Ben Bernanke

Congress Ignores Obvious Policy Solution To Major Economic Threat

Brian Beutler | May 24, 2012, 5:12AM

If Congress passed legislation to fund the federal government for a year, then scattered to the four winds, the United States would find itself in recession sometime in 2013.

That's what the non-partisan Congressional Budget Office concluded in a Tuesday report, meant to alert elected officials to the dangers of allowing the country to fall off the "fiscal cliff." That's shorthand for allowing all of the Bush tax cuts and the payroll tax holiday, extended unemployment benefits, and Medicare physician reimbursement rates to expire; and to allow spending on domestic and defense programs to be cut indiscriminately. All of these things will happen automatically at the beginning of the year if Congress does nothing.

Budget deficits would fall dramatically, but at the expense of hundreds of thousands or millions of jobs at a time when the country's current economic maladies are just beginning to heal. By contrast, protecting the recovery likely means large budget deficits will persist for quite some time.

If there were an obvious way around this conundrum you'd think Congress would've taken it. In reality, according to policy experts and economists of a wide range of ideological leanings there is an obvious way around this conundrum -- and yet Congress isn't taking it.

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Labor

Labor Force Participation Is Lower Than It Has Been In 30 Years -- Why It Matters And Why It Doesn't

Brian Beutler | May 4, 2012, 1:28PM

Among the new employment figures the Labor Department released Friday morning is an obscure one that's ripe for politicking: the labor force participation rate. It measures the percentage of the population age 16 and above who are actually working. The labor force participation rate fell last month to 63.6 percent, its lowest level since 1981.

In the midst of an economic recovery -- albeit a slow one -- why would the labor participation rate continue to be hover near four-decade lows?

If you take a long view of the figures, something becomes abundantly clear: there's a lot more behind the country's slumping labor force participation rate than today's weak economy. The real reasons behind the fluctuations in the rate over the past several decades are fascinating, and they raise some of the biggest questions in the field of labor economics.

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Economy

Romney Budget Attack Based Flawed View Of The Economy

Brian Beutler | April 17, 2012, 1:45PM

In a new effort to turn the country's debt and deficits into political problems for President Obama, Mitt Romney's campaign is promoting a new infographic that draws a comparison between federal and household budgets.

It may be a political winner, but it's a deeply flawed way to look at budgeting, as even many conservative budget experts admit. And it rests on the false implication that President Obama has no intention or desire to rein in deficits in the coming years.

But it breaks down further when you examine the analogy more closely -- and, as Dean Baker, co-founder of the liberal-leaning Center for Economic and Policy Research says, it suggest either that Romney's misleading voters about his policy views, or that he has a "loony" view of the economy.

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Economy

Government Jobs Buoyed Bush's Economy And Sunk Obama's (CHART)

Brian Beutler | March 21, 2012, 10:22AM

President Barack Obama speaks on the economy in Shaker Heights, OH on January 4, 2012.

An enduring impediment to President Obama's economic recovery has been the erosion of public-sector employment, driven largely by layoffs at the state and local levels. As we've noted before, this wasn't a problem recent Republican presidents faced. Total government expenditures (federal, state and local) grew under Reagan and the two Bush presidents much more than it has under President Obama.

But how is that reflected in Obama's economic record? The economics blog Calculated Risk points us toward private- and public-sector payrolls under both Presidents George W. Bush and Obama, both of whom faced tough economies early in their first terms (though of wildly varied levels of severity).

We've adjusted these to reflect percent change, to account for population growth. The basic story is that Obama's private-sector recovery has outpaced Bush's, but Obama's been hobbled by government cutbacks that Bush never faced. Quite the opposite, in fact.

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Barack Obama

How Politics Damaged Obama's Recovery (CHART)

Brian Beutler | March 13, 2012, 5:39AM

Last week we brought you this chart, demonstrating that the unemployment rate under President Obama is coming down fairly quickly -- though not as quickly as it did under President Reagan in the months before he won a landslide re-election in 1984.

Here's a major reason why.

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Ronald Reagan

Why Obama Hopes The Recovery Picks Up Even More (CHART)

Brian Beutler | March 9, 2012, 1:53PM

President Barack Obama

Will recent months of economic good news, including today's Department of Labor unemployment report, redound to President Obama's political benefit in 2012?

