October Stimulus Trick, not Treat: Unemployment up to 10.2 Percent

By kwallace on Nov 06, 2009

This morning, November 6th, 2009, the American people received a late Halloween trick from the Bureau of Labor Statistics (BLS) as they released unemployment numbers for the month of October.  National unemployment rose 0.4 percentage points to 10.2 percent, the first time joblessness has hit double digits since 1983.  There are now 15.7 million people without jobs and looking for work.  There are another 808,000 people labeled discouraged workers not included in that number because they don’t believe jobs exist for them and are thus not searching for work.  Who can blame them when unemployment has reached a new 26-year high and the Obama administration continues to try to mislead us on the impact of the stimulus rather than seeking ways to free entrepreneurs from the government chains of high taxes and regulations that are keeping them from creating new jobs?

Moreover, the 0.4 point increase in the unemployed is four times the jump from August to September of this year (0.1%).  The surge in the jobless rate only continues the rollercoaster numbers since June.  At that point, unemployment briefly dropped in July to 9.4 percent before rising dramatically 0.8 percentage points over the next few months.  Since February when the stimulus bill was released, unemployment has risen an unfathomable 2.1 percentage points.  The 10.2 percent unemployment for October is almost 2 percentage points worse than the administration predicted had the stimulus not been put into place.  It is about 2.5 percentage points higher than the forecast with stimulus aid (See graph).

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In total, 190,000 jobs were lost in the month of October after a combined 479,000 were lost in August and September.  That brings the number of jobs lost since the stimulus’ enactment to 2.9 million.  According to calculations by the White House, that stimulus bill has “saved” 640,000 jobs in that same time frame.  But the Associated Press (AP) has reported on several occasions that the White House’s counts are far from accurate.

In an article from November 5th’s Boston Globe, AP reporters disclosed more miscounts, specifically in a federal program under the Health and Human Services Department (HHS).  Of their 14,506 jobs “saved,” more than two thirds of them were counted as “saved” because the government workers were given pay increases.  A spokesperson for HHS defended the number saying “If I give you a raise, it is going to save a portion of your job.”

In a Wall Street Journal (WSJ) article from November 4th, reporters cited WSJ analysis that jobs “saved” by the stimulus “could be overstated by at least 20,000 of the 640,000 claimed.  Ed DeSeve, the President’s senior adviser on implementing the stimulus, replied to the WSJ’s inquires about the inaccuracies saying that the plan was intended “to create jobs, not count them.”  This comes only a couple weeks after the White House promised to “undergo extensive reviews to ensure accuracy,” according to the AP’s November 5th article.

That kind of statement from an administration official embodies the inability and inefficiency of the oversight of these job counts and distribution of stimulus funds.  This deception in light of the quickly deteriorating unemployment situation is not going to bring us back to prosperity.  Actions speak louder than words and so far the Obama administration has only let the American people down.

 

A constituent base is the engine that drives a political party’s success, which is why the Republicans did well in elections last week and may do well in midterm contests next year. It also can be an albatross, which is why our party’s fundamental problems persist.

The conservative wing of the Republican Party is dominant. These often are the types of conservatives who take no prisoners on political and social issues and believe compromise is a dirty word.

The patron saints of these conservative movements are less political leaders or philosophers and more talk-show hosts such as Rush Limbaugh and Glenn Beck. To them, everything about Democrats is suspect, including their patriotism.

They also energize the minority of hard-core conservatives, who turned out Nov. 3 to elect Republicans as governors in Virginia and New Jersey and win a good share of down-ballot contests.
This energy level, compared with that of Democrats, many of whom stayed home, is likely to persist through the midterm national elections in 2010. If, as Las Vegas does for sporting events, the odds on the congressional outcome next year would feature an over/under, today it would be a Republican pickup of 20 seats in the House and three in the Senate.

Nevertheless, the GOP is in no better shape than it was a year ago. This was apparent when the party lost a special congressional election in New York after the right wing took over the contest; this was a seat that Republicans had held since the 19th century.

This illustrates the dilemma. An energized base can turn into a liability when it defines a party, turning off more independent-minded voters. That’s what happened to the Democrats through the 1970s and 1980s.

