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: