Saturday, November 30, 2013

How Walmart Hurts America

Can you imagine being able to wake every single morning, just to lie in bed all day long watching the latest movies on a 110-inch super-size ultra-high-definition TV, and having a beside intercom to have all your meals delivered to you any time you get hungry --- all while being paid over $1 million a day? If they wanted to, the 6 Walmart heirs can --- raking in more than $1 million every single day, just from the dividends paid on their Walmart stock.

Friday, November 29, 2013

High School Drop-Out Debunks Economics Professor

* Chart below from the National Employment Law Project

Question: How can eliminating federally extended unemployment benefits for the long-term unemployed enable the short-term unemployed, those who are still receiving State jobless benefits, (and those who don't qualify for any jobless benefits at all), help any of the unemployed find jobs—or lower the unemployment rate—if there aren't enough jobs?

Answer: It can't. So, to say otherwise is total nonsense. If extended federal employment benefits are not reauthorized, only 1 out of 4 jobless Americans (those that are still counted in the U-3 unemployment rate) will be receiving jobless benefits next year. Millions of others (such as the 99ers) have already exhausted all their jobless benefits without ever finding work again, and have had no income at all for years. Meaning, many of them now qualify for food stamps and Medicaid.

Federal Extended Unemployment Insurance Benefits in 2013

Thursday, November 28, 2013

Black Mag CEO, Sanborn, Sentenced for Manslaughter


On May 14, 2010 Fox News reported that two people were killed after three explosions rocked a black powder gun factory at the MDM Muzzleloader plant in Colebrook, N.H., a town of roughly 2,000 residents near the Vermont border.

From ReliablePlant.Com:

Wednesday, November 27, 2013

Walmart & Black Friday: Why Support Corruption?

It's a shame and a pity that every year so many financially strapped and desperate American shoppers have to stand in long lines (or camp outside for days) just to squeeze through the retailers' front doors to push and shove their way through the crowds like starving refugees in an attempt to save a few dollars in search of bargains (many times "deals" that aren't always really bargain at all).

The New York Times describes Black Friday as "the single most manic, delirious shopping day of the year" --- when people become animals.

Tuesday, November 26, 2013

American Bombers over Chinese Sea

We're not beating them economically, maybe we can beat them militarily.

From CNN: "Two U.S. military aircraft flew into China's newly claimed and challenged air defense zone over the East China Sea, a U.S. official said, an action that could inflame tensions between the world powers. The U.S. Air Force B-52 planes -- which were not armed because they were on a training mission -- set off Monday from Guam and returned there without incident. The mission lasted for several hours, and the aircraft were in China's newly declared air zone for about an hour, according to the U.S. official."

Instead of reporting "newly claimed", CNN might have reported "re-newly claimed" --- but later in their article they wrote "long-running dispute over islands" --- and then gave some historical background.

Obama's Enemies are also Traitors

Robert Draper, author of the book "When the Tea Party Came to Town", wrote in his new book, "Do Not Ask What We Do" that on inauguration night in 2009, during a four hour "invitation only" meeting, the GOP "propaganda minister" Frank Luntz and several GOP lawmakers (listed below) literally plotted to sabotage, undermine and destroy America's Economy.

Pope Francis Crucifies Reaganomics


From the Washington Post: "Pope Francis denounces ‘trickle-down’ economics"

The Pope:

Human beings are themselves considered consumer goods to be used and then discarded. We have created a “disposable” culture which is now spreading. It is no longer simply about exploitation and oppression, but something new. Exclusion ultimately has to do with what it means to be a part of the society in which we live; those excluded are no longer society’s underside or its fringes or its disenfranchised – they are no longer even a part of it. The excluded are not the “exploited” but the outcast, the “leftovers”.

A very powerful statement, and it may be the best description yet of the 99ers, those in the U.S. who have been laid off and out of work for going on 5 years now...usually older Americans over 50 years old. They were used and abused for 30 or 40 years, then tossed away like used toilet paper.

The Pope goes on to say:

I encourage financial experts and political leaders to ponder the words of one of the sages of antiquity: “Not to share one’s wealth with the poor is to steal from them and to take away their livelihood. It is not our own goods which we hold, but theirs.” (The "sage" being Saint John Chrysostom)

So, for the past 40 years, all those rich bastards have been buying multiple yachts and mansions with our hard-earned money!!

The Pope also says, "Money must serve, not rule!"

Now, Bill Maher, comparing JFK to Ronald Reagan:

Just last week, Sarah Palin said, "There is no Ronald Reagan on the scene today. If he was, that's who I would put my faith in." That's quite a hold on someone. After all, when Reagan was elected, Sarah Palin was barely 16, probably pregnant, but still in 3rd grade."

1 out of 5 Jobless in Normal Labor Force

Economic policies have kept the U.S. GNP down from its full potential, keeping unemployment higher than it should be --- which is barely (if at all) keeping up with population growth. And antiquated ways of measuring the real unemployment rate greatly under-defines the real jobless numbers.

Adjusted for the labor force participation rate (LFPR), the U-3 unemployment rate would be nearer to 11% today. And counting ALL "discouraged workers" who "dropped out of the labor force" (using the U-6, Alt U-6 or U-7 rates of measurements), the unemployment rate would skyrocket, making one out of every five working aged adults (who would normally be in the labor force) unemployed today.

Research by Christopher Erceg and Andrew Levin is providing solid evidence that the decline in the labor force participation rate since 2007 has been due to cyclical factors --– the recession and slow recovery --– rather than to demographic factors.

Food Shortages in U.S., now a National Crisis

Give me your tired, your poor,
Your huddled masses yearning to breathe free,
The wretched refuse of your teeming shore.
Send these, the homeless, tempest-tost to me,
I lift my lamp beside the golden door!
~ from "The New Colossus", the poem engraved on a bronze plaque and mounted inside the pedestal of the Statue of Liberty.

Food Shortages in America

Since 2006, the number of Americans receiving aid from food pantries and similar services is up almost 50%, according to Feeding America.

With rising food prices, stagnant wages and cuts to benefit programs, the number of people who rely on food banks and soup kitchens has been on the rise. And the recent cuts to food stamps are prompting even more families and individuals to turn to the local food banks to pick up the slack.

AT&T & Verizon Support the Tea Party

According to Credo, via a newsletter from Mother Jones, Verizon Wireless and AT&T just reported their latest political contributions—and the numbers aren't pretty. Verizon has now given $241,600 and AT&T a whopping $1,111,000 to members of the House and Senate Tea Party Caucuses since 2009.

Brave New Democrats and Filibuster Reform

Sally Kohn at CNN: "The nuclear option, an overblown term for changing Senate rules to enable judicial and executive nominees to be confirmed with just 51 votes instead of 60, will put an end to using the filibuster to block appointees. Republicans have been gumming up the works of our government, both because they ideologically favor the dysfunction of government, and because they want to fundamentally undermine the president. Proponents of the measure call it the constitutional option, in so far as it is constitutional and it would finally hold Senate Republicans' feet to the fire to perform their constitutional duty. That indeed seems a more accurate description and one that reminds us all that it was Republicans' own reckless and destructive behavior that brought us to this point."

An article in the Los Angeles Times credits the elimination of the Senate filibuster to a new class of Democrats --- the "Elizabeth Warren wing of the Party".

Monday, November 25, 2013

Senator Bernie Sanders Budget & Petition

The pushback against the assumptions of budget austerity America is revving up. The latest sign: Senator Bernie Sanders from Vermont, a member of the House and Senate panel charged with framing a budget deal by mid-December, has unveiled a ten-point "Progressive Budget Blueprint" that rejects austerity's rich people-friendly givens.

