Secretary LaHood Visits NH

As you may know, Transportation Secretary Ray LaHood was in New Hampshire today attempting to defend the stimulus to a state growing more and more skeptical of its impact.

STEWARD put out the following release, lampooning the visit and laying out the real facts:

In the spirit of Halloween, Secretary Ray LaHood and local Democrats gathered today to “dress up” the stimulus package as a New Hampshire success story. It’s not. And for the 53,330 out-of-work Granite Staters, the disguise is more “trick” than “treat.”

With the Democrats talking about the stimulus today, it’s important to recap some key numbers:

· The White House promised 16,000 New Hampshire jobs when it announced the stimulus package back in February. The Administration also said that more than 90% of “American Recovery and Reinvestment Act” (ARRA) positions would be in the private-sector. (The White House, “American Recovery and Reinvestment Act: State-by-state jobs impact,” 2/13/09)

· Last week, the state’s Office of Economic Stimulus disclosed that at least 2,786 of the 3,007 Granite State jobs – or almost 93% – created or “retained” by ARRA were firmly public-sector. (State of New Hampshire, American Recovery and Reinvestment Act Progress Report – Data through September 30, 2009, Office of Economic Stimulus, 10/20/09)

· Although the Obama Administration and local Democrats may point to the Manchester Airport Access Road as a stimulus success, the state’s overall numbers tell a different story. According to the state’s stimulus progress report, a mere 116 ARRA-driven jobs have been in Highway Infrastructure Investment – and winter is nearly upon us. It’s a figure so under-whelming that even Congresswoman Carol Shea-Porter recently acknowledged that the program hasn’t delivered on what Democrats promised.

· In September 2008, New Hampshire’s unemployment rate stood at 3.9%. When the stimulus passed in February, it was 5.7%. Unemployment in the state hit 7.2% in September. (U.S. Department of Labor, Bureau of Labor Statistics)

· 53,330 Granite State residents were unemployed last month. That’s 24,540 more than last year at the same time. (New Hampshire Employment Security, Unemployment Rates, 10/12/09)

· The state has approved more than $407 million in ARRA-backed projects. That figure divided by the 3,007 jobs created or “retained” works out to roughly $135,350 per position.

These numbers are delivering this year’s real Halloween fright. Unfortunately, it seems as though our grandchildren will be taking their children “trick or treating” before the $787 billion stimulus tab is paid.

Stimulus Job Numbers Inflated - Big Time

A closer look at the White House's stimulus job numbers shows that the administration padded the actual number of jobs saved or created by up $5,000 positions. The Associated Press reports:

The AP review found some counts were more than 10 times as high as the actual number of jobs; some jobs credited to the stimulus program were counted two and sometimes more than four times; and other jobs were credited to stimulus spending when none was produced.

For example:

_ A company working with the Federal Communications Commission reported that stimulus money paid for 4,231 jobs, when about 1,000 were produced.

_ A Georgia community college reported creating 280 jobs with recovery money, but none was created from stimulus spending.

_ A Florida child care center said its stimulus money saved 129 jobs but used the money on raises for existing employees.

There's no evidence the White House sought to inflate job numbers in the report. But administration officials seized on the 30,000 figure as evidence that the stimulus program was on its way toward fulfilling the president's promise of creating or saving 3.5 million jobs by the end of next year.

The reporting problem could be magnified Friday when a much larger round of reports is expected to show hundreds of thousands of jobs repairing public housing, building schools, repaving highways and keeping teachers on local payrolls.

Coverage of the Spending Summit

From the Union Leader:

The spending summit, attended by about 100, came just a week after a two-day discussion of state tax policy that the House Ways and Means Committee held. Republicans said taxes are only half the discussion, and that spending has to be talked about too.

Timing for state spending controls is off a bit, since a new two-year budget just took effect in July. But speakers yesterday said this is actually the ideal time to start examining what state government should be expected to provide, and how to best organize and pay for it.

Arlinghaus warned that Republicans and Democrats have to work together on the difficult task of reshaping budget priorities.

"If all you want to do is snipe at the other side, you're not going to get anything done," he said. Arlinghaus cautioned that it may take more than one election to turn the ship of state spending "It's a big problem and you can't fix it if the election is first and foremost in your mind," he said. "It's going to take a long time to fix this." ...

Over the past 20 years, spending of state revenues has increased by an average of 9 percent for every biennium Budget increases vary from a 30 percent jump in 1994-95 to a 1.9 percent decline in 1996-97, according to data from the New Hampshire Center for Public Policy Studies.

Lieberman Connects

Sen. Joe Lieberman (ID-CT) has connected with the concerns of the majority of Americans by saying he will oppose the President's government option health plan because Washington is simply doing and spending too much. This is an excerpt from a Wall Street Journal editorial:

The health-care debate isn't over, notwithstanding the White House-Nancy Pelosi attempt to make it seem inevitable. Majority Leader Harry Reid had barely announced his plan to include a public insurance option when Connecticut Independent Joe Lieberman declared yesterday that he'd join a filibuster against such a Senate bill.

"We're trying to do too much at once," Mr. Lieberman said. "To put this government-created insurance company on top of everything else is just asking for trouble for the taxpayers, for the premium payers and for the national debt. I don't think we need it now."

Bravo, Joe. It's a relief to see at least someone standing up to the Washington rush to rearrange 18% of the U.S. economy without carefully inspecting the cost and the consequences.

Mr. Lieberman added that he'd also oppose a bill that includes Mr. Reid's provision for states to "opt-out" of the public program "because it still creates a whole new government entitlement program for which taxpayers will be on the line." Exactly right again.

Are there jobs to count?

How to count and classify the jobs created by the federal stimulus remains a nagging question for policymakers and watchdog groups as the money from the package continues to roll out. But still, much of the evidence, no matter the metric, points to lower than expected returns. In the Granite State:

New Hampshire has assigned at least half of its economic stimulus money to various projects or programs, but job totals remain at just 19 percent of initial White House projections.

The equivalent of 3,007 full-time jobs was created or saved with stimulus money through September, according to a report released last week by Orville “Bud” Fitch, director of the governor’s Office of Economic Stimulus.

That’s a big increase from the last quarterly report, when 796 jobs were linked to the program through June. But it remains unclear whether New Hampshire will reach the 16,000-job benchmark touted by the White House

And nationally:

As the government implements the $787 billion stimulus program, the effect of the spending and tax cuts are proving difficult to measure.

Part of the challenge is that assessments of the impact often rely on imagining how the economy would have fared if the stimulus money were spent differently, or not at all. Debates continue today about the effects of the 2001 stimulus program that sent rebate checks to taxpayers.

Complicating matters further: Many spending projects might end up being short-term jolts that fizzle out, raising questions about their effectiveness. The $3 billion cash for clunkers program, funded partially by stimulus money, pulled consumers into auto dealerships nationwide. Auto sales soared in August, then slumped in September. Similar concerns surround the $8,000 tax credit for first-time home buyers that ends next month. ...

As stimulus money slowly is disbursed, the continued troubles in the job market are renewing the fierce political battle about the giant program's performance. If the program is stimulating the economy, why is unemployment rising?

These WSJ graphs add more fuel to the skeptics' fire.

Money Well Spent?

USA Today reports on the release of some $30 million in stimulus funds to shady defense contractors:

The Department of Defense has awarded nearly $30 million in stimulus contracts to six companies while they were under federal criminal investigation on suspicion of fraud.

The companies claimed to be small, minority-owned businesses, giving them preference in bidding for government contracts, Air Force documents allege. But government investigators found they were part of a larger minority-owned firm and not eligible for small-business contracts.

The Air Force and Army awarded the companies 112 stimulus projects, federal contract records show. It wasn't until Sept. 23 — more than a year after the investigation started — that the Air Force suspended the firms from new federal contracts.

Scott Amey of the non-partisan Project on Government Oversight said the case exposes an oversight gap under the $787 billion stimulus plan and federal contracting in general. "Was there any disclosure of the contractors' missteps prior to them receiving the stimulus money?" he asked.

Air Force Lt. Col. Ann Stefanek said the stimulus projects were awarded independently by officers at military bases who wouldn't have spotted problems unless a contractor was suspended or debarred.

Federal rules let agencies terminate contracts if it's in the government's interest. Stefanek and Army Maj. Jimmie Cummings said the companies' work has been satisfactory and neither branch plans to cancel the stimulus contracts that were awarded before the firms were suspended.

Shea-Porter Stimulus Flip-Flop

Congresswoman Shea-Porter appears to be walking back her strong support of the floundering stimulus bill. As you may recall, Shea-Porter had this to say after voting in favor of the $787 taxpayer giveaway:

After seven years of mismanagement and no oversight from the Administration, the housing market is in a crisis, the economy is struggling, and families are paying more for everything from groceries to heating oil,” said Congresswoman Shea-Porter. “I’m pleased that we came together in a bipartisan manner to pass this stimulus package. It will put money in the pockets of hard-working American families and help to restore the strength of our economy.

But now, given the stimulus' dismal performance coupled with a tough campaign ahead, local and national media outlets are picking up on Shea-Porter's reversal:

More Stimulus Job Numbers

Today's Union Leader provides another example of the government growing power of the stimulus bill. Despite a somewhat rosy headline ("State's stimulus benefit put at 3,007 jobs") the devil was in the details:

[Stimulus Czar Bud Fitch] said he favors a method that shows closer to 1,862 jobs were created or saved, based on an assumption that the jobs being counted are full-time and run for a full year. Fitch calculated that ARRA funds have paid for nearly 3.9 million hours of work since money began flowing in the spring.

So far, New Hampshire has taken in grants and contracts worth $407 million from a total of $965 million that has been authorized to date. The funds include money used in state government, aid to local school districts and nearly $20 million in a $25 weekly add-on to unemployment benefits. ...

Fitch's report shows that the bulk of jobs affected by ARRA funding are in education, with 2,041 jobs created or saved under the OMB formula.

Another 745 are in government agencies.Despite the hectic pace of road construction around the state, the formula shows only 116 jobs saved or created under stimulus funding.

At best, then, the numbers show that we are averaging $135,000 per each job saved or created, much worse if we base the math off of Fitch's more conservative estimate.

Even worse, NowHampshire.com reports:

President Barack Obama’s American Recovery and Reinvestment Act (ARRA), commonly known as the stimulus act, created or saved only 221 private sector jobs between February 17th and September 30th NowHampshire.com has learned. ...

According to a report issued on Tuesday by Orville “Bud” Fitch, Governor John Lynch’s designated “stimulus czar,” the stimulus has financed 3,872,686 hours of work in the Granite State. However, the huge majority of the “Full-Time Equivalent” jobs appended to those hours – around 93% of all stimulus jobs, in fact — are government jobs through the State Fiscal Stabilization Fund.

The Geography of Job Losses

A really interesting, and concerning, look at employment trends over the last five-plus years. Click here for the full animation.

Banks, Wall Street, & President Obama

Today's Washington Post today examines further instances of big bank executives receiving perks and bonuses funded by taxpayer bailouts:

Even as the nation's biggest financial firms were struggling and the federal government was spending hundreds of billions of dollars to save many of them, the companies as a group were boosting the perks and benefits they pay their chief executives.

The firms, accounting for more $350 billion in federal bailout funds, increased these perks and benefits 4 percent on average last year, according to an analysis of corporate disclosures filed in recent months.

Some chief executives, such as Kenneth D. Lewis of Bank of America and Jeffrey M. Peek of CIT Group, the major small-business lender now on the brink of bankruptcy, each received about $100,000 more than a year earlier for personal use of corporate jets. Others saw an increase in the value of chauffeured services, parking or personal security.

Ralph W. Babb Jr., chief executive of Dallas-based lender Comerica, was compensated for a new country club membership, with an initiation fee and dues of more than $200,000. GMAC Financial Services chief executive Alvaro de Molina benefited from a $2.5 million payment from his company to help cover his personal tax bill.