And almost every survey shows that the number of self-identified Republicans in America is actually in decline. Recent polls indicate that about 19% of the people in the US identify themselves with the GOP the lowest number in over 20 years.

Party activists and conservative leaders dismiss those numbers. Their main talking point is a Gallup poll last month that showed an increase in people identifying themselves as conservatives, particularly among independents. Since the Republicans are plainly the more conservative party in America, they are on the upswing, this reasoning goes.

But a number of the most reputable pollsters believe the Gallup data have been vastly over-interpreted: If there’s any shift in public attitudes, it’s very small and doesn’t redound to the Republicans’ advantage.

“On a feeling thermometer, Republicans have the worst scores in 20 years,” says Peter Hart, who conducts the NBC News/Wall Street Journal survey. Ann Selzer, who is the pollster for Bloomberg News, concurs: “There may be a few more fiscal conservatives but not social conservatives, and that’s where the Republicans have moved.”

The election results last week underscore the fundamentals. It was all about turnout: Republicans voted, while there was a huge drop in Democrats and independents, which support President Barack Obama.

What that suggests isn’t a movement toward conservatives or Republicans. It is that Mr. Obama, along with almost every popular politician from Dwight D. Eisenhower through Ronald Reagan, cannot transfer his appeal. The much-hyped Obama grass-roots machine, which was so effective in getting him elected president, doesn’t have coattails when it comes to congressional races or issues such as health care.

In elections such as 2009 and 2010, the angry and alienated turn out in larger proportions. Ultimately, the Republicans will have to offer an alternative vision of governance. That is what they did successfully in 1980.

This usually gets them in trouble on hot-button social issues. It could prove a loser on economic and fiscal matters, too. The Republican agenda — tax cuts for business and investors, pretty much the status quo on health care and an unwillingness to take on entitlements — doesn’t add up and offers minimal appeal to important constituencies such as younger voters, Hispanics and working-class women.

Red meat, not vision, is what conservative activists and their flock around the country demand; those who don’t follow do so at their own peril. For example, conservatives scored a big victory in New York when they forced out a liberal Republican candidate in favor of a conservative.

Glenn Beck orchestrated a campaign against Mr. Obama’s chief of information and regulatory affairs, Cass Sunstein, a respected law professor who incurs the wrath of liberals because of his pro-market views on regulation. He once wrote a scholarly article on humane treatment of animals. Mr. Beck and his ilk mounted a campaign against him, with the charge he wanted to give animals the right to sue humans.

It sounds silly. Thirty-one Senate Republicans voted against Mr. Sunstein.

Governor Tim Pawlenty of Minnesota, usually level-headed, recently joined the chorus of the right-wing attacks on Senator Olympia Snowe of Maine, a Republican, saying “she can’t say she’s a Republican and then vote against the Republican position much of the time.” Although Mr. Pawlenty later backed down, this is the sort of anti-inclusion message that the movement right demands of presidential hopefuls such as the Minnesota governor.

Looking ahead to next November, Democrats fear an unemployment rate stuck around 10 percent and the makings of a quagmire in Afghanistan. And if they botch up health care, as Senate leaders are risking now, these internal Republican antics may not matter.

If Democrats avoid those nightmares, more important than a questionable Gallup poll will be a Republican agenda shaped by the party’s fringe elements.

That will turn off independents and other voters.

Which is exactly why only 22% of the US considers themselves Republicans.

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Job loss became the worldwide concern; there must be an urgent solution for this dilemma because in every job loss there is dream that being shattered. We deprive the people the right to acquire descent kind of living. Anyway have you heard that Nicholas Cage had sued his former manager, who seems to be the prime culprit after seriously mishandling his funds, and pocketing millions in fees, leaving Cage holding the bag on bad real estate deals. To scare up the cash, according to People Magazine and others, he's auctioning off homes that he owns. The amounts in the Nicholas Cage broke reports are more than payday lenders could lend him.

Kudos to MR. Cage for selling what he owns to pay his debts. Wall Street could learn something from this type of responsible behaviour.

Aren’t these the same unemployment numbers we had 3 years after Reagan was elected?

