James Pethokoukis

Politics and policy from inside Washington

Why the unemployment rate is headed higher

Aug 7, 2009 18:55 UTC

There were no high-fives at the White House today because of this probable economic reality, as explained by the guys at RDQ Economics (the great John Ryding and Conrad DeQuandros):

The case that the recession ended in June continues to grow with this report.  The rate of job loss has downshifted and the lengthening of the workweek in July resulted in flat hours worked in the private sector and an increase in manufacturing hours worked, which in turn points to a gain in industrial production in July.  However, the decline in the unemployment rate was not a product of job creation, but a result of falling labor force participation.  The labor force is unchanged over the last year and, as the economy improves, people are likely to seek jobs, resulting in an increase in the unemployment rate.  We do not think that the unemployment rate has peaked—although the case that it can peak at around 10% (rather than 11% or higher) is now much stronger.


What? I doubt if anyone actually believes this stuff. If they do, they need to visit their local neighborhood psychiatrist.

Posted by Frank | Report as abusive

5 political impacts of today’s July jobs report

Aug 7, 2009 15:47 UTC

Rising U.S. unemployment, to borrow a phrase, has been a giant vampire squid wrapped around the face of the Obama administration, sucking out its popularity and thus draining momentum from its legislative agenda. But now the White House received some good news from the jobs front. The unemployment in July unexpectedly fell to 9.4 percent from 9.5 percent in June. This breaks a string of 16-straight months where the unemployment rate had either risen or stayed flat, including every month of the Obama term. (Recall the rate was 7.6 percent in January.)

Now, the economy still lost a quarter of a million jobs. And had the same number of people been looking for work in July as June, the rate would have risen. Plus, the broader unemployment rate is still over 16 percent. But the news headlines will show the traditional jobless rate easing, making the approach toward double digits a bit slower if also more unlikely. Here are the political impacts of a possible economic turning point:

1) A third positive data point for Obamanomics. The stock market has been up sharply, the decline in GDP has slowed sharply and now Team Obama can point to a dip in the jobless rate. (Plus cash for clunkers seems pretty popular.) When the market was down, GDP collapsing and the unemployment rate soaring, it was tough for the White House to counter GOP claims that its stimulus plan was anything but a miserable failure. Now Republicans have to make a tougher argument, that a) a “real” recovery plan would be working faster rather than this sugar high from government spending, and b) it’s really the natural strength of the economy (with some help from monetary policy) taking over rather than anything the Democrats have done. More of a muddle than “Obamanomics has done nothing!”

2) Makes the economy a bit less of a negative for healthcare and climate change legislation. The bad economy — and rising unemployment in particular — hurt the Obamacrat agenda in several ways. First, with the economy worsening, it meant Obama had yet to fix the economy. And that was the main thing he was elected to do. Until that is done, healthcare and climate change look like distractions from Job One. Second, a weak economy made it seem to voters like it wasn’t a good time to pass legislation that would add taxes and costs to the economy. Third, the bad economy made Obama less popular and thus his agenda less popular. To the extent that Obama looks like he is capably managing an actual recovery, it will also help momentum on these other issues. And certainly Democrats don’t want to see unemployment hit 10 percent right when healthcare crunch-time hits in the autumn.

3) There is a risk Obama and the Democrats overplay their hand.
Look, the unemployment rate is still double what Americans have become used to during the past generation. Plus, the broader unemployment rate is at scary levels, particularly in states like Michigan and California. And this dip could be followed by a reversal. After the 1990-91 recession ended, the unemployment rate took a similar dip, from 6.8 percent to 6.7 percent. But then it started rising again for the next year and half, eventually hitting 7.8 percent. This was due to a combination of slow economic growth and discouraged workers looking for jobs again (which meant the Labor Department started tracking them again). A lengthy jobless recovery may well be in the offing. Dems would be wise to avoid premature celebration. Here is how IHS Global Insight puts it: “The unemployment rate fell, but it is hard to believe that it has peaked already. … We will need to see sustained employment gains before concluding that unemployment has peaked, and that probably won’t be until the first half of 2010 with unemployment above 10 percent.” This is why the White House is taking a cautious stance today.