And despite consistently railing against these practices, President Obama is headed to New York tonight to get some of that money back, in the form of a check made out to the Democrat's campaign committee (emphasis ours):

At separate events in New York City, the president will raise money both for Bill Owens, a Democrat trying to win a special election in an upstate New York congressional district, and for the Democratic National Committee. The national party fundraising event alone is expected to generate between $2 million to $3 million.

Beyond a $30,400-per-couple dinner for the DNC, Obama will attend a health care rally with tickets starting at $100. His comments at that event will be pumped live via webcast to house parties around the nation, where supporters plan to call voters and ask them to lobby Congress to pass a health care reform bill.

The scale of the DNC fund-raiser has raised some eyebrows, given that executives from firms who benefited from the administration's bailout may be attending the event.

Last weekend, top administration officials criticized the size of Wall Street bonuses. Chief of Staff Rahm Emanuel told CNN that "Wall Street is back doing what Wall Street did."

The New York Times reported Tuesday that about half-dozen bankers from financial giants like Goldman Sachs, JPMorgan Chase and Citigroup that received federal money are expected to attend the fundraiser.

Former House Speaker Newt Gingrich told NBC's TODAY show on Tuesday that Obama's attendance is "one more example of the gap between his rhetoric and what happens in reality."

Ovide Lamontagne Speaks at the STEWARD Chowderfest

Former GOP Gubernatorial Nominee and attorney Ovide Lamontagne speaking at the STEWARD Chowderfest.

Kelly Ayotte Speaking at the STEWARD Chowderfest

Former Attorney General Kelly Ayotte speaking at the STEWARD Chowderfest (h/t Granite Grok).

Sean Mahoney Speaking at STEWARD Chowderfest

Businessman Sean Mahoney speaking at the STEWARD Chowderfest (h/t: Granite Grok)

Jim Bender Speaking at the STEWARD Chowderfest

Businessman Jim Bender addressing the crowd at the STEWARD Chowderfest.

STEWARD Chowderfest Tomorrow

Don't forget about the STEWARD Stop the Spending Chowderfest tomorrow. We will be inside at the Portsmouth Brewary, so any weather won't be a concern. Here is the Portsmouth Herald's write up on the event, look forward to seeing you tomorrow!

While the chowder at the Steward of Prosperity's "Stop the Spending Chowderfest" may be the traditional white recipe, there will certainly be something of the red variety.

A host of potential Republican candidates for U.S. Senate will speak at Saturday's rally, including Kelly Ayotte, Jim Bender, Ovide Lamontagne and Portsmouth's Sean Mahoney.

Former New Hampshire House Speaker Doug Scamman, of Stratham, will deliver remarks about state spending.

It is no coincidence the group chose Portsmouth to hold its event, said spokesman Jeff Grappone. The Steward of Prosperity, a group committed to holding politicians in Concord and Washington accountable to the taxpayers, wanted to make sure current House Speaker Terie Norelli, D-Portsmouth, could hear their call for lower taxes.

"With the Democrats planning a tax summit in Concord next week, the timing and location of this event — in Speaker Norelli's hometown — is not coincidental," said Grappone. "We're making sure Democrat legislative leaders know that too much spending is what's busting the budget, not too few taxes. Saturday's Chowderfest provides a timely opportunity for fiscal conservatives to send a clear message: low taxes are the result of low spending."

The Chowderfest will take place from 1 to 3 p.m. Saturday at Redhook Ale Brewery, at Pease International Tradeport.

The event is billed by Steward founder Fred Tausch as a "golden opportunity" for fiscal conservatives to gather in opposition of wasteful spending.

"As we move closer to Election Day 2010, it's critical for Republicans to continue building enthusiasm and momentum," said Tausch. "There's no better way to do so than by rallying for fiscal conservatism — and enjoying some great chowder."

Official Stimulus Data Released

After months of speculation on the effectiveness of the stimulus, today the Administration released some of the first hard data related to the $787 billion spending package. CNN reports:

So far, 30,383 jobs have been created by companies that have gotten $2.2 billion worth of stimulus contracts directly from the federal government. That equates to $71,500 per job based on just the funds that have been distributed.