If the GOP's messaging schizophrenia over the last several weeks is any indication, they seem to think it could. And there are real precedents for this effect. When President Reagan's economy bottomed out and began to improve, it did so early and quickly enough in his term that he pronounced it "morning in America" and won a landslide re-election.

Here's how President Obama's recovery looks by comparison.

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Economy

Why The Economic Recovery Hasn't Felt Like One For The 99 Percent (CHARTS)

Brian Beutler | March 6, 2012, 11:26AM

New data from a renowned economist show what most people in the country have intuitively understood for months: When the recession technically came to an end, it didn't really feel that way unless you were wealthy enough to weather it to begin with.

In his updated report "Striking it Richer," Emmanuel Saez of UC Berekely found that the top one percent in the U.S. hoovered up 93 percent of the income gains in 2010. To break that down, the top one percent enjoyed, on average, income gains of over $100,000 a year from 2009-2010. Everyone else saw their incomes rise, on average, about $80.

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Recession

CHART OF THE DAY: 50% Chance Of Another Recession... Because Of The Euro

Brian Beutler | November 15, 2011, 1:46PM

Here's why you should be worried about the spiraling demise of the Euro.

Travis J. Berge, Early Elias, and Oscar Jorda, Economists at the Federal Reserve Board of San Francisco, have analyzed the domestic and international factors that threaten the American economy. What they found suggests that the risk of another recession in the next several months is alarmingly high -- and largely out of our control. Downside risks within the U.S. are pretty low, but taken together with external factors, particularly the escalating crisis in Europe, the likelihood of another U.S. recession jumps above 50 percent.

Here's the graph:

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Euro

The Euro Crisis Is Far From Over

Brian Beutler | October 29, 2011, 9:58AM

In a carefully worded statement Thursday, President Obama applauded the news out of Europe.

"We welcome the important decisions made last night by the European Union which lay a critical foundation for a comprehensive solution to the Eurozone crisis," Obama said. "We look forward to the full development and rapid implementation of their plan. We will continue to support the EU and our European allies in their efforts to address this crisis as we work together to sustain the global recovery and put our people back to work."

If you're a U.S. political news junkie you probably missed this. And now that you're reading it here, you may be wondering why the President of the U.S. is commenting at all about something called the "Eurozone crisis."

Here's why.

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Recession

CHART OF THE DAY: How The Recession Turned Us Into A Nation Of Teetotaling Canned-Veggie Fiends

Brian Beutler | October 27, 2011, 11:20AM

Over two years after the official end of the Lesser Depression, people still aren't hiring. And here's why.

Forget everything you hear on TV from partisans about regulatory uncertainty or taxes on "job creators". The problem is that consumers aren't consuming as much as they need to be to keep the economy growing.

Break it down a bit, though, and it turns out that the last four years have been OK for some industries -- and killer for others.

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CBO

CHARTS OF THE DAY: Where'd All The Income Growth Go? To The 1 percent!

Brian Beutler | October 25, 2011, 3:47PM

At the request of the Senate Finance Committee, the Congressional Budget Office has produced a report analyzing trends in the distribution of household income from 1979 until 2007 -- just before the economy fell off a cliff.

The results will be familiar to economists and policy wonks, but they're eye-popping. These charts and graphs tell a story of a massive income growth in the Reagan and post-Reagan years, and particularly during the George W. Bush administration -- but only for the famous 1 percenters.

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Occupy Wall Street

CHART OF THE DAY: The '47 Percent' Pay Their Fair Share

Brian Beutler | October 21, 2011, 6:03AM

Conservatives are continuing their counter-protest against the so-called "47 percent." Specifically, that's the share of recession-era households that pay no federal income taxes. Most of them pay payroll taxes and other federal taxes (not to mention state taxes), but Republicans have chosen to depict them as the free-riding half of the country.

The fact of the matter, though, is that those other taxes constitute a huge chunk of federal revenues. Check out the charts below. Over the 58 years preceding the Lesser Depression, the share of federal revenues that came from individual income taxes has remained fairly stable, fluctuating between 40 and 50 percent, and peaking just before George W. Bush slashed rates in 2001.