Powerfully designed online infographics buttress the blueprint’s case for taxing Wall Street speculators, enacting a truly progressive estate tax, ending the preferential tax treatment for capital gains, and repealing the remaining Bush tax cuts on income over $250,000. According to the Social Security Administration, 98.95% of all wage earners have annual incomes less than this (and 50% take home $27,500 or LESS.)

* From the Congressional Progressive Caucus: Back to Work Budget // And an analysis by the Economic Policy Institute of their budget for fiscal year 2014 // And an excellent article at Common Dreams about the budget proposal by Senator Bernie Sanders // And his petition at the very bottom of the page » » » Just submit your name, email address and zip code --- that's all.

From Senator Bernie Sanders...

The Farm Bill: Rich Farmers vs. Hungry People

* Editor's Note: Regarding the title of this post...before the farmers begin raising their pitchforks up in protest, let's define what being financially "rich" in America really means.

Many rich people in the U.S. don’t believe they’re rich (or they refuse to admit it, either to themselves or to anybody else). In a survey, the vast majority of investors with $1 million in assets don’t consider themselves wealthy. And many poor people don't realize they're poor, and believe they are middle-class. So being financially "rich" can sometimes be just a matter of self-perception.

But in real terms: Considering the fact that 50% of all wage earners in the U.S. take home $27,500 a year or LESS, and less than 1% of wage earners have incomes of more than $250,000 a year, I would say that being financially rich means anyone who can quit their job today (if they work) and would never need to worry about food or shelter for the rest of their lives, while also maintaining the same lifestyle of someone who has an annual income of at least $250,000 a year --- no matter where you live in the country.

So naturally that would also include the over 8.4 million millionaires and over 400 billionaires in America (the top 0.01%). Being "rich" would include those who can live the lifestyle of someone with an income of $250,000 a year, even if they passed away owing vast amounts of debt (regardless if they left their relatives stuck with paying any bills.)

Sunday, November 24, 2013

5 Years Later and Still, Where are the Jobs?

From the New York Times article Readers React: "When you lose your job, suddenly nothing feels secure."

That was one of the most common themes among the more than 700 comments on Annie Lowrey’s New York Times article, “Caught in a Revolving Door of Unemployment” last weekend. Few readers, many approaching retirement age, had not expressed any confidence at all in their own job security. The comments are full of sympathy for the unemployed, along with pleas for additional support.

Does Excess Wealth cause Moral Hazards?

According to one economist (Tim Hartford), "Clients of Goldman Sachs bought into a subprime mortgage deal called Abacus 2007-AC1, which had been constructed with input from the Paulson & Co hedge fund, which was betting that the entire thing would implode" (The banks had been very "morally hazardous".)

But if that wasn't enough "moral hazard", now there's also a push to legalize insider trading. Do remember Congress and that joke of the STOCK Act that they passed for themselves? These two actions could cause yet even more "moral hazards" in the financial markets.

The Social Security MINT Debate

* This is an UPDATE to a previous post

From the Social Security Administration about MINT (aka Modeling Income in the Near Term) ---

"MINT is the micro-simulation model to make future projections about 21st century retirement income, marital trends, Social Security benefits, income, and poverty. These projections allow researchers and policy analysts to study future retirement conditions such as income and poverty, as well as the effects of policy changes." (The latest MINT report is here in PDF)

From Kevin Drum at Mother Jones:" MINT and the Retirement Crisis" (November 19, 2013) ---

"Should we expand Social Security? Of course we should. We all know that old-style pensions have all but disappeared, replaced by 401(k) plans that are disastrously under-funded.

Janitors can't retire 'cause lawyers live longer?

Paul Krugman, making another excellent case why we should expand Social Security, not cut it (November 21, 2013):

"Let me briefly take on two bad arguments for cutting Social Security. One is that we should raise the retirement age because people are living longer. This sounds plausible until you look at exactly who is living longer. The rise in life expectancy, it turns out, is overwhelmingly a story about affluent, well-educated Americans. Those with lower incomes and less education have, at best, have hardly seen any rise in life expectancy at age 65; in fact, those with less education have seen their life expectancy decline. So this common argument amounts, in effect, to the notion that we can’t let janitors retire because lawyers are living longer. And lower-income Americans, in case you haven’t noticed, are the people who need Social Security most."

Saturday, November 23, 2013

Trade Agreement Job Claims are Pure Baloney

The talks concerning the Trans-Pacific Partnership (TTP), a trade agreement linking the economies of the U.S., Japan, Malaysia, Vietnam and eight other Pacific Rim countries, is underway along with an even bigger trade deal with the European Union, the Transatlantic Trade and Investment Partnership (TTIP).

Friday, November 22, 2013

It's Raining Jobs, Hallelujah!

Is it really raining jobs?

No, it's not raining jobs. This post is for the family members
of the long-term unemployed who only believes it's raining jobs.

There are many people, whose own family members won't believe them, when they try to explain to them why they can't find a job. After all, their family members may have been constantly hearing on the news that there are plenty of jobs out there, if only they would go out there and look for one. But some in the media have been saying this for the past 5 years, and still, there are not enough jobs.

Thursday, November 21, 2013

Permanent Unemployment may be New Normal

According to a new Fed report, if one is jobless for 6 months or longer, they might only have a 10% chance of ever finding another job. And to make matters worse, federal extended unemployment benefits for those jobless longer 6 months will soon end.

Regarding what the unemployment rate is consistent with full employment, Joe Binden's former economic advisor says,

POLL - 70% won't vote for those proposing Social Security cuts


A new Public Policy Polling poll finds voters overwhelmingly disapprove of cutting Social Security.

As reported at the Huffington Post, the new survey looked at 10 key House and Senate districts and found that voters there strongly opposed any cuts to Social Security benefits (such as using chained-CPI for annual cost-of-living-adjustments) -- a stance that may imperil [mostly Republican] lawmakers in next year's elections.

Meet the New Middle-Class (which Peaked in 1979)

In the "good old days" dad went to work at places like U.S. Steel or IBM, earning enough to pay the mortgage and meeting the payments on a car loan; all while mom stayed home to raise the kids, giving them milk and cookies after they returned home from school.

This was a time in American history when the top 1% paid a higher marginal and capital gains tax rate, and when the major corporations paid a higher tax rate as well (see historical rates) — when "big government" had the resources to do things, such as building the national highway system, or putting man on the Moon.

Nowadays, both parents must work to pay the rent and feed the kids, when dad might be working at Walmart, while mom is picking up the kids from a daycare center after leaving her job at McDonalds — while the government (for lack of revenues) has been cutting back on everything.

Wednesday, November 20, 2013

Judge Reveals why no Bankers were Jailed

"Corporations have been enthroned, and an era of corruption in high places will follow, and the money power of the country will endeavor to prolong its reign by working upon the prejudices of the people until all wealth is aggregated in a few hands and the Republic is destroyed." ~ President Abraham Lincoln (1809-1865)

Why Have No High Level Executives Been Prosecuted In Connection With The Financial Crisis?
by U.S. District Judge Jed S. Rakoff (11/12/13) Download PDF from the Financial Times

Five years have passed since the onset of what is sometimes called the Great Recession. While the economy has slowly improved, there are still millions of Americans leading lives of quiet desperation: without jobs, without resources, without hope. Who was to blame?

Why Walmart Should be Public Enemy #1

Walmart could afford to pay every one of its U.S. employees $14.89 an hour by just not buying back its own stock. A recent article at Salon points to a new report which concludes that, rather than buying back stock to enrich the Walton family, Walmart could use the same cash to give raises to their employees.