These firms have been awarded a total of $16 billion.

Stimulus-fueled job creation has become a very controversial issue. The White House has faced blistering attacks by Republicans, who contend that the recovery act has failed to live up to its promise to put Americans back to work.

The Obama administration downplayed the reports released Thursday, saying they represent just a small sliver of the stimulus that's been spent, since the massive recovery act was enacted in February. The first reports detailing the number of stimulus jobs created or saved were submitted last weekend by recipients of stimulus-funded contracts, grants and loans.

New STEWARD Health Care Study Released

STEWARD has released a new study detailing the disastrous impact ObamaCare will have on New Hampshire's businesses. The Union Leader reports:

New Hampshire's business community would pay $215 million to $229 million to comply with a Democratic-sponsored health care reform bill that has advanced in the House of Representatives, a new study by two conservative economists says.

J. Scott Moody and Dr. Wendy P. Warcholik, writing for Republican activist Fred Tausch's grassroots STEWARD group, conclude that H.R. 3200 contains "hidden penalties for New Hampshire businesses" that will hurt their ability to compete for jobs in an international market.

They criticize the bill's so-called "play-or-pay" mandate and its provision to impose three new marginal brackets to the federal income tax to partially pay for health care reform.

"In the long run," say the authors, "this will discourage job creation in New Hampshire and reduce access to quality health care."

Among the study's key findings:

• The "play-or-pay" health insurance mandate would cost Granite State businesses $215 million to $229 million.
  
  
• New Hampshire businesses that file through the individual tax code would face a combined income tax rate of 47.25%
  
  
• State business owners would face a higher income tax burden than Canada, France and Italy.

Here is the full text of the study:

STEWARD Health Care Study

NH Jobs News Gets Worse

The Union Leader reports this morning:

New Hampshire's unemployment rate climbed to 7.2 percent in September and few industries escaped the undertow of dour economic trends.

The number of people out of work increased by 1,430 to 53,330, an estimated 24,540 more unemployed than in September 2008, the state reported yesterday.

The nation's unemployment rate crept to nearly 10 percent in September. The state's unemployment rate was 6.9 in August. It is now nearly double what it was a year ago at this time, according to New Hampshire Employment Security.

At the same time, Governor Lynch is dealing with the impact of the vague budget cuts imposed by the legislature a few months back:

State employees have rejected a tentative contract agreement with the state, by a vote of 2,708-1,875, opening the door for mass layoffs as early as this week.

"I am deeply disappointed the state employees union has rejected a contract that would have implemented furloughs and preserved jobs," Gov. John Lynch said in a written statement released last night.

Lynch said he will meet with department heads this morning to begin implementing plans for layoffs. Employees could be notified this week, with layoffs completed by the end of the month. …

Since the contract was voted down, the old contract will remain in effect until a new one is negotiated. Lynch will have to find another way to save the $25 million in personnel costs mandated by the Legislature.

In the meantime, the State’s unemployment compensation fund is going broke, reports the New Hampshire Business review:

The state’s unemployment compensation trust fund is going broke faster than anticipated, causing the state to borrow more, and possibly earlier, than expected from the federal government in order to continue to pay benefits to the jobless.

There is even a remote chance that unemployment-related payroll taxes on business – which are already scheduled to more than double over the next three years – might have to increase even higher.

The fund, which stood at $240 million at the beginning of last year, is projected to sink to $11 million at the end of this year. And since the fund is some $16 million lower than the last projection, “we will be lucky to be at more than zero” on Dec. 31, said Department of Employment Security Deputy Commissioner Darrell Gates.

The state had planned to borrow at least $100 million in any case from the federal government, but finishing in the black on New Year’s Eve is more than just a symbolic cause for celebration. If the state is forced to borrow before the end of the year, it has to pay interest on that loan, and pay it back a year earlier. And that, combined with some actions – or inactions – on the part of the federal government might force another tax increase.

It would appear the Governor and the Democratic majority in Concord need to start cleaning up their mess.

Democrats Preparing Second Stimulus...

...they just aren't calling it that.

