Friday, February 6, 2009

Political & Economic Reality vs. Rightwing Propaganda

All,

The stark reality vs. the criminal propaganda of the venomous and destructive Republican right is this: President Obama and the majority Democratic Party is simply going to have to get tough and go toe to toe with the Republicans because "bipartisanship" is merely a rancid myth/lie at this point in American political history. It's a genuine all out ideological war whether the Democrats want to face it or not and they and the President had better be fully prepared to go all the way in their principled opposition to the reactionary bullshit of the shameless demagogues running the Republican Party. The survival of this country hangs in the balance and as the President openly acknowledges any delays in passing this crucial legislation is totally "inexcusable" (see Obama's remarks in the article following the first one below about SPIRALING UNEMPLOYMENT...

Kofi


February 7, 2009
Economy Shed 598,000 Jobs in January
By EDMUND L. ANDREWS
New York Times



WASHINGTON - The United States lost almost 600,000 jobs last month, and the unemployment rate rose to 7.6 percent, its highest level in more than 16 years, the Labor Department said Friday.

It was the biggest monthly job loss since the economy tipped into a recession more than a year ago, and it was even worse than most forecasters had been predicting.

In addition, the government revised the estimates for previous months to include another 400,000 job losses. For December, the government revised the job loss to 577,000, versus an initial reading of 524,000. Over all, it said, the nation has lost 3.6 million jobs since it slipped into a recession in December 2007.

"Businesses are panicked and fighting for survival and slashing their payrolls," said Mark Zandi, chief economist at Moody's Economy.com. "I think we're trapped in a very adverse, self-reinforcing cycle. The downturn is intensifying, and likely to intensify further unless policy makers respond aggressively."

Despite the jobless number, Wall Street was higher; all three major exchanges were up about 2 percent at noon.

President Obama, in comments Friday morning, said the jobs report reinforced the need for Washington to act quickly, and he urged Congress to pass the economic stimulus package.

"All of us in Washington must remember that we're here to work for the American people," Mr. Obama said. "And if we drag our feet and fail to act, this crisis will turn into a catastrophe."

As in previous months, employers in January slashed their payrolls in almost every industry except health care. Manufacturers eliminated 207,000 jobs, more than in any year since 1982. The construction industry eliminated 111,000 jobs. And retailers, who were wrapping up their worst holiday shopping season in years, eliminated 45,000 jobs.

One modest exception was in workers' wages, which have thus far not reflected the sharp plunge in employment. Hourly earnings edged up to $18.46, up 5 cents, and average weekly earnings climbed to $614.72, up $1.67.

But over all, the new data reinforced the impression of an economy that has become increasingly trapped in a vicious circle of slumping consumer demand, falling business investment, rising unemployment and mounting losses in the banking system.

Although the United States officially slipped into a recession in December 2007, the decline was erratic and temporarily disguised by the impact of the emergency tax-rebate last spring.

Since September, analysts say, economic activity has plunged on almost every front. The monthly pace of job losses shot up to about 500,000 a month for the last three months of 2008, and the new report offered no hint that a bottom was in sight. Last week, the number of Americans filing first-time jobless claims reached a 26-year high, with 626,000 filling out applications.

"This is a horror show we're watching," said Lawrence Mishel, president of the Economic Policy Institute, an economic research organization in Washington. "By every measure available - loss of employment and hours, rise of unemployment, shrinkage of the employment to population rate - this recession is steeper than any recession of the last 40 years, including the harsh recession of the early 1980s."

Most forecasters had predicted that the economy would lose about 540,000 in January. Instead, the Labor Department estimated that 598,000 jobs disappeared.

To be sure, monthly payroll numbers are subject to big revisions in the months that follow. But most other indicators of the job market had been trending worse as well.

Major retailers, rocked by one of the worst holiday shopping seasons in memory, have been shutting stores and laying off of armies of workers in recent weeks. On Thursday, retailers reported that sales fell 1.6 percent in January, the fourth consecutive month of steep declines.

And in a sign that the country's slowdown continues to reach beyond its borders, Canada, America's largest trading partner, reported Friday that its unemployment rate jumped to 7.2 percent in January, from 6.7 percent in December.