Congressional Tea Party Crack Head Gets Probation!

According to USA Today, in a sting operation that stemmed from a broader FBI and DEA investigation of a major drug trafficking organization in the nation's capital, Tea Party Congressman (Rep. Trey Radel from Florida) was caught in the federal net.

The targets of the federal investigation were dealers and high-level people in a drug organization, not buyers and users. But a dealer who was arrested last month told federal agents that one of his customers was a Congressman. So federal agents had set up the sting operation.

Tuesday, November 19, 2013

Government Debt vs. Household Debt

According to USA Today, as of last year, the national debt was roughly equal to the value of all goods and services the U.S. economy produced in one year.

CBS recently reported that the federal debt (about $17 trillion) jumped $409 billion last month --- to $3,567 per household. (Whether that CBS report is true or not is besides the point...read on.)

It should be noted that "households" aren't equally responsible for government debt, as we all pay different tax rates on our different incomes. But to put it in this way, only makes for sensational headlines, as conservative groups like to do — as a way to scare people into reducing government spending and cutting taxes (on the rich, who pay most of the taxes).

But even if one preferred to use this skewed analogy of "household debt" or "household budgets", then let's rationally argue the case from their own perspective.

Say we have $17 trillion in debt, and we have a $17 trillion annual economy, we'll also have to include what we (the government) has in assets — which is about $200 trillion according to Cullen Roche, founder of Orcam Financial Group.

So if we just change "trillion" to "thousand" for a household budget:

Let's say you only earn $17,000 a year and you owe $17,000 to the bank (for a mortgage, car, or whatever). To some people, that might seem like a lot of money. But what if you also had $200,000 in assets (cash, land, fine art, etc.) Would $17,000 of debt really mean anything at all?

We've been hearing a lot about the debt and deficits — ever since the Democrats were in control of the government. But government spending is down and we have less federal workers than since 1966. And government spending is down faster than since WWII.

Government spending and "waste, fraud and abuse" hasn't been our biggest problem—we could actually use MORE government (excluding defense), paid for with a more fair tax code.

The U.S. population has grown by over 1/3 (100 million) since the 1970s — but not enough tax has been paid by the top income earners over the past 40 years — when their tax rates should be DOUBLE than what they are today.

And as Cullen Roche points out, none of this even touches on the operational realities behind the United States monetary system, and the fact that we’re not going bankrupt unless we choose to go bankrupt...and we’re not going to be unable to pay the bills (on debt denominated in a currency we can print) unless we choose not to pay those bills.

And if the Republicans would like to define "wasteful government spending", let them — but they won't, because to them, what they REALLY think is "wasteful" is Social Security and Medicare (and not tax loopholes). If they were honest, they would just come out and verbally say it — in plain English.

The reality is, we don't have a spending problem — we have a revenue problem. Instead of cutting programs that the poor and middle-class rely on (instead of cutting taxes for the rich), do this instead:

Raise the minimum wage (including, for tipped employees); reform the tax code and taxing capital gains as regular income; institute programs to put the long-term unemployed back to work; reduce or eliminate H-1B visas until skilled Americans are hired first (at the prevailing wage); renegotiate ALL our "free trade" agreements, force the repatriation of overseas corporate earnings and tax them at the "statutory rate" of 35% (not at a lower "effective rate", with applied loopholes); ban any further outsourcing of manufacturing, service, and tech jobs; raise (or eliminate) the "cap" on Social Security taxes (most working Americans pay this tax on 100% of their income up to $113,700 a year); Strengthen Social Security, don't cut it!

Businesses Break Law with "Independent Contractors"


Business models that attempt to change or obscure the employment relationship through the use of "independent contractors" are not inherently illegal, but they may not be used to evade compliance with federal labor law, as many businesses do.

Capital Gains Taxed Less than Corporate Profits?

It's ludicrous that the capital gains tax rate (currently at 23.8%) is lower than the corporate tax rate (35%) because that just gives the CEOs and other shareholders more incentive to stuff profits directly into their pockets, rather than reinvesting.

Why Seniors Should Boycott Amazon

Seniors that are drawing Social Security (and anyone else who plans on eventually retiring with Social Security) should boycott Amazon.

Jeff Bezos is the founder and CEO of Amazon.com, and he recently purchased The Washington Post for $250 million.

The editorial board at the Washington Post says that taxing someone $58,700 a year who is earning $1 million a year to pay an elderly Social Security retire an addititional $60 per month is "a massive transfer of income from upper-income Americans to the retired."

Boycott Walmart Day --- November 29th, 2013

* What Walmart Could Learn from Henry Ford by Robert Reich, Saturday, November 16, 2013

Walmart just reported shrinking sales for a third straight quarter. What’s going on? Explained William S. Simon, the CEO of Walmart, referring to the company’s customers, “their income is going down while food costs are not. Gas and energy prices, while they’re abating, I think they’re still eating up a big piece of the customer’s budget.”

Walmart’s CEO gets it. Most of Walmart’s customers are still in the Great Recession, grappling with stagnant or declining pay. So, naturally, Walmart’s sales are dropping.

Why the U.S. should be more like Europe

Young activists in Switzerland have plutocrats hyperventilating — and spending a fortune to beat back a ballot initiative that would establish a legal limit on the pay gap between top execs and their workers.

Something astounding is happening in Switzerland. For the first time ever, voters in a modern developed nation are going to be voting on whether to create what essentially amounts to a “maximum wage.”

The $235 million CEO Tax Loophole

(Note: to see a list of corporate loopholes, go here.)

Board members at Oracle, the business software colossus, last year extended to their billionaire CEO Larry Ellison $94.6 million in performance-based compensation. If Ellison “performs,” he’ll collect all those millions.

If Ellison “performs,” Oracle will benefit big-time, too. The company will be able to deduct every cent of that “performance” reward off its U.S. corporate taxes.

So how will Oracle determine whether Ellison has “performed” adequately enough?

Monday, November 18, 2013

Report: Unemployment, UI Benefits & DI Claims (2013)

"It has been a painful slide. A five-year spell of unemployment has slowly scrubbed away nearly every vestige of [her] middle-class life. She is a 53-year-old college graduate who worked steadily for three decades. She is now broke and homeless." ~ Annie Lowrey, from the New York Times, November 17, 2013.

That pretty much sums up the situation for millions of other unemployed Americans today. Michigan Stadium has a capacity of about 110,000 people (photo below). Now multiply that number by 182 --- that's how many people we have in 2013 who want a job.

Michigan Stadium

Friday, November 15, 2013

The Most Significant Labor Case in a Generation

Labor leaders and businesses have been closely watching a Supreme Court case that was argued last Wednesday that involved a popular strategy used by unions to successfully organize hundreds of thousands of workers.

The New York Times reports that the union's enlistment strategy "involves pressuring an employer into signing a so-called neutrality agreement in which the employer promises not to oppose a unionization drive. By some estimates, more than half of the recent successful unionization campaigns involve such agreements, which sometimes allow union organizers onto company property to talk with workers."

67% of Republicans Approve Food Stamp Cuts

Republican voters strongly approve of the cuts to food stamps that reduced benefits for all 47 million Americans this month, according to a new HuffPost/YouGov poll.

  • By a 67 percent to 25 percent margin, most Republicans said they approved of the cuts.
  • But by a 67 percent to 28 percent margin, most Democrats said they disapproved of the cuts.
  • And by a 48 percent to 40 percent margin, most Independents also said they disapproved of the cuts.

Together, Americans appear evenly divided: 46 percent disapproved of cuts to food stamps and 45 percent approved (I suppose 9 percent didn't care either way.)