4) Voter anxieties are likely to remain high even if the worst is over. President Bush, the first one, lost the 1992 presidential election to Bill Clinton because of the economy and the lingering impact of the 1990-91 recession. Two years later, though, it was the Democrats’ turn to feel the brunt of widespread economic anxiety as the Republicans captured both the House and the Senate. Even though the economy had been growing for 14 straight quarters by then and the unemployment rate was down to 5.8 percent from a high of 7.8 percent in 1992, 72 percent of Americans still thought the economy was only “fair” or “poor,” and 66 percent thought the nation was headed in the wrong direction. That’s right—3½ years after the 1990-91 recession ended, the economy was still weighing negatively on voters. Lesson: It takes a long time after a bad downturn for people to feel safe and confident.

5) The GOP argument just got tougher. The Republicans would be crazy to pull back from attacking Obama’s management of the economy, given high joblessness and massive deficits. But they need to prepare themselves for two things. First, there could be a big GDP pop in the near future. The typical first quarter after a recession shows 5 percent GDP growth or better. And if employers overestimated the severity of the downturn and cut too many jobs, the same upside surprise could happen with employment. At that point, it will seem like Obamanomics might be working, and GOPers better have an answer. Still, if we get a Reagan style “v-shape” recovery and boom, Republicans are in deep trouble, though concerns about the deficit may give a bit of cover. More likely: a good quarter or two followed by weak growth and continued high unemployment. The Long Recession Scenario, or 1990s Japan-lite. Why? Still lots of economic uncertainty after financial meltdown, impact of huge deficits on interest rates, weak consumers, a dead housing market, and the high-tax, high-regulation Obama agenda among others.

Bottom line: The unemployment report provides a short-term boost to Obama’s popularity and agenda, but does not change the likely scenario that on Election Day 2010 (maybe even 2012), voters will not be thrilled about the economy. And to the extent the economy improves, will voters view it as a real turnaround or one manufactured by unsustainable government spending, as with cash for clunkers? A foundation of rock or sand?


We have the 37th worst quality of healthcare in the developed world. Conservative estimates are that over 120,000 of you dies each year in America from treatable illness that people in other developed countries don’t die from. Rich, middle class, and poor a like. Insured and uninsured. Men, women, children, and babies. This is what being 37th in quality of healthcare means.

I know that many of you are angry and frustrated that REPUBLICANS! In congress are dragging their feet and trying to block TRUE healthcare reform. What republicans want is just a taxpayer bailout of the DISGRACEFUL GREED DRIVEN PRIVATE FOR PROFIT health insurance industry, and the DISGRACEFUL GREED DRIVEN PRIVATE FOR PROFIT healthcare industry. A trillion dollar taxpayer funded private health insurance bailout is all you really get without a robust government-run public option available on day one. Co-OP’s ARE NOT A SUBSTITUTE FOR A GOVERNMENT-RUN PUBLIC OPTION. They are a fraud being pushed by the GREED DRIVEN PRIVATE FOR PROFIT health insurance industry that is KILLING YOU!


These industries have been slaughtering you and your loved ones like cattle for decades for profit. Including members of congress and their families. These REPUBLICANS are FOOLS!

Republicans and their traitorous allies have been trying to make it look like it’s President Obama’s fault for the delays, and foot dragging. But I think you all know better than that. President Obama inherited one of the worst government catastrophes in American history from these REPUBLICANS! And President Obama has done a brilliant job of turning things around, and working his heart out for all of us.

But Republicans think you are just a bunch of stupid, idiot, cash cows with short memories. Just like they did under the Bush administration when they helped Bush and Cheney rape America and the rest of the World.

But you don’t have to put up with that. And this is what you can do. The Republicans below will be up for reelection on November 2, 2010. Just a little over 13 months from now. And many of you will be able to vote early. So pick some names and tell their voters that their representatives (by name) are obstructing TRUE healthcare reform. And are sellouts to the insurance and medical lobbyist.