In Washington, Friday's gloomy job report put more pressure on Congress to pass an economic stimulus bill. The House passed a bill last week that would provide more than $800 billion in spending and tax cuts. In the Senate, still bogged down by objections from Republicans, lawmakers were hoping to be able to muster enough votes to pass a measure on Friday

"If anything can persuade Congressional Republicans to stop their hyperpartisan sniping at the recovery package, these disastrous employment numbers should be it," said Representative Barney Frank, the Massachusetts Democrat who leads the House Financial Services Committee.

For comparison, the unemployment rate was 4.9 percent in January 2008. But some analysts contend that the current rate of 7.6 percent understates the labor market's problems because the percentage of adults participating in the labor force has slumped, and those people are not listed as "unemployed."

Peter Morici, an economist at the University of Maryland, estimated that if the labor force participation rate today were as high as it was when President Bush took office, the unemployment rate would be 9.4 percent.

Ian Shepherdson, chief North American economist for High Frequency Economics in Valhalla, N.Y., said the government had become the only source of energy left to break the cycle of slumping demand for goods and falling production.

"The public sector needs to act," Mr. Shepherdson wrote in a note to clients. "It needs to prevent an endless spiral of attempts to increase saving, leading to reduced spending, leading to reduced incomes, leading to further attempts to raise savings, and so on."

"We remain firmly of the view that the package now in Congress is the bare minimum required to slow the shrinkage of the economy over the next year," he said.

Many economists expect that the economy will continue to contract until July at the very least, but at a slowing pace in the second quarter.

The Federal Reserve continues to pump money into the financial system at a furious pace. Since September, the central bank has more than doubled its reserves, from $900 billion to more than $2 trillion, by literally creating new money.

The Fed has used some of that money to help bail out financial institutions, from Citigroup and Bank of America to the American International Group.

It has been pumping hundreds of billions of dollars into lending programs, stepping in for banks and other financial institutions to buy up a widening array of corporate debt. Later this month, the Fed will begin a $200 billion program, in conjunction with the Treasury, to finance consumer debt ranging from car loans and credit card debt to student loans.

But analysts say that the big problem is not a shortage of money, but a shortage of demand for products by businesses and consumers. As a result, banks are overloaded with excess reserves, made available by the Fed, which they are often simply parking at the Fed.

Jack Healy contributed reporting from New York.


Copyright 2009 The New York Times Company



February 7, 2009
Senators Close to Reaching Accord on Stimulus Bill
By CARL HULSE and DAVID M. HERSZENHORN
New York Times


WASHINGTON - Spurred by a dismal unemployment report for January, senators were close to reaching an accord on Friday evening on an economic stimulus program of some $800 billion sought by President Obama to pull the country out of the worst recession in years.

Democrats appeared to have succeeded, after a long day of private negotiations and intense public debate, to have won the support of enough Republicans to move the package toward a final vote. Assuming there is a final vote, passage would be assured.

Exact outlines of the accord were not immediately available, but the senators reportedly agreed to cut some spending and strip out some business tax cuts to gain enough Republican support.

Once the Senate votes on the package, differences between the Senate legislation and a considerably different version passed recently by the House would have to be reconciled. President Obama has said he hopes all that can be accomplished in time for him to sign the measure within 10 days.

Three centrist Republicans, Arlen Specter of Pennsylvania and Olympia J. Snowe and Susan Collins, both of Maine, were said to be among the senators being wooed by Democrats, whose efforts were bolstered by Rahm Emanuel, the president's chief of staff, who is a former Congressman from Illinois.

Senator Harry Reid of Nevada, the Democratic majority leader, and Mr. Emanuel reportedly met with Ms. Collins and Mr. Specter Friday evening to smooth out any remaining wrinkles. Soon afterward, Mr. Reid conferred with his fellow Democrats to gain their approval.

The Senate negotiations and day-long public debate were given new urgency by the announcement on Friday morning that 598,000 jobs were lost in January. Democratic lawmakers said it was time to stop quibbling about the exact parameters of the legislation, which mixes safety net spending, tax cuts and a huge infusion of dollars into federal programs.

"While we dither, Rome burns," Senator Dianne Feinstein, Democrat of California, said, noting that the number of unemployed in her state was greater than the total population of other states.

At the White House, Mr. Obama urged Congress to act expeditiously.

"It is inexcusable and irresponsible for any of us to get bogged down in distraction, delay or politics as usual while millions of Americans are being put out of work," said the president, who has grown increasingly impatient with Republican resistance to the legislation.