Meanwhile, Democratic Rep. Chris Van Hollen, a top party strategist and the ranking member on the House Budget Committee, told the Washington Post (regarding the upcoming budget talks)

"We’re going to be focused on stepping up our investment in infrastructure, on replacing the job killing sequester, and on extending unemployment compensation. If we don’t address that issue, more than a million Americans who are still looking for work will have no means of supporting their families."

Senate budget chair Patty Murray continues to insist new revenue through the closing of loopholes must be part of the talks. But the GOP has been steadfastly against any new revenues, and only wants more cuts.

When asked if there is any scenario under which Democrats would accept a deal without new revenues, Van Hollen said: “We’ve not heard any reason why we shouldn’t be closing these tax breaks. The burden is on Republicans to show why they want to preserve them.”

Study on Social Security Disability Insurance (SSDI) 2013


This post was excepted from a brief prepared for the Urban Institute. The study was funded by a grant from the Ford Foundation. It was researched by Melissa Favreault and Karen Smith under contract to the Social Security Administration. For more detailed information, charts, sources, sub-notes, acknowledgments and other credits read the full 12-page report here (PDF). This post was edited with excerpts from the Social Security Administration's website. Henceforth, "DI" means disability insurance, as in SSDI (Social Security Disability Insurance) and not SSI (Supplemental Security Income). SSDI is paid for from payroll taxes, whereas, SSI is paid for from the general fund.

Thursday, November 14, 2013

The Great Tax Reform Charade (Expect More Loopholes)

It took two years of brutal bipartisan bickering to pass a new 2,000-page healthcare law, and that was when the Democrats were in control of the White House, the Senate and the House of Representatives.

Also, Congress plans on working less next year than they did this year (only 126 days). This enables John Boehner to deliberately run out the clock on passing a 1,300 page immigration bill.

So you can imagine how impossible it would be for our esteemed members of Congress to reform a 75,000-page tax code within a few short weeks to meet a budget deal deadline. News Flash: It ain't gonna happen!

The reason the tax code is so long and complicated is because, we've had decades of wrangling done by expensive tax attorneys, lobbyists and CEOs on behalf of the top 0.01% and major corporations. Half of all wage earners in the U.S. take home $27,519 a year or LESS a year; and most could probably manage filing their income taxes by using a 1-page 1040EZ form --- whereas, Mitt Romney's tax returns are 500-pages long. (nobody lobbies for low-wage earners).

But when it comes to the upcoming budget negotiations, you can forget-about-it --- there will be no tax reform --- and on that you can bet the farm bill. It's all a public charade for public consumption.

Wednesday, November 13, 2013

Wikileaks Releases Obama's Secret Plan for Trade Agreement

Via Popular Resistance: Recently Wikileaks offered a reward for the text of the secret Trans-Pacific Partnership (TPP). A people's hero must have stepped forward because today Wikileaks released the full text of the chapter on Intellectual Property Rights. Click here to see their report.

A new study from the Center for Economic and Policy Research (CEPR) shows that the vast majority of U.S. workers would see wage losses as a result of the pending "free trade agreement" called the Trans-Pacific Partnership (TPP)

When the Age of Economic Anxiety Began

* Editor's Note: I could simply say that the era of economic anxiety began when American workers first lost their edge --- which was over 40 years ago as our elected politicians (in both major political parties) kowtowed to major corporations while also using their public office to enrich themselves --- but that would be much too simple. So make a pot of coffee, read this (and be sure to read through all the links), and then you can draw your own conclusions.

The Great Healthcare Insurance Scam

From the Center for Public Integrity: Separating myth from reality on Obamacare --- News media scare stories and website glitches hide savings for those who look at insurance alternatives.

Insurance companies are sending those letters primarily because the policies that they will no longer offer won’t provide enough coverage --- or have deductibles that are too high --- to comply with the Affordable Care Act. In many cases, however, the policyholders getting those letters are simply victims of a business practice insurers have engaged in for years: discontinuing policies because they’re no longer sufficiently profitable.

How the Rich Abandoned the Us

A group of wealthy "takers" are giving up on the country that made it possible for them to build their huge fortunes. As they accumulate more and more wealth, the very rich have less need for society. At the same time, they’ve convinced themselves that they made it on their own, and that contributing to societal needs (such as Social Security) is unfair to them. There is ample evidence of their greedy treason (And for the most part, the Republicans have been their favorite enablers). From "Five ways the super rich are betraying America" (Salon, November 5, 2013)

The Push to Expand, Not Cut, Social Security

When members of Congress voted to end the Tea Party-led government shutdown last month, they imposed a December 13th deadline on themselves to reach a long-term budget deal. As that deadline approaches, media chatter about the budget is bound to get louder. So what will the "talking heads" be discussing?

Well, the conventional wisdom in D.C. is that current budget negotiations are all but guaranteed to cut Social Security and/or Medicare benefits --- but there are those who have been shifting the conversation to expand Social Security, not cut it. In the past week alone, we've seen articles in the New Republic, BuzzFeed Politics and the Washington Post, all with the same message:

The push to expand (not cut) Social Security is gaining steam!

On Nov. 6th, the Census Bureau published data based on the supplementary poverty measure for 2012. It shows a poverty rate of 16 percent, one percentage point higher than the official measure. The supplemental report also shows what the impact on poverty is from various government programs. Thus, we've learned that if the Social Security program did not exist, the poverty rate would be 24.4 percent --- 8.4 percentage points higher than it is now.

The simple truth is, we're already facing a crisis. According to one report, 67% of today's seniors won't be able to maintain their standard of living in retirement. We need a solution immediately, and the most logical way to solve this problem is to improve on the most successful social program in American history by increasing Social Security benefits — not cutting them.

Senators Tom Harkin and Sherrod Brown have co-sponsored a bill (S.567) the Strengthening Social Security Act (which includes phasing out the earnings cap on contributions so that the super-rich pay the same percentage of their income as everybody else).

This position has been gaining a lot of traction in the media, but to make this a reality for the 99%, we need to understand the threats that we're facing from the top 1% and their GOP allies --- and what we can do about it.

The House Budget Committee is chaired by Rep. Paul Ryan (R-Wis.) and the Senate Budget Committee is chaired by Senator Patty Murray (D-Wash.), and they are meeting again this week to find ways to cut spending, but without raising taxes. It would be win-win for the GOP and the top 1%, but and a lose-lose for the Democrats and the 99% (those who will at some time in their lives rely on Social Security and Medicare).

Imagine this scenario: one or two not-so-great Democrats on the committee will see an opportunity to make themselves look "serious" about a "budget crisis" (that's already been in decline).

We've been hearing a lot about the debt and deficits—ever since the Democrats were in control of the government. But government spending is down and we have less federal workers than since 1966. And government spending is down faster than since WWII.

But still, maybe one or two not-so-great Democrats will start to talk about a possible "compromise" with Paul Ryan to "fix" entitlements. If so, then we've got big problems, because essentially, one or two supposed "centrist" Senate Democrats could force the whole caucus into the deep end of the pool with Paul Ryan --- where even "winning" the argument over how much to cut Medicare would be a losing proposition for the 99% (Sign a petition against these cuts).

Also, our elderly Social Security retirees (and those with disabilities), as well as our Veterans are also having their benefits threatened with chained-CPI on their cost-of-living adjustments (COLAs) --- which is currently being proposed by both Republicans and a few not-so-great Democrats (and which even President Obama has considered). Plainly stated, this would be nothing nothing more than a cut to earned benefits (See the full post here for full details).

On top of that, the GOP has been advocating for raising the retirement age and means-testing Social Security benefits (but not their congressional salaries).