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Recession

CHART: U.S. Birth Rate Drops As Economy Falters

Igor Bobic | October 14, 2011, 11:12AM

A new Pew report details a sharp decline in fertility rates across the United States that appears closely tied to the economic recession that hit the country in approximately 2007.

The correlation between a faltering economy and the national birth rate is nothing new. What is astounding, however, is that the birth rate for almost every state has dropped dramatically. In 2007, the country experienced a record number of births, 4,316,233. Since then, following one of the worst recessions the U.S. has ever seen, Pew's provisional data shows that the number of births in 2010 was just 4,007,000.

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Ben Bernanke

Congressional Dysfunction Begins To Spook Old Pros

Brian Beutler | October 10, 2011, 5:05AM

U.S. Capitol building

Congress has always been Washington's whipping boy, particularly near election time. The antics get sillier, the pace shifts from glacial to gridlock, and the frustrated public gets daily reminders that lawmakers are often too mired in politics to function in the national interest.

That's not news.

What is news is that this time it's starting to scare the pros.

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Recession

Brinkmanship Tanks: Obama Still Favored Amid Economic Pessimism

Kyle Leighton | September 14, 2011, 10:45AM

President Obama

President Obama's speech unveiling his jobs bill was a call to action for Congress. Literal action, in this case, as he's gone on a barnstorming tour of swing states with a simple message repeated over and over: "Pass this bill." So how is the new jobs package playing with Americans? Pretty well, but as before, economic pessimism is reigning right now, and it's a drag on almost all numbers.

But being down on the economy hasn't convinced Americans to hand control over to Republicans: they still trust Obama more on the economy than the Congressional GOP.

CNN and Bloomberg on Wednesday both released polls on reaction to the jobs plan and the economy in general. CNN asked Americans if they agreed with the proposals in Obama's plan, and a plurality said they did: 43 percent favored the bill and 35 were against it. But Bloomberg asked voters if the plan "will or will not help lower the unemployment rate?", which respondents doubted. 40 percent said no, 51 yes.

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Barack Obama

When Nothing Can Be Done: Study Shows Americans Losing Faith In Solutions For Recovery

Kyle Leighton | September 8, 2011, 6:00AM

President Obama

The Great Recession has been more than an economic downturn. The term "downturn" suggests the situation is fairly short and fixable, a temporary flattening in America's unending economic slope. It has been three years since the stock market tanked and contraction started, and the Obama administration just announced that it expects unemployment to remain above 9 percent through 2012. So, forget short. But what about fixable?

President Obama's jobs speech may be highly anticipated by the media and in Washington, but it seems certain that the GOP majority in the House will reject whatever Obama proposes. And as we've seen with the deficit reduction proposals that the super committee could undertake as part of their deficit reduction task, the priorities of Congress and what the American people would accept is oftentimes at odds.

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Economy

CNN Poll: 8 in 10 Believe We Are Still In Recession

Kyle Leighton | September 2, 2011, 12:30PM

New York Stock Exchange

A new CNN poll out on Friday shows that two and half years after the financial crisis and subsequent fallout, the public's worries about the economy have not settled. In fact, more people now feel the US is in a recession than they did in October of 2008.

CNN's survey showed that 69 percent of Americans think we are in a serious or moderate recession, with 13 percent who believe it's still a mild one. That means 8 in 10 Americans still feel the economy is still stuck in neutral, which isn't helpful for other economic indicators like consumer confidence, and could contribute to slowing the recovery.

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Barack Obama

Former Top White House Economist: One-In-Three Chance Of Double-Dip Recession

Brian Beutler | August 3, 2011, 10:39AM

Larry Summers and President Barack Obama

For the umpteenth time in the last two years Democrats are going to "pivot to jobs." This time, according to President Obama's former chief economist, they better be serious.

In a Wednesday Washington Post op-ed, Larry Summers issues his most dire public warnings about the economy since leaving the White House.

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Barack Obama

Obama: I Underestimated Magnitude Of The Recession

Susan Crabtree | July 6, 2011, 3:17PM

President Obama openly acknowledged underestimating the length and magnitude of the worst recession since the Great Depression in a response to a question during his Twitter town hall.

