Showdown Fatigue

Robert Reich

We’re one week away from a massive cut in federal spending — cuts that will hurt millions of lower-income Americans who’ll lose nutrition assistance, housing, and money for their schools, among other things; that will furlough or lay off millions of government employees (adding more competition for jobs in an already horrible job market--jef), reduce inspections of the nation’s meat and poultry and pharmaceuticals and workplaces, eliminate the jobs of hundreds of thousands of people working for government contractors, and, according to Leon Panetta and other military leaders, seriously compromise the nation’s defenses.

Bad enough. If the spending cuts go through next week our fragile economy will slow further, causing more unemployment and misery. When consumers don’t have the money to buy enough to keep the economy moving, and government pulls back this much, businesses can’t justify keeping people on.

Yet the silence is deafening.

Republicans won’t deal. Obama has already cut $1.5 trillion out of the budget but Republicans insist on far more. They want the White House to propose major cuts in Social Security and Medicare.

Meanwhile, the Bush tax cuts have been extended permanently to everyone earning up to $400,000. Only the richest 2 percent have to pay at the rate they did under Bill Clinton, which was far lower than rich paid before 1981. That will generate $600 billion — less than half of the cuts Obama has accepted.

No one in their right mind would call this a balanced approach to deficit reduction. Yet Republican’s won’t even consider raising taxes on the most fortunate members of our society. They won’t limit deductions and loopholes that have driven down the super-rich’s tax rates to single digits (remember Romney’s “carried interest” loophole for private-equity mavens?).

So where’s the outcry? Why aren’t more people up in arms? Why aren’t big businesses (including major military contractors) and Wall Street screaming into the ears of the GOP? Where’s the outrage from Main Street?

I suspect most Americans are suffering showdown fatigue. After all, we got through the debt-ceiling showdown of August 2011 and the fiscal-cliff showdown on January 1, and the world didn’t end. So most people figure Washington will find a way out of this one, too.

Others have bought the Republican-Fox News lies that the deficit is our biggest economic problem, and government spending is to blame. So a massive, abrupt, and indiscriminate cut in spending seems okay.

It’s not okay. It will hurt the most vulnerable members of our society, and much of the middle class.

Yet it would be even worse if Obama and the Democrats were to give in to Republicans, and not demand more from those who have never been wealthier. Inequality is widening again. All the economic gains since the Great Recession have gone to the top. The richest 400 have more wealth than the bottom 150 million Americans put together.

Why not limit the mortgage interest deduction to $25,000 a year, so the rest of us don’t have to subsidize mansion mortgages? Why not a wealth tax on assets in excess of $5 million to pay for early-childhood education? Why not a small tax on financial transactions (as Europe is now instituting) to finance better schools? Why not close the loophole that private-equity and hedge-fund moguls live off of, to finance child nutrition and social services for the poor?

It’s no time for showdown fatigue. It’s time to fight.

U.S. Postal Service could shut down by winter

Published: Sept. 5, 2011

WASHINGTON, Sept. 5 (UPI) -- The U.S. Postal Service, facing a deficit that will reach $9.2 billion this fiscal year, could be forced to close this winter, officials say.

"Our situation is extremely serious," Postmaster General Patrick R. Donahoe said in a New York Times article published Monday.

Donahoe has been advocating spending cutbacks recently that would eliminate Saturday mail delivery, close as many as 3,700 postal locations and result in layoffs of 120,000 employees, nearly 20 percent of the Postal Service's workforce.

The delivery service, which has no-layoff clauses with unions, faces higher costs, particularly for labor, which accounts for 80 percent of its expenses.

It also has seen revenue decline as the Internet has resulted in fewer people relying on traditional mail as they use other delivery companies, e-mail, pay bills online, and receive news and advertisements online.

"The situation is dire," said Sen. Thomas R. Carper, D-Del., chairman of the Senate subcommittee that oversees the Postal Service. "If we do nothing, if we don't react in a smart, appropriate way, the Postal Service could literally close later this year. That's not the kind of development we need to inject into a weak, uneven economic recovery."

Without emergency congressional action, by early next year the agency won't have the money to pay employees and put gas in its delivery trucks, which would force it to stop delivering the estimated 3 billion pieces of mail it handles weekly, the Times reported.
But lawmakers haven't agreed on a solution.

Among other things, the Postal Service has asked Congress to allow it to discontinue Saturday delivery but that has drawn criticism.

Thousands of Public Employees Laid Off in 2010

Wednesday, August 31, 2011 by Rueters

Local and state governments axed more than 200,000 jobs in 2010, according to U.S. Census data released on Tuesday that showed the growing threat of public employee layoffs to the economic recovery.

According to the Census, local and state governments had 203,321 fewer full-time equivalent employees in 2010 than in 2009 and 27,567 fewer part-time employees. 

Most local governments cut full-time jobs in 2010, with the biggest decline in Rhode Island, where the workforce shrank 7.7 percent. Those in North Dakota, one of few states to go through the 2007-09 recession unscathed, added jobs in 2010, with its full-time workforce growing 7.5 percent in 2010.

It was the second year local governments lost part-time employees, with cities, counties and authorities in California shedding the most, 47,620.

The job losses have continued this year. John Lonski, chief economist for Moody's Capital Markets Research told Reuters this month that "we are looking at the worst contraction of state and local government employment since 1981."

Analysts polled by Reuters expect a report on Friday to show governments dropped another 30,000 jobs in August, marking the ninth consecutive month