So remember: Expand Social Security, not cut it!

* Click on the info-graphic below to see the full image.

Expand Social Security

Tuesday, November 12, 2013

Many People don't Realize they're Poor

Wealth inequality in the U.S. is very real, but yet 9 out of 10 Americans would be shocked to learn just by how much. And not only don't they realize how much the top 0.01% rakes in, a great many don't even realize how poor they are either (having misperceptions about their own class status as well.)

From Bruce Bartlett at the New York Times:

On Nov. 6, the Census Bureau published data based on the supplementary poverty measure for 2012. It shows a poverty rate of 16 percent, one percentage point higher than the official measure. The supplemental report also shows what the impact on poverty is of various government programs and personal expenses.

Thus [in the table below], we see that if the Social Security program did not exist, the poverty rate would be 24.4 percent, 8.4 percentage points higher than the 16 percent supplemental rate. In other words, Social Security reduces the poverty rate by about a third. Items below 16 percent add to the poverty rate. (Continued below)

Supplemental Poverty Rate

On Sept. 10, 2013, a NBC News/Wall Street Journal poll found that when people were asked about their economic circumstances, only 12 percent of people classified themselves as poor, with 28 percent putting themselves in the working class, 42 percent in the middle class, 16 percent in the upper middle class and 1 percent calling themselves well-to-do.

On Nov. 30, 2012, a USA Today/Gallup poll asked about social class found that 10 percent of people defined themselves as lower class, with 31 percent in the working class, 42 percent in the middle class, 13 percent in the upper middle class and 2 percent in the upper class.

Gallup has been asking the same question for some years and the percentage of people in the lower class has trended up. In 2000, only 3 percent placed themselves in the lower class. At the same time, the percentage of people putting themselves in the middle class has fallen from 48 percent. The other classes are about the same.

According the Social Security Administration, almost a third of all wage earners in the U.S. had a net income of only $15,000 a year or LESS --- And 50% earned less than or equal to $27,519 last year. But yet, only 12% of working Americans classified themselves as poor; and 42% believed that they were in the middle class. And most people HAVE NO CLUE AT ALL as to how wealth is really distributed in the U.S.

And many rich people don’t really think they’re rich. In a survey, the vast majority of investors with $1 million in assets don’t consider themselves wealthy. (Read: 10 Most Obscene Lifestyles Choices of America's 1% Elite and Five ways the super rich are betraying America).

Watch the dramatic video below to see the vast wealth divide between rich and poor. It's no wonder most people aren't storming the ramparts...too many people still don't realize. But if they don't soon learn, and take to the streets in protest, they may end up sleeping on them instead.

Inequality, Mayor Bloomberg, SAC Capital & Tax Havens

Quote of the Week: “We will bring an end to inequality in this city.” --- Bill de Blasio, New York mayor-elect, addresses the troops in a war on inequality ( November 6, 2013)

Analysts with the Harvard School of Public Health just published the latest research that links depression to income distribution. Residing in a state “with higher income inequality,” the researchers behind the new study find, “increases the risk for the development of depression among women.” Their research controlled for a wide range of other possible explanations, including prior family history of depression. Women in unequal states — like New York — turned out to be nearly twice as likely to experience depression as those in Utah, Alaska, and other much more equal states.

The American middle class is shrinking. According to a report released earlier this year, an estimated 51% of the population was in the middle class at the start of the decade, down from 61% 40 years earlier. Working off Census Bureau 2012 income data, 24/7 Wall St. has calculated America's ten most unequal metro areas. The NYC metropolitan area ranked #5 on the list:

New York-Northern New Jersey-Long Island, N.Y.-N.J.-Penn. (Median income: $63,982 -- Poverty rate: 14.8%) More than 19 million people reside in the New York metro area. The area is also home to many of the nation's wealthiest individuals, living in and around the city. Last year, over 11% of household incomes exceeded $200,000, nearly double the national rate. However, the lower 60% of households by income accounted for less than a quarter of the area's annual total, and together earned less than the top 5% of households. Even within New York City, there were large disparities. While the poverty rate in Manhattan was roughly 18% last year, 31% of all residents in the Bronx lived below the poverty line. The Bronx's median household income was $32,460, while in Manhattan, it was more than $67,000.

The latest Social Security figures, released last month, show annual wages for the typical American worker down $980 in 2012 from five years earlier. David Cay Johnston, the nation’s top analyst of Social Security's wage data, last week placed that total in a paycheck perspective: "Median wage falls to lowest level since 1998."

By contrast, the ranks of Americans making over $5 million a year grew 27 percent in 2012. The actual compensation this cohort collected soared 40 percent over what the $5 million-plus crowd pocketed in 2011.

According to a report by University of California economist Emmanuel Saez, taxpayers in America’s most affluent 0.01 percent grabbed 993 times more income in 2012 than taxpayers in America’s bottom 90 percent averaged. (In 1975, the top 0.01 percent only averaged 114 times the income of America’s bottom 90 percent.)

Do these numbers tell us everything? Not quite. The dramatic IRS figures on high incomes only count what America’s rich want the government to count. They don’t count all the income the wealthy harvest from secret tax havens overseas. But we’re slowly getting a better idea, thanks in part to a federal amnesty program for tax evaders.

Affluent tax evaders can currently avoid criminal prosecution if they pay up all their taxes overdue on their secret income, plus interest and penalties. With this amnesty program in effect, the Wall Street Journal reports, IRS officials are now seeing “a new rush by U.S. taxpayers to confess secret offshore accounts.”

What’s driving this rush? To a surprising degree, Swiss banks. Four years ago, the long-standing Swiss bank secrecy wall started cracking when officials at the Swiss banking giant UBS found themselves forced to admit they’d been helping Americans conceal assets. UBS had to pay out $780 million in penalties.

Other Swiss banks, eager to avoid a similar fate, are now pushing their secret American depositors to end the error of their tax-evading ways, and this banker pressure is apparently having an impact.

Just one New York attorney, Bryan Skarlatos, has already handled over a thousand confessions. Skarlatos used to receive just a couple confession calls a week. How he’s getting two to three a day. Many of the wealthy Skarlatos takes to the IRS have over $10 million in their secret stashes, a few over $100 million (Mitt Romney has that much in an IRA account).

As of last year, 38,000 U.S. taxpayers had revealed undeclared offshore assets. The declarations from these tax evaders, the IRS reports, figure to bring in $10.5 billion. But this total doesn't cover the recent "confession surge".

The Levin-Whitehouse-Begich-Shaheen Stop Tax Haven Abuse Act, S. 1533) would do several things, including, but not limited to:

  • Stop offshore tax abuse by allowing Treasury to take steps against foreign jurisdictions or financial institutions that impede U.S. tax enforcement.
  • Shift to the U.S. taxpayer, who takes advantage of loopholes, the burden of proving: who controls an offshore entity when money sent to or received from offshore is taxable income.
  • Stop companies incorporated offshore but managed and controlled from the United States from claiming foreign status and avoiding U.S. taxes on their foreign income.
  • Establish a penalty on corporate insiders who hide offshore holdings.
  • Require anti-money laundering programs for private funds.
  • Eliminate incentives for offshoring jobs and operations by deferring corporate tax deductions for expenses related to deferred income.