But Republicans argued that the urgency of the moment should not make them forget their party's principles. "We want to stimulate the economy, not mortgage the future of our children and grandchildren by the kind of fiscally profligate spending embodied in this legislation," said Senator John McCain of Arizona, the defeated presidential candidate who was emerging as a chief Republican opponent of the proposal.

The accord emerged after hours of talks between Democratic leaders and a bipartisan group of lawmakers seeking some reductions in the price tag of the plan. The bipartisan group led by Senators Collins and Ben Nelson, a conservative Democrat from Nebraska, was trying to reduce the spending to about $800 billion, in line with Mr. Obama's initial request.

A memorandum circulating Friday afternoon listed proposed cuts that would bring a net reduction of about $80 billion from a measure that had grown to more than $900 billion. The document showed that money would be eliminated from education programs such as Head Start, criminal justice initiatives that included money for additional police, and some future spending on food stamp programs. The proposal would add spending on Pentagon programs, environmental cleanup and some transportation programs.

"This is a critical day for this new Congress and our country," Senator Reid said. "Faced with this grave and growing economic crisis, Republicans must decide today whether they will join the president and Congressional Democrats on that road to recovery."

"Lets not get dug in," said Senator Joseph I. Lieberman, independent of Connecticut. "This is not a perfect bill, but it clearly is a very good bill. Most important, of all, it is a proposal that will pump money into American economy, into the pockets of working Americans and to businesses throughout this country."

By mid-day, after the president called further delays "inexcusable," the tone of the Senate debate was growing decidedly sharper, with no immediate end in sight, although the Democratic majority leader, Senator Harry Reid of Nevada, remained optimistic about a vote by Friday evening.

President Obama seized on Friday's economic news - the Labor Department's report that the unemployment rate shot up in January - to step up the pressure on the lawmakers. "Last month, another 600,000 Americans lost their jobs," Mr. Obama said. "That is the single worst month of job loss in 35 years. The Department of Labor also adjusted their job loss numbers for 2008 upwards, and now report that we have lost 3.6 million jobs since this recession began.

"I am sure that at the other end of Pennsylvania Avenue, members of the Senate are reading these same numbers this morning. I hope they share my sense of urgency and draw the same, unmistakable conclusion: The situation could not be more serious. These numbers demand action. It is inexcusable and irresponsible to get bogged down in distraction and delay while millions of Americans are being put out of work. It is time for Congress to act."

Senator Joseph I. Lieberman, independent of Connecticut, said he was worried that the Senate was becoming like a gathering of firefighters arguing about "how to get to the fire while the house keeps burning."

"This is a critical day for this new Congress and our country," Mr. Reid said earlier on the Senate floor. "Faced with this grave and growing economic crisis, Republicans must decide today whether they will join the president and Congressional Democrats on that road to recovery.

"If we succeed, there will be plenty of credit to go around. But if we fail, our entire country will suffer the consequences."

Still, Mr. Reid's Republican counterpart, Senator Mitch McConnell of Kentucky, said his party colleagues would not sign on to "an aimless spending spree that masks as a stimulus."

President Obama, after signaling for the last several weeks that he wanted to work with Republicans on the bill and accommodate their requests, suggested in sometimes-sharp language on Thursday night that his patience with the other party is wearing thin, and that the Democratic Party's ideological approach should take precedence.

"Don't come to the table with the same tired arguments and worn ideas that helped to create this crisis," Mr. Obama told a gathering of House Democrats in Williamsburg, Va., referring to Republican demands for more tax cuts.

"We are not going to get relief by turning back to the very same policies that for the last eight years doubled the national debt and threw our economy into a tailspin," Mr. Obama said. "We can't embrace the losing formula that says only tax cuts will work for every problem we face, that ignores critical challenges like our addiction to foreign oil, or the soaring cost of health care, or falling schools and crumbling bridges and roads and levees."

Stepping up his pressure on both parties on Capitol Hill to act swiftly to finish work on the bill in the next 10 days, the president said that the American people had not voted for "the false theories of the past" when they elected him in November, and that it was time to set aside "phony arguments and petty politics."

The Democrats will need the support of at least two Republicans and probably more to win passage of the Senate's stimulus bill, which for procedural reasons will require 60 votes. The Democrats now hold 58 seats, but only 57 have been voting this week. Senator Edward M. Kennedy of Massachusetts has been absent because of illness.

David Stout contributed reporting.