USA Today reports this morning:

Confronted with big job losses and no sign the U.S. economy is ready to stand on its own, Democrats are working on a growing list of relief efforts, leaving for later how to pay for them, or whether even to bother.

Proposals include extending and perhaps expanding a popular tax credit for first-time home buyers, and creating a new credit for companies that add jobs. Taken together, the proposals look a lot like another economic stimulus package, though congressional leaders don't want to call it that.

Democratic leaders in Congress and the White House say they have no appetite for another big spending package that adds to the federal budget deficit, which hit a record $1.4 trillion for the budget year that ended last week.

But with unemployment reaching nearly 10%, many lawmakers are feeling pressure to act. Some of the proposals come from the Republicans' playbook and focus on tax cuts, even though they, too, would swell the deficit.

Interestingly, many of the proposals currently under consideration are those that could have effectively been included in the original stimulus prior to Congress and the Administration selling out to political cronies and special interests.

Reaction to CBO Health Care Score

The Congressional Budget Office recently released the newest cost estimate for the health care reform bill moving through Sen. Max Baucus’ Finance Committee. The estimated 10-year cost of $829 billion is lower than previous estimates, but that has yet to convince two of New Hampshire’s most high profile politicians.

Senator Gregg released the following statement:

The cost estimate from CBO shows that the Democratic proposal on health care that came out of the Finance Committee -- and is considered the most reasonable of the Democratic proposals -- will increase the size of the government by almost a trillion dollars.

This huge increase in government spending is allegedly paid for by cutting Medicare by approximately $500 billion dollars and raising taxes. On top of that, the cost of premiums paid for by all Americans with private insurance will increase significantly. This is extraordinarily expensive and means that resources that should be used to shore up a soon-to-be insolvent Medicare system for seniors is being diverted to create a massive new entitlement, while pushing the country down the road toward a Washington Beltway-controlled system with millions losing their private insurance.

Considering that 25 million individuals will remain uninsured under this proposal, it does not solve our health care issues but does concentrate more power in Washington over every American’s health care and how it is delivered, while radically growing the size of the federal government.

Governor Lynch made more news by what he did not do; James Pindell reports:

Gov. John Lynch is one of six Democratic governors refusing to sign a letter urging their Washington colleagues to pass meaningful health care legislation this year.

The letter, drafted and circulated by the Democratic Governors Association, avoided controversial issues like the public option and was meant to show unity and apply pressure to Democratic lawmakers in Washington.

Of the 28 Democratic governors, 22 signed the letter. Lynch did not along with Missouri's Jay Nixon, North Carolina's Bev Purdue, Arkansas's Mike Beebe, Wyoming's Dave Freudenthal, and Oklahoma's Brad Henry.

The news was first reported by the website Talking Points Memo.

Lynch spokesman Colin Manning said Lynch is concerned about costs to states under some of the proposed plans. When asked by NHPoliticalReport.com whether Lynch supported the public option Manning simply replied, "Governor Lynch believes in the goals of health care reform and applauds the President and Congress for making reform a priority. But the Governor is concerned about cost shifting to the states, and that is a concerned shared by other governors."

It is a thorny issue for Lynch. His Democratic base passionately wants health care reform and favors the public option. Yet Lynch has branded himself as a fiscal conservative and the potential for new health care costs to shift to states is very real.

Chowdaah!

Come join STEWARD of Prosperity for our "Stop the Spending" Chowderfest on Saturday the 17th in Portsmouth.

As we move closer to Election Day 2010, it’s critical for Republicans to continue building
enthusiasm and momentum. There’s no better way to do so than by rallying for fiscal conservatism – and enjoying some great chowder!

STEWARD’s “Stop the Spending Chowderfest” will provide a golden opportunity for fiscal conservatives to gather in opposition to the reckless spendathon at the Statehouse and in Washington. We’ll have several special guest speakers that day, including Kelly Ayotte, Jim Bender and Sean Mahoney – Republicans who are all looking at the race for U.S. Senate next year.

Here are all the important details, we look forward to seeing you next weekend!