Ask them to contact their representatives and tell them that they are going to work to throw them out of office on November 2, 2010, if not before by impeachment, or recall elections. Doing this will give you something more to do to make things better in America. And it will make you feel better too.

There are many resources on the internet that can help you find people to call and contact. For example, many social networking sites can be searched by state, city, or University. Be inventive and creative. I can think of many ways to do this. But be nice. These are your neighbors. And most will want to help.

I know there are a few democrats that have been trying to obstruct TRUE healthcare reform too. But the main problem is the Bush Republicans. Removing them is the best thing tactically to do. On the other hand. If you can easily replace a democrat obstructionist with a supportive democrat, DO IT!

You have been AMAZING!!! my people. Don’t loose heart. You knew it wasn’t going to be easy saving the World. :-)

God Bless You

jacksmith — Working Class

I REST MY CASE (http://krugman.blogs.nytimes.com/2009/0 7/25/why-markets-cant-cure-healthcare/)

Republican Senators up for re-election in 2010.

* Richard Shelby of Alabama
* Lisa Murkowski of Alaska
* John McCain of Arizona
* Mel Martinez of Florida
* Johnny Isakson of Georgia
* Mike Crapo of Idaho
* Chuck Grassley of Iowa
* Sam Brownback of Kansas
* Jim Bunning of Kentucky
* David Vitter of Louisiana
* Kit Bond of Missouri
* Judd Gregg of New Hampshire
* Richard Burr of North Carolina
* George Voinovich of Ohio
* Tom Coburn of Oklahoma
* Jim DeMint of South Carolina
* John Thune of South Dakota
* Kay Bailey Hutchison of Texas
* Bob Bennett of Utah

Posted by jacksmith | Report as abusive

U.S. corporate tax rates vs. the world (OECD)

Aug 7, 2009 13:31 UTC

How does the US corporate tax rate stack up against other nations? Take a look (via the Tax Foundation):



The nominal numbers charted are correct. However, you must account for the fact that many US Corporations have avoided paying tax through subsidies, subtractions from income, tax credits and transfer pricing (Delaware Intangible Holding Companies). Thus the US effective tax rate is much lower than many other OECD nations.

Posted by Josh | Report as abusive

U.S. jobs numbers: charts edition

Aug 7, 2009 13:22 UTC

Another look at the July employment numbers:


Unemployment rate in July slips to 9.4 percent; another 247,000 jobs lost. Yuck

Aug 7, 2009 12:40 UTC

The bad news arrives. Here is the latest from the Labor Department on the July unemployment rate and the number of jobs lost (bold is mine):

1. Nonfarm payroll employment continued to decline in July (-247,000), and the unemployment rate was little changed at 9.4 percent, the U.S. Bureau of Labor Statistics reported today. The average monthly job loss for May through July (-331,000) was about half the average decline for November through April (-645,000).

2. The number of long-term unemployed (those jobless for 27 weeks or more) rose by 584,000 over the month to 5.0 million. In July, 1 in 3 unemployed persons were jobless for 27 weeks or more.

3. The civilian labor force participation rate declined by 0.2 percentage point in July to 65.5 percent.

4. Among the marginally attached, there were 796,000 discouraged workers in July, up by 335,000 over the past 12 months. Discouraged workers are persons not currently looking for work because they believe no jobs are available for them.

5. Manufacturing employment fell by 52,000 in July and has declined by 2.0 million since the recession began.

6. In July, retail trade employment declined by 44,000. Job losses in the industry had averaged 27,000 per month over the prior 3 months.

7. Employment in professional and business services continued to trend down in July (-38,000); the industry has shed 1.5 million jobs since the start of the recession.  …  While temporary help has lost 844,000 jobs since the recession began, the declines have lessened substantially over the past 3 months.