Always a tough question to answer, Obama was asked what mistakes he made in handling the economic crisis and what he would have done differently looking back on his first months in office.

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Debt Ceiling

Top Economist: Even Brief Default Will Cause New Recession And Blow Recovery 'Out Of The Water'

Brian Beutler | June 28, 2011, 11:39AM

Moody's Analytics chief economist Mark Zandi

How big are the stakes on Capitol Hill right now? According to one of the most influential economists in federal policy making, the next four weeks will make the difference between a slow glide toward economic recovery, and a severe tumble into a new recession.

[TPM SLIDESHOW: More Than Just Forms: Tax Day Tea Party-Style]

Moody's chief economist, and former McCain economic adviser Mark Zandi is forecasting GDP growth of 4 percent by the end of the year and into next. But in response to a question from TPM, he told reporters at a breakfast meeting hosted by the Christian Science Monitor that his forecast would be "blown out of the water," if Congress fails to "reasonably gracefully" raise the national borrowing limit.

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Debt

Are We Really Drowning In Red Ink? A Closer Look At Our Non-Exceptional Debt And Deficit Crisis

Brian Beutler | April 22, 2011, 9:36AM

For the next several weeks, and likely through election season, Washington will continue to be gripped by the debate about how to reduce federal deficits and the national debt. It's a common focus of legislative preening, particularly after economic downturns, and even more particularly when Democrats control the White House.

So it's worth keeping in mind how current and projected deficits and debt stack up to their historic levels, relative to GDP. The answers will surprise you.

The following graph tracks annual deficits as percentages of GDP over the last several decades. Unsurprisingly, what you see is that they spike during economic downturns, with the most severe spike after the United States entered World War II -- a spending effort that provided the economic stimulus the country needed to finally break the back of the Great Depression.

National surpluses shrank as the country entered a mild recession at the end of the Clinton administration, got worse after President Bush spearheaded deficit financed tax cuts, wars, and domestic spending, and ballooned just as Obama took office thanks to the double whammy of a sharp decline in revenues, which plunged when the bottom fell out of the economy after the financial crisis, and stimulus spending to salvage the economy.

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KY-SEN

Rand Paul Suggests Economic Decline Could Lead To A New Hitler

Evan McMorris-Santoro | September 22, 2010, 2:02PM

KY Sen. candidate Rand Paul (R)

More goodness from Jason Zengerle's tasty profile of Rand Paul in GQ: The Republican nominee for Senate in Kentucky just wants you to know that, with the way things are going these days, a new Hitler could be in America's future at any moment.

It's probably a good idea to keep an eye out for that, folks.

Here's the long quote from Paul that Zengerle snagged on the trail with the candidate:

"In 1923, when they destroyed the currency, they elected Hitler. And so they elected somebody who vilified one group of people, but he promised them, 'I will give you security if you give me your liberty,' and they voted him in. And that's not to mean that anybody around is Hitler, but it's to mean that you don't want chaos in your country. And we could have chaos, not just because of the Democrats, but because the Democrats and the Republicans have all been spending us into oblivion. And having a massive debt runs the risk of chaos at some point. Not tomorrow, maybe not next week--I mean, I can't even predict the stock market six months from now. But I think that a country is in danger that spends beyond its means and lives beyond its means. And I don't ever say it started with President Obama. I think it started long ago."

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Recession

The Democrats' Recession Problem (And Why It Won't Get Fixed Anytime Soon)

Brian Beutler | August 27, 2010, 10:51AM

According to the Commerce Department this morning, the country's gross domestic product this spring grew at an anemic 1.6 percent. But that's just the latest in a series of indications that the economy isn't really improving. Forget mosques and immigration and health care reform -- they may split the country and bedevil Democrats politically, but it's the economy that's really to blame for all of it. The good news is, there are steps the government can take to improve the situation. The bad news is they're not gonna. And that's why Democrats are suffering.

"It's very difficult to envisage any significant policy response to current economic problems in the near term," said Mark Zandi, one of the nation's top economists, earlier this week.

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