Meanwhile, back in NYC --- the U.S. Justice Department has just shut down a major NYC hedge fund. In a settlement announced last week, SAC Capital has pled guilty to insider trading and will shell out $1.8 billion in penalties. The settlement bans SAC Capital from managing money for outside investors. From now on, the fund will essentially manage only the $7 billion personal fortune of Steven Cohen, SAC Capital's owner and top exec. He will likely enjoy his fortune in peace. Prosecutors may still file criminal charges against him, but they've ruled out a long-jail-time racketeering case. The guilty plea from SAC they've extracted instead, complains New Yorker analyst John Cassidy, perpetuates the myth that "corporate abstractions rather than flesh-and-blood humans are responsible for financial wrongdoing.”

Mayor Bloomberg's Chat Rooms --- from Wall Street On Parade:

The Mayor of New York City, Michael Bloomberg, has functioned as public servant to the people of the boroughs of Manhattan for the past 12 years. Magically, while ostensibly dedicating himself to public service over this period, the Mayor’s net worth has skyrocketed from $3 billion to $31 billion according to Forbes.

Now we are learning that part of the Mayor’s business empire at Bloomberg LP was facilitating highly secure chat rooms for Wall Street traders, where the company vetted each trader before they could gain access, effectively keeping away the snooping eyes of the Feds.Wall Street traders had so much confidence in the security of these chat rooms that they turned them into market rigging mechanisms, openly engaging in collusion in their discussions, offering quid pro quo bribes, and turning the Libor interest rate benchmark and potentially foreign exchange and oil markets into a financial cesspool.

Wall Street On Parade first reported on the use of the Bloomberg chat room to facilitate crime on December 20 of last year. It’s almost a year later and the Justice Department has not shut down the chat rooms. This weekend, the Wall Street Journal reported that some of the largest Wall Street firms are now mulling over whether to bar their traders from using these chat rooms. After almost a year of prosecutors releasing chat room transcripts showing a level of corruption that would make the Mafia blush, Wall Street is still mulling things over.

The public, unfortunately, is too busy attempting to deal with the scorched earth economic landscape that Wall Street left in the wake of its 2008 collapse to pay close attention to the intricacies of the new round of insider shenanigans.

Here’s a quick lesson in the meaning of the term “distribution phase.” That’s when the stock market gets so frothy that rational minds become lemmings, companies like Twitter, without profits, go public and pop 73 percent on their first day of trading, and folks who lost their shirts in the dot.com bust of 2000 are now taking the proceeds of their maturing, insured certificates of deposit and seeking instant riches in the stock market. As this chart from Insider Monitor shows, over the past month a lot of big name insiders are heading in the other direction, to the tune of hundreds of millions of dollars.

Frothy markets, rigged markets and highly-leveraged derivatives-led markets can extend their upward trajectory for far longer than common sense would dictate. But that doesn’t make them any less dangerous.

And some Democrats are even joining the GOP in relaxing the rules for derivatives (credit default swaps) in the Dodd-Frank bill --- are these people crazy, or are they just bought and paid for? Read Alan Blinder's "After the Music Stopped" -- Insight on the economic collapse.

Monday, November 11, 2013

No Job Openings? Tough, No Food Stamps Either!

The GOP prefers corporate welfare (such as oil and farm subsidies) to human welfare (such as food stamps and Medicaid).

NYTimes: During the great recession, the Supplemental Nutritional Assistance Program providing food stamps began to play a more significant role in the social safety net, largely because cash assistance rules became so much more stringent in 1996, imposing strict time limits and work requirements.

Work requirements can’t be enforced when people can’t find work. Recent econometric analysis suggests that at least two-thirds of the growth in food stamps between 2007 and 2011 was the direct result of changes in local unemployment rates. Much of the remaining growth reflected loosened restrictions aimed to help families cope with increased economic stress.

Now, that policy is being reversed. SNAP benefits have recently been cut, and congressional Republicans are trying hard to impose work requirements so strict that they would exclude applicants who are doing their best to find a job, along with the imaginary multitudes of slacker surfer dudes.

The GOP would end SNAP benefits (food stamps) after three months (and keep benefits shut off for nearly three years) for 18- to 50-year-old able-bodied individuals in high-unemployment areas who aren’t raising minor children and aren’t employed or participating in a work or training program for at least 20 hours a week.

NYTimes: The working-age population has continued to grow, meaning that if the economy were healthy there should be more jobs today than there were before the recession...There are now 11.3 million people looking for work who cannot find it. The tally of those who are underemployed — that is, adding in those workers who are part time but want to be employed full time, and workers who want to work but are not looking [discouraged workers] — brings the total up to 21.7 million.

But some estimates say as many as 35 million may be unemployed who want to work, regardless of whether they tell a census household surveyor that they're "not looking for work", because after a year or more, people give up looking for non-existent jobs.

We still have negative job growth --- 7.8 million jobs created vs 8.7 million jobs lost since the Great Recession --- and according to the NCES, the U.S. also had approximately 18 million high school graduates from 2008 to 2013 (minus about 1 million older workers who were forced into an early Social Security retirement with reduced benefits and another 1 million net recipients on disability from December 2008 to December 2012.

The Labor Department began calculating the U-7 rate in 1976, but discontinued using it in 1994 in favor of the current U-6 rate (that includes "discouraged workers"). During the 1982 recession the U-7 rate reached 15.3%, its highest level as of October 2009 when the officially reported unemployment rate had peaked at an adjusted 10% --- meaning, the U-7 rate at that time was the highest since the last year of the Great Depression in 1941. But PBS reports that now in 2013, the U-7 rate is even higher at 16.2%.

The number of Americans who are not counted in any measure of the unemployment rate (and who currently want a job) is 6,291,000 (Source: Bureau of Labor Statistics and check "persons who currently want a job"). In actuality, there are more people unemployed today than there were in October 2009 --- they're just not being counted.

There are a lot more people out of work (that want a job) that the government and the media hasn't been reporting. But informed members of the GOP must know this, but still they want to cut food stamps for people that they know have very little chance of ever finding a job in this brutal job market.

And on top of that, the GOP also wants to cut benefits for the elderly and our Veterans by using chained-CPI --- and since we all end up being "elderly", the GOP wants to cut everyone's Social Security retirement pay --- rather than taxing the rich their fair share. (The Democrats could have changed the tax code in 2009-10, but they did nothing.)

Bill Maher: New Rule for Christians

http://2.bp.blogspot.com/-Si4em2u744o/Tdt92FXHtBI/AAAAAAAAAV8/n5U2_ccuyzU/s1600/bill-m.jpg When Did Christian Values Change From Love Thy Neighbor to Fuck off and Die?

Bill Maher (video below) delivered a great New Rule blasting conservatives who call themselves Christians, and yet show themselves to be little more than selfish assholes:

It's OK if you don't want to feed the hungry, or heal the sick, or house the homeless. Just don't say you're doing it for their own good. Don't say you'd like to help people, but your hands are tied because if you did, it would cause a culture of dependency, or go against the Bible, or worst of all, rob them of their freedom...to be sick and hungry.

Just admit you're selfish, and based on how little your beliefs mirror the actual teachings of Jesus, you might as well claim to worship Despicable Me.

Now I bring this up, because last week new food stamp cuts went into effect, and Congressman Steve Fincher, a Republican from Dogpatch, justified the cuts by quoting the Bible — "The one who does not work shall not eat." And it reminded me that I keep seeing stories in the news about Christians stiffing servers in restaurants. Like the Applebee's waitress in Missouri who got this note from a church pastor.

Written on the check, it said, "I give God 10%. Why do you get 18?"

Prompting the question, "Who ordered the piping hot asshole?" (audience applause)

Is this what Jesus would do? I doubt it. I think what Jesus would do is move the hell out of that part of Missouri. And if you're a waiter or waitress in the Bible Belt, you may very well have seen one of these...

