a function of the economy and the fact that they have a retirement system separate from Social Security. Not that I’m saying it’s preferable to have one’s money go into SS because TMRS does pay out better (well, if it’s solvent in 20 years it would), but most cities wouldn’t be facing this situation if they didn’t use a separate pension plan.

For the most part, these are not unreasonable retirement benefits. Most folks get to keep earning benefits comparable to their ending salaries, and for those of you who think this is a bad thing, keep in mind that these are people who are going to be spending money. Usually plenty of it, and they’re not taking it from current tax receipts but money that’s already in the fund. This is a good thing for the economy. People buying stuff is entirely what we need.

For those people who scoff at government-run anything, let me point out that 401(k)s have fared no better. The only difference is that when those fail, only the individual suffers. When a public pension plan fails, everybody suffers. As for whose fault it is, I’d just say that we haven’t really found any completely sustainable retirement system at all.

Glenn Greenwald highlights this episode of Bill Moyer’s Journal, where Rep. Marcy Kaptur and economist Simon Johnson tell us that the big banks on Wall Street “own” Congress. An excerpt:

BILL MOYERS: Let me show you an excerpt from the speech President Obama made on Wall Street last month, September. Here is the challenge he laid down to the bankers.

PRESIDENT OBAMA: We will not go back to the days of reckless behavior and unchecked excess at the heart of this crisis, where too many were motivated only by the appetite for quick kills and bloated bonuses. Those on Wall Street cannot resume taking risks without regard for consequences, and expect that next time, American taxpayers will be there to break their fall.

BILL MOYERS: A reality check. Not one CEO of a Wall Street bank was there to hear the President. What do you make of that?

SIMON JOHNSON: Arrogance. Because they have no fear for the government anymore. They have no respect for the President, which I find absolutely extraordinary and shocking. All right? And I think they have no not an ounce of gratitude to the American people, who saved them, their jobs, and the way they run the world.

Why don’t they fear Obama? Because Obama’s top advisors are their own people, and they own Congress:

While the industry has scaled back its political spending in the wake of last year’s economic collapse, data from the Center for Responsive Politics show that it’s still investing heavily in the Senate, where it’s likely to have its best shot at stopping — or at least shaping — the crackdown on Wall Street that President Barack Obama has proposed.

And it’s clearly looking to Democrats to do it.

Of the $10.6 million the industry has given to sitting senators this year, more than $7.7 million has gone to Democrats.

The clue as to why our government struggles to deal with any substantial problem facing our country today is right there. So long as politicians must run massively expensive campaigns to get themselves elected, they will be in thrall to those who give them the most money. Between that and a media that’s incapable of either understanding or addressing the problems that face our nation, it’s hardly any wonder that some (myself included) find ourselves thinking that our nation is doomed.

An unmitigated failure. The Bush administration was a disaster for our nation…unless you were the beneficiary of those massive tax cuts:

Thursday’s annual Census Bureau report on income, poverty and access to health care-the Bureau’s principal report card on the well-being of average Americans-closes the books on the economic record of George W. Bush.

It’s not a record many Republicans are likely to point to with pride.

On every major measurement, the Census Bureau report shows that the country lost ground during Bush’s two terms. While Bush was in office, the median household income declined, poverty increased, childhood poverty increased even more, and the number of Americans without health insurance spiked. By contrast, the country’s condition improved on each of those measures during Bill Clinton’s two terms, often substantially.

[...]

So the summary page on the economic experience of average Americans under the past two presidents would look like this:
Under Clinton, the median income increased 14 per cent. Under Bush it declined 4.2 per cent.

Under Clinton the total number of Americans in poverty declined 16.9 per cent; under Bush it increased 26.1 per cent.

Under Clinton the number of children in poverty declined 24.2 per cent; under Bush it increased by 21.4 per cent.

Under Clinton, the number of Americans without health insurance, remained essentially even (down six-tenths of one per cent); under Bush it increased by 20.6 per cent.
Adding Ronald Reagan’s record to the comparison fills in the picture from another angle.

Under Reagan, the median income grew, in contrast to both Bush the younger and Bush the elder. (The median income declined 3.2 per cent during the elder Bush’s single term.) When Reagan was done, the median income stood at $47, 614 (again in constant 2008 dollars), 8.1 per cent higher than when Jimmy Carter left office in 1980.

Such is the result of a deliberate effort to shift money away from social spending and give it back to the already wealthy, combined with a general inattention to and disinterest in the well-being of our nation (beyond torturing terrorists and launching wars of aggression.) There should be retribution for such awful stewardship, but the only punishment being meted out is to you and me.

Adam and I were talking about this yesterday, about how real unemployement isn’t being reported in most news outlets. The most-quoted figure I’ve seen is the 9.5% seasonally adjusted U-3, and when a number is that qualified you know it’s not quite natural. I just looked up the U-6 measure (the most inclusive measurement) in the current statistics. The percentage of all employable people not working full-time jobs is 16.8%. The U-6 includes part-timers who are looking for full-time work as part of the figure, which is reasonable because a lot of them are part-time because of the economy. The number being reported in the news is the 9.7% U-3, which as you can see is a much more limited measurement.

Now, one thing to note is that the difference between June ’08 and June ’09 using these two indices tell two different stories. From June ’08 to June ’09, the U-3 went from 5.7% to 9.7%, a 4% change. The U-6 changed from 10.3% to 16.8%, a change of 6.5%. So the net change in employment is also worse than is being reported. Some of this is people being shunted into part-time jobs, but the U-1 is a measure of how many people have been unemployed more than 15 weeks or longer, and that has risen from 1.8% to 4.8%. Jobs have really just vanished.

The question is, even when the economy starts growing again, how many full-time jobs are going to come back for people? Even when the economy was supposedly so great back in the Bush years (coming off the Clinton high, that is), people were struggling. Just read Nickel and Dimed by Barbara Ehrenreich. Actually I think I’ve blogged on that subject plenty of times. We keep hearing about how the recession is supposed to end this year or that we may already be at the tail and the economy is starting to recover; we hear that jobs lag behind the economy in general. Either of these things may be true; neither of them means that Americans will be getting well-paid full-time jobs with benefits. Is there any way to change that?

I don’t know the answer to that, but it lies in what industries are going to make the biggest turnaround. I honestly don’t think that even if the automakers come around and turn profitable, they’ll end up re-hiring a lot of people. They’re cutting back as much as possible and if their salvation lies in competing with the foreign auto makers, they’re going to be making more of fewer kinds of vehicles, which means less workers. America needs growth industries that we can take the lead in. We need to invest in an infrastructure to produce new kinds of goods and services that other countries can’t compete with. Things like clean energy, health care and medicine, or eco-science, that the world needs but which can also be profitable industries. It’s time to do something new.

Update: Xanthippas just let me know about this article, pointing out estimates of the real number of unemployed, which is well above even the U-6. Read the article for an explanation of how these numbers are arrived at:

By adding these folks back in, William’s SGS-Alternate Unemployment Measure rose to a jaw-dropping 20.6%. Separately, the Center for Labor Market Studies in Boston puts U.S. unemployment at 18.2%. Any way you cut the numbers, the situation is very bad. According to David Rosenberg, one-in-three among the unemployed have been looking for a job for more than six months and still can’t find one.

That’s about 1 in 5 employable people either unemployed or underemployed. This recession is far from over.