These things take time and I can’t believe people honestly think that any President could reverse an economic downturn after 9 months in office.

Only 25% of the stimulus has been spent which to me is the right way to spend Government money....slowly and with accountability..

Spending has to be done more slowly than we did in the last administration where money went out the door and no one knew where it went.

Now this means that the same amount spent this year can be spent for the next 3 years without having going back to the well and economic progress can be sustained.

Buy your wheel barrels now because after the fool(obama) is done you will need them to haul those dollars to the grocery store. That is if you are employed.

Actually it is the Republican appointed Federal Reserve chairmen that have kept interest rates low in order to keep making lending cheap (thus ultimately continuing the trend of overleveraging) which has resulted in a weak dollar.

one of my friend had work in china,and you can't image how cheap the labor there

Once a year I have to fly to China for work related purposes and I can tell you that though it's still a 3rd world nation the standard of living has risen dramatically over the last 15 years. There is a new sense of optimism there as well. This is our most formidable economic opponent.

I guess the economy is crap and obama has completely failed because America is racist. Unemployment reaching serious highs must be because Americans don't want a black President and they are refusing to work. No wonder his poll numbers suck. People are tired of the race card and liberals who use it to hide their own faults.

Media made obama out to be some kind of genius and savior when his actions are proving him to be a complete incompetent boob. He campained about fundementally changing our way of life and ran around ranting about how he was going to fix everything. My biggest fear is that he still has 3 more years to make it worse. Liberals are trying to hold back the flood gates of this bad economy with words.

He further adds insult to injury with his healthcare ideas full of huge costs to the American taxpayer. When the bread lines start who will pay the taxes this administration will need? He(obama) is unraveling and revealing the total loser he is. Heck, Kerry was a real loser and he looks good now next to obama, lol.

Now, Toy and The Man, those are some well orchestrated points. I give you credit for those. Interesting! Except on the sarcastic one, about the 9 yrs. as President. Lost credibility on that one! But, that's what I mean about giving good constructive arguements!

I believe it should be abundantly clear that whomever is responsible for passing the stimulus bill was mistaken about its benefits. Consider countries like China and India, who resisted the temptation to spend taxpayer money in a vain attempt to correct the market: Not only did they weather the recession better, but have recovered faster. Consider again the counrty of Japan that had tried to spend its way out of a recession in the eighties resulting in the "Lost Decade." Again and again we see the evidence of the failure in the belief that fiscal policy can lift us out of a recession caused by poor monetary policy. Yet as if the historical and contemporary evidence did not exist our political class continue to fall back on erroneous Kenysian economic theory that has yet to be sucessful in an objective measure.

Consider again the counrty of Japan that had tried to spend its way out of a recession in the eighties resulting in the "Lost Decade."

Interesting you'd mention that. The Japanese asset bubble had its start much in the same way ours did: market speculation and high-risk loans. When the bubble burst, the lost decade came as prices and values returned to "normal." The policies of George W. Bush inflated our own asset bubble, from which we are not going to recover from for years. This is a failure of laissez-faire economics. There is really no real evidence that the recession was caused by "poor monetary policy." Government spending isn't going to reverse this, but it can cushion the fall, and by all indications it has done just that.

By the way, you seem to believe that the economy is what you learned in Econ 101. It's not. The economy is not a rational thing that behaves according to quaint little rules like "supply and demand." It's best understood as a complex web of interconnected feedback mechanisms, kind of like a neural network.

India and China have fared well because of cheap labor and goods.

Do you realize that while our unemployment rate is going up yet the number of H1B visas are being offered at a record pace?

And it is the free market that failed the US. Free market = free trade no matter now domestic many jobs are lost. Free market also means financial deregulation which caused the housing bubble and the stock market crash.

Of course Obama is also responsible for the Iraq and Afghanistan Wars, the 9/11 Bombings, the housing market collapse, the economic collapse, and the financial institution bailouts.

I mean he was the president for the last 9 years right (he also repealed the 2 term limit while he was at it).

He's the Pres. it's all his now.

Yeah and look what Bush did with the record surplus that was handed to him.