It's a phony $10 dollar bill that Christians sometimes leave on the table in lieu of an actual tip. It looks like a $10, so you get the benefit of giving poor people hope, and then crushing it, but on the back it says, "Some things are better than money ... like your eternal salvation that was bought and paid for by Jesus going to the cross."

Yeah, well, Jesus didn't have to put gas in the donkey. (audience applause)

I don't know what the snake-handlers have against the food-handlers, or when restaurant receipts became the new bully pulpit, but there was another story recently, this one from Kansas, where instead of a tip, a Christian family left their server, who they knew was gay, this note:

"Thank you for your service, it was excellent. That being said, we cannot in good conscience tip you, for your homosexual lifestyle is an affront to GOD. Queers do not share in the wealth of GOD, and you will not share in ours."

(stunned audience reaction)

Note they repeat the phrase "not share", to really drive home that they've absorbed the message of Jesus. (audience laughter)

OK, first off, just because you're eating out, doesn't give you the right to tell your server who they should be eating out. (wild audience laughter and applause)

And beyond that, someone needs to tell these people that not tipping a gay waiter will not make him want to put his penis in a woman. It'll make him want to put his penis in your pasta primavera. (wild audience laughter and applause)

Now, I am sure there are millions of Christians who try to actually follow Jesus, but you gotta admit, conservatives always seem to have a reason why they would love to give, but they just can't...

'We would love to help the unemployed, but it would discourage working. I believe in charity, just not for people who need it. Of course we'd like it if everyone could see a doctor, we're not monsters, but if the government does it, it will destroy our way of life. Plus, the website is glitchy, which leads to Stalinism. Oh sure, we'd like to help people who are starving, but what if they use the strength from not starving to take drugs?'

Yes, there's always a good moral Christian reason to tell everyone you meet to fuck off and die. (audience laughter and applause)

Fair enough. But if you're a waiter, and you ever get one of those fake $10 dollar bills, do me a favor, and the next time you're in church, drop it in the collection box. (audience laughter and applause)

Related:

When the corporate shill Stephen Moore (a regular on both Fox News and CNN) makes his usual false claim about corporate taxes, Senator Bernie Sanders and Bill Maher calls him out on his big lie as Jon Huntsman's daughter helplessly looks on.

Also, see Bill Maher at YouTube: "30% of this country will always vote Republican. I'm just asking...why?"

The Democrats War on the Poor

It was the Democrats and Obama who cut Food Stamps first, not the Republicans.

They say one thing, then do another. I've learned that I can almost NEVER believe what a Republican (or Fox News) tells me --- I expect them all to lie. But it's very disheartening whenever a Democrat lies.

And even though it's been shown that Republicans lie more than Democrats, it doesn't make make me feel any better if the Democrats lie less...especially when it comes to programs that hurt the most vulnerable.

According to the Washington Post, in 2010 the Democrats passed a bill to provide funding for states to reimburse them for Medicaid and teacher's pay --- and to pay for this, it was the Democrats who agreed to end the temporary boost to SNAP earlier than was originally planned.

And then later, to also pay for a child nutrition re-authorization bill that was championed by the first lady, the Democrats had also agreed to end the temporary boost to SNAP even earlier still.

So that year in the House, Rep. George Miller (D-Calif.) came up with the bill that passed through committee. And on the Senate side, they were going to make a bipartisan compromise and pay for it by cutting aid to SNAP and aid to cattlemen.

But then the Republicans said, "The cattlemen aid can't be cut!"

So Senator Blanche Lincoln (D-Ark.), literally days after assuring advocates at a national conference she wouldn't cut food stamps, had went and cut food stamps.

So the Senate cut $1.4 billion from SNAP by ending the temporary boost to SNAP much, much earlier than was originally planned.

Rep. Jim McGovern (D-Mass.) and the Congressional Black Caucus had objected and extracted a promise that Obama would fix this later --- but he never did. The Democrats lied, and the boost to SNAP died.

Margarette Purvis, the president and CEO of the Food Bank for New York City (the largest food bank in the country) remarked about the recent cut in food stamps:

We were all told that these cuts for November 1st would not happen. When they decided they were going to take from some of the increases to food stamps to fund First Lady Michelle Obama's program, we were told by the president that these cuts will not happen. Well guess what? No one has restored that money.

And many Democrats in Congress and Obama are also considering cutting Social Security and Veterans benefits by using chained-CPI to calculate cost-of-living-adjustments. Any cut to Social Security would heavily impact the 40% of veterans who rely on the Social Security benefits they earned. But the chained CPI would not only cut Social Security benefits—it would also cut Veterans Disability Compensation, Military Retirement Pay and Veterans Pension.

We need a 3rd political party. In 2009 and 2010, the Democrats could have done much more than just passing Obamacare and the Dodd-Frank bill. They could have reformed the tax code and did a host of other things. The Democrats and Republicans are exactly the same in many ways when it comes to maintaining their power and status quo. And they ALL lie.

Now the Democrats want more of the same with Hilary Clinton...another political dynasty. Will she eliminate all the corporate tax loopholes, eliminate all the corporate tax subsidies and eliminate all the corporate corruption? Or will she be another crony capitalist like her husband on Obama?

Usually it feels as though elections are an exercise in futility. We live in a mirage democracy, one in which major party candidates are first vetted by the corporate machine before they can get on the ballot --- whereas third party candidates, who represent the values of real grassroots movements, are always undercut by actions in which the major parties collude against them.

We can't rely on either party to defend our interests --- those of the middle-class and poor. The only difference is, one party happens to be worse than the other and lies more.

Veterans Face a New Threat

Proposed cuts to Social Security beneficiaries will also affect those who receive veterans' disability benefits, Veterans pensions and military retirement pay, by using chained-CPI (rather than CPI-E) to calculate annual cost-of-living adjustments (COLAS).

Are the Rich Born Selfish and Greedy?

Or were they just raised to be that way by their parents?

(Editor's Note: This is a prologue to "Veterans Face a New Threat")

It is said that war is 99 percent boredom and 1 percent sheer terror --- but mostly for those in the bottom 99% (those who actually participate in wars), and not usually for those in the top 1% (those who are well-connected and get deferments --- although, there are many who patriotically volunteered to serve their country).

But when it comes to daily life, rarely are the ultra-rich ever bored, nor do they usually ever feel sheer terror, because they are isolated from poverty and entertained and protected by all their wealth. The poor, on the other hand, constantly worry --- sometimes living in sheer terror on a daily basis.

Sunday, November 10, 2013

How Economic Research can be Crap

According to three researchers at VOX, extended unemployment benefits "encourages job seekers to prolong their search."

Mark Thoma, Professor of Economics (University of Oregon) responded, "One thing that seems to be missing here is that one benefit of unemployment insurance is that it allows workers to find better matches for their skills."

And I would also add, "Yes, in a NORMAL downturn in a business cycle, both statements may be true to some extent (depending on an individual's personal circumstances), but the Great Recession was anything but NORMAL."

There is this report from the San Francisco Federal Reserve that concludes:

Although economists have shown that extended availability of UI benefits will increase unemployment duration, the effect in the latest downturn appears quite small compared with other determinants of the unemployment rate. Our analyses suggest that extended UI benefits account for about 0.4 percentage point of the nearly 6 percentage point increase in the national unemployment rate over the past few years. It is not surprising that the disincentive effects of UI would loom small in the midst of the most severe labor market downturn since the Great Depression.

But the authors at VOX research continue to argue, "Some observers argue that US unemployment would have returned much faster to normal levels if the US had not expanded the duration of benefit payments from 26 to 99 weeks."