8. Transportation and warehousing lost 22,000 jobs in July.

9. Financial activities employment continued to trend down in July (-13,000). The average monthly decline for this industry was 23,000 over the past 3 months compared with 46,000 per month from November through April. Since the start of the recession, the financial activities industry has lost 501,000 jobs.

10. Health care employment increased by 20,000 in July, about in line with the average monthly gain for the first half of this year but down from an average monthly increase of 30,000 during 2008.

11. In July, the average workweek of production and nonsupervisory workers on private nonfarm payrolls edged up by 0.1 hour to 33.1 hours.

Segway inventor Dean Kamen: Nationalized healthcare will kill innovation

Aug 7, 2009 12:32 UTC

Let’s spend more on healthcare! An interesting chunk from a Popular Mechanics chat with Segway inventor Dean Kamen (via The Health Care Blog):

We now live in a world where technology has triumphed, in many ways, over death. The problem with that is that it’s enormously expensive. And big pharmaceutical giants and big medical products companies have stopped working on stuff that could be extraordinary because they know they won’t be reimbursed, according to the common standards. We’re not only rationing today; we’re rationing our future. “

“If you project forward these horrific costs of treating everybody and you want to assume we are not going to respond to that by making the therapies better, simpler and cheaper and in some cases completely wiping out the [diseases], well you know what? We might actually get to that situation—if we stop investing in technology, if we stop believing that the future ought to be better than the past. “

“If somebody in this country wants to explain to me that we ought to be spending about twice as much supporting sports as on all of our pharmaceuticals, then stop spending.”

“I think this debate shows a fundamental lack of vision, a lack of confidence, a lack of understanding of what’s possible.


King George Obama and the Health Care Tories
(A Call to Arms, Legs, Heads, and Hearts)
By Thomas Paign

The President and his loyalists in the Congress are trying to force a new threat to our Liberty upon us. Universal Health Care is being sold as progressive, high minded, and beneficial to all. However, the road to hell is paved with good intentions. While I do believe that some of the loyalists have good, but misguided intentions; the real goal of King George Obama and his Tory leadership is simple, yet hidden from view. Their real goal is to create a new bureaucracy to reward and employ their minions, and to ensure their total control of the government for as long as we can foresee.

Does King George Obama really care about the little people? The disenfranchised? Those without adequate health care? A look at recent political events in his home state of Illinois offers clues to the answer. The State of Illinois cannot pay its own bills, however it recently passed an enormous Capital Spending bill which relies upon borrowing even more money and legalizing video poker to finance the Capital Bill’s obligations. The State of Illinois cannot pay its own bills, yet the Capital Bill is loaded with lavish rewards for politically connected organizations. The State of Illinois cannot pay its own bills, yet the Capital Bill is not limited solely to needed infrastructure items like road repairs and school construction. This is Chicago Politics as usual, and as usual, the little people, along with the rest of the citizens of Illinois, are being led down the road to hell.

Who will be dumping their income into the video poker machines, across the State of Illinois, to pay for this mess? Those that can least afford it. Those that are presently buying groceries with food stamps. Those that rely upon their political slave masters for their subsistence and shelter. The Illinois politicians fully understand and are relying upon this. Do you really think that the politicians truly care about the little people, the disenfranchised, and those without health care? Or are these voters simply a means for attaining power, luxury, and position?

The same people who want government controlled health care are also proclaiming “the age of small, limited government is over!” They say this as if it were universally agreed to. They say this to justify their desire to feed and grow the leviathan known as the United States Government.

This is our call to arms, legs, heads and hearts. Our arms must make and carry signs, wherever and whenever we can, to interrupt their staged events and town hall meetings. Our legs must support us as we stand up for our rights as individuals. Our legs must carry us to wherever the Health Care Tories appear, as they try to sell their ambitions to the masses. Our heads must be clear and focused upon the defeat of their efforts. Our voices and letters must convey the danger that King George Obama’s agenda represents. Our hearts must guide us with courage, love for liberty, and the respect for all of those that fought similar battles for freedom before ours.

Posted by Thomas Paign | Report as abusive