WHAT: STEWARD of Prosperity’s “Stop the Spending Chowderfest”

WHO: New Hampshire Fiscal Conservatives

WHERE: Redhook Brewery, 35 Corporate Drive, Portsmouth, NH

WHEN: Saturday, October 17, 2009, from 1 to 3 p.m., rain or shine

ADMISSION: Free

RSVP: Required - cick here, or call STEWARD at 603-415-2601

Wall Street Journal Predicts Midterm Difficulties for Congressional Dems

As President Obama's stimulus package continues to flounder, Congressional Democrats who bought the program hook, line and sinker as the only way to save jobs and revive the economy will be tied to its success or failure come the mid term elections, reports the Wall Street Journal:

Congressional Democrats and the Obama White House have plenty to fret about as they eye the 2010 elections: rising deficits, the Afghan war, public fears over expanding government, the fate of the health-care brawl.

But one item may prove key: the national unemployment rate, which hit a 26-year high last month at 9.8%. On that front, economists and political pundits say, the majority party looks increasingly wobbly.

The incumbent Democrats are facing an uphill climb in the 2010 elections. With the jobless rate nearing 10%, President Obama could lose more than 20 seats in the House. WSJ's Neil King explains.

"Unemployment is the leading economic indicator when it comes to politics," said Democratic pollster Peter Hart. "Anytime unemployment hits double digits, it's hard to see the party in control having a good election year."

Economists generally predict that the number of people out of work will continue to inch up next year, even if the economy begins to rebound. Most see the jobless rate peaking at around 10.5% in the summer. Former Fed Chairman Alan Greenspan said Sunday that his own hunch was that the economy would turn around over coming months, but that unemployment would "penetrate the 10% barrier and stay there for a while before we start down." ...

President Barack Obama and the Democrats are all the more exposed on the jobs front because they touted the $787 billion economic-stimulus bill as a way to curb job losses. The Obama team asserted in January that the recovery plan would keep unemployment below 8% and push it down to nearly 7% by the end of 2010. Obama aides have since said that they didn't grasp how sour the economy was at the time.

Economists now generally believe that the stimulus package has cushioned the economic fall. But Republicans argue that it was a waste of money, and it isn't clear whether the Democratic argument -- that things would be worse without the stimulus -- will sway many voters.

The Minimum Wage and Teen Unemployment

We remarked last week on the record high unemployment levels among the nation's teenagers and young workers. Today's Wall Street Journal examines the impact the mandatory increase in the minimum wage, as pushed by Congressional Democrats in 2007, has had on the problem:

The September teen unemployment rate hit 25.9%, the highest rate since World War II and up from 23.8% in July. Some 330,000 teen jobs have vanished in two months. Hardest hit of all: black male teens, whose unemployment rate shot up to a catastrophic 50.4%. It was merely a terrible 39.2% in July.

The biggest explanation is of course the bad economy. But it's precisely when the economy is down and businesses are slashing costs that raising the minimum wage is so destructive to job creation. Congress began raising the minimum wage from $5.15 an hour in July 2007, and there are now 691,000 fewer teens working.

As the minimum wage has risen, the gap between the overall unemployment rate and the teen rate has widened, as it did again last month. The current Congress has spent billions of dollars—including $1.5 billion in the stimulus bill—on summer youth employment programs and job training. Yet the jobless numbers suggest that the minimum wage destroyed far more jobs than the government programs helped to create.

Congress and the Obama Administration simply ignore the economic consensus that has long linked higher minimum wages with higher unemployment. Two years ago Mr. Neumark and William Wascher, a Federal Reserve economist, reviewed more than 100 academic studies on the impact of the minimum wage. They found "overwhelming" evidence that the least skilled and the young suffer a loss of employment when the minimum wage is increased. Whatever happened to President Obama's pledge to follow the science? Democrats prefer to cite a few outlier studies known to be methodologically flawed.

(Thanks for Don Surber for the graphic)

UNH Prof, Other Experts, Reinforce What We Already Knew...

The recovery is not yet underway.

Fosters Daily Democrat reported yesterday:

Economic experts and business leaders say there are few signs that any kind of recovery from one of the worst recessions in U.S. history will occur anytime soon.