But how can that be? Using the broader measurement of unemployment (the U-6 or the revised U-7 rate) there is 1 job opening for every 6 unemployed --- and it's been that way for years --- so the math doesn't add up. Using the multiplier effect, how many working people does it take to employ one unemployed person? If 6 "slackers" took 6 non-existent jobs, would that create 1 more job?

The authors of this research also says, "Additional costs arise because more generous benefits induce job losers to stay longer on unemployment insurance benefits or enter unemployment more frequently."

I suppose one can always find anecdotal evidence to show that there is a "slacker" in every government program, but it shouldn't be used as an economic measure in research (There is probably X amount of dollars lost that can be attributed to employee theft, which might also contribute to unemployment as well...if one wanted to stretch the horizon a bit and make that point.) But to basically say, unemployed people causes unemployment (cause and correlation) sounds like nonsense to me, and sounds more like ideological tripe than anything else.

Besides myself, I know of many others who have exhausted all their unemployment benefits 3 years ago without every finding another job again. Those who were laid off early on when the mass layoffs occurred (from late 2008 through early 2009) stayed unemployed for months on end as the layoffs had continued --- when no one was hiring at all. They had already became classified as "long-term unemployed" even before net job creation first began in June of 2009. Just by being out of work (and especially if they were 50+ years old) only contributed to their jobless status --- not because they weren't looking for work, but because no employer would to hire them. (That's a fact, not speculation by researchers.)

Also, most people are on a strict budget, and can't meet their monthly expenses after a very short time with the reduced jobless benefits. Eventually their savings run out (if they have any savings at all) and most people already have fixed financial obligations to meet (such as auto loans, mortgages, rents, etc.). So naturally they would (at first) seek out work that would at least pay as close to as much as they had previously earned --- and only then gradually lower the bar, until such time when they become totally desperate and take any job at all. (I know, I lived through this experience.)

The authors of this research mentions search externalities --- "When generous unemployment insurance induces all other workers to search less intensively, it becomes easier for me to find a new job."

The whole idea isn't just to search for "a new job", but a job that pays enough to meet someone's current financial obligations. One can't simply abandon their car payments to find a cheaper car to drive, no more than they can abandon a mortgage or lease to live in a cheaper place. Just by BEING unemployed can disqualify someone from obtaining a new lease or auto loan. A landlord or bank manager might ask, "Can I please see your past two weeks of pay stubs?". More generous unemployment insurance benefits (during a NORMAL economic downturn) provides someone more time to find something that's more survivable given their personal circumstances.

FOR EXAMPLE: If I were working as a CEO and I got laid off, the first job I'm going to look for is NOT for one in the mail room, but as a CEO --- and if that fails, then I'll apply as a vice president, then as a regional director, then as a manager, then as an assistant manager (and so on and so on), until I exhaust all my job options (the last being, at McDonald's or Walmart --- and the last I heard, they don't need to hire 19.93 million unemployed Americans anyway.)

The researchers used Austria during the period 1988–1993 as an example for people receiving extended unemployment benefits as being unemployed longer (and causing unemployment), which is a bad example of an example because that example in no way compares to the period in the aftermath of the stock market crash in the US beginning in 2008 and lasting until March 2009 ---and here's why:

We are still negative jobs --- 7.8 million jobs created vs 8.7 million jobs lost. and according to the NCES, a research arm of the U.S. Education Department, the U.S. also had approximately 18 million high school graduates from 2008 to 2013 --- minus about 1 million American workers who took an early Social Security retirement (with reduced benefits) and another 1 million net recipients on disability (from December 2008 to December 2012).

As the researchers noted in the very last sentence of their article: "Recent studies conclude that the US benefit extension programmes of the Great Recession increased unemployment significantly, but by less than half a percentage point." (How can the word "significantly" and "less than half a percentage point" mean the same thing --- and be in the same sentence?)

As far as prolonging a job search to stay on benefits longer --- take myself for instance: Admittedly, at first, I didn't seek re-employment immediately (for about two months) after I was first laid off --- but I was an exception to the rule, and for several reasons:

  1. Mass layoffs had continued heavily in all the places where I was qualified to work (and where I would have naturally first applied) in the industry where I was just laid off (I was 53 years old then). So I had asked myself, why bother looking right now? It would be like swimming against a rip tide.
  2. I was experiencing severe back pain back then (from hard work) and I had thought at the time that two months off from work would do me good. It turned out not to be --- I later learned that I had severe degenerative arthritis in my lower back (from years of hard work).
  3. I was lucky back then because I had over a year's of monthly expenses in my savings to help me augment my unemployment benefits for a time, so I could afford NOT to immediately search for work at that time --- but, most average working people don't have that kind of savings.
  4. After the initial mass layoffs, most people (including myself and all the "experts") didn't know then what we know now --- that unemployment would end up being as deep or as prolonged as it has been for the last several years (myself, in 2008 I had thought it would be like just after 911 and after those layoffs, and employers would be calling people back to work. But we've since learned, it didn't quite happen that way.
  5. After the first two months of being unemployed (even while the layoffs continued, and as unemployment remained very high where I lived, peaking at 15%) I still looked for work. I didn't want to supplement my jobless benefits forever by using my savings indefinitely. That would have been a huge financial waste (I didn't save just to take unneeded and unwanted idle time off from work).
  6. After two long years of job searching (all through 2009 and 2010), I found that: because I was unemployed, and because I was unemployed for so long, and because I was over 50 years old, employers weren't hiring anyone like me. Then, after two long years, when the jobless benefits and my savings were finally all gone, I got evicted and lost my car (after 3 years of payments were made on a 5 year auto loan).

So you see, in my case, the plan was, to maintain my status quo (by paying my rent and car payment) until I could AT LEAST find a job (any job at all) that would at least permit me to pay my rent and car payment (I wasn't even considering utilities and food, figuring, I'd just "wing it" some how.)

Here's what extended unemployment benefits did for me...it allowed me to survive JUST LONG ENOUGH before I met someone who took me in to their spare bedroom to live, just 5 days before I was evicted. Essentially, extended unemployment benefits saved my life because, before I met this person, I had already carefully planned my suicide.

So all this talk about optimal levels, sufficient statistics, direct costs, well-identified measures, insurance generosity, theoretical analysis, micro studies and search externalities is just a load of crap...especially when you're talking about someone's life.

And finally, I don't even know why those researchers took the time to include the US in their "study" because by the end of the year, federal extended unemployment benefits are coming to an end anyway.

* I wrote on this same topic 2 years ago and earlier this year --- but some people want to keep beating this same old tired drum. Unemployment insurance benefits do not cause unemployment; just like disability benefits does not cause someone to become disabled; just like having health insurance does not cause someone to become sick.

Two-Income Households Earning Median Wages...

...is not enough, and is not a middle-class income.

We hear a lot about "household incomes", but by comparing the nominal values and real values chained in 2013 dollars, we see a very ugly picture. (See the complete post with charts.) Recently the Census Bureau reported that median household income* fell for the fifth straight year in 2012 to $51,017 -- and after being adjusted for inflation, was the lowest annual income since 1995.

* Median household income is the total combined income of all people living in one household -- with median meaning, half of all households in the U.S. earned less and the other half earned more. Using median is a more representative measurement for describing incomes rather than using averages.

A "household income" might include 10 people working part-time minimum-wage jobs and all living under one roof ---- while only one person (who is a multi-millionaire, and whose only income comes from capital gains) might live in another "household". A household income could also include a combination of wages and income from a Social Security benefit (or pension, disability, unemployment benefits, etc). So the median household income between the two aforementioned households won't tell you very much. That's why you have to first consider median wages before you should consider household incomes.