And when New Hampshire's recovery does finally start, it will be a slow process, they add.

"I think we're going to crawl out of the hole, not jump out of it," said Russ Thibeault, president of Applied Economic Research in Laconia. "The impact of this recession has been very, very broad."

New Hampshire's unemployment rate is 6.8 percent, 3 points higher than in July 2008, according to the state Economic Labor Market Information Bureau. The bureau reports that 18,900 people have been out of work since December 2007.

Meanwhile, Maine's unemployment rate is 8.4 percent, New England's second highest behind Massachusetts' 8.8 percent rate.

According to the New Hampshire bureau, the state has 755,100 workers in the civilian workforce, and nearly 50,000 of them were unemployed as of July.

The bureau reported that 15,600 jobs were shed in the past year. Manufacturing lost 7,400 jobs, construction lost 4,700, retail trade lost 900 and leisure and hospitality lost 1,500. Only education and health care gained, with 900 more employed people in 2009, the bureau reported. ...

Ross Gittell, a professor at the Whittemore School of Business and Economics at the University of New Hampshire, said he doesn't see anything that suggests the recession will end soon.

"There are not many strong signs of recovery," he wrote in an e-mail to the newspaper.

The Veep Backtracks, Sort Of...

After Joe Biden’s widely reported endorsement of the stimulus’ success late last week, one would assume the Administration was expecting some good news from today’s employment numbers.

Unfortunately for 263,000 Americans, and now 9.8% of the workforce, that was not the case. The AP reports:

If the recession really is ending, someone forgot to tell the nation's employers. A net total of 263,000 jobs vanished from the economy last month — much worse than economists' expectation of 180,000 job losses.

The Labor Department figures set the stage for a scenario that labor analysts expect: that joblessness will continue to rise for several months or more after the economy starts to rebound.
The unemployment rate stands at 9.8 percent, a 26-year high. The rate would have been higher if 571,000 people hadn't dropped out of the labor force, which many did in frustration over failing to find jobs.

That leaves 15.1 million Americans out of work, a huge pool of people. Many discouraged workers are likely to re-enter the labor market and compete for jobs that will eventually be created.

And VP Biden’s response, as reported by Fox News:

Vice President Joe Biden, speaking glumly from the White House from note cards, could barely hide his disappointment at today's unemployment report showing 263,000 jobs lost in September and a jobless rate rising to 9.8 percent.

"We knew all along the recovery was going to take a long time," said Biden, sitting in the Roosevelt room with top economic advisers Christina Romer, Larry Summers and budget director Peter Orszag. "We inherited an awful lot of baggage and we knew the recovery would come in fits and starts and job creation would be the last element to come into place. Those are the realities we live with."

Biden said quarterly job loses have fallen from an average of 700,000 in the 1st quarter to 250,000 in the third quarter.

"But less bad is not our measure of success," Biden said. "One job loss is one job to many. There's still too much pain."

Biden said the stimulus has, "by some estimates, saved or created 1 million jobs."

In fact, the economy has lost 2.7 million jobs since the stimulus passed. Moreover, this number doesn’t accurately account for the folks who have given up the job hunt and are thus no longer counted in the typical measure of the unemployed - meaning even more people are out of work than these already dismal numbers represent.

The Administration has yet to explain this four million job disparity.

And now, the newest version of the chart the must haunt the Administration at the start of each month:

Who Pays?

CNN reports that in 2009, 47% of Americans, or roughly 71 million people, won’t pay a dime in federal income taxes. In fact, some of these folks will actually be owed money by the government because of various social safety net programs.

At first glance, this might seem like welcome news. Maybe the summer tea parties really had an effect.

Unfortunately, however, all it really means is a smaller and smaller pool of taxpayers are responsible for financing the growing largess of the federal government.

And although every American aged 18 and older has the right to vote for our representatives in Washington, it turns out that only about 50% of them will actually pay for effects of those votes.

And the result, as a number of folks have pointed out, is this:


It is much easier to be complacent to massive increases in government spending, and vote for those who support it, if the dollars aren’t coming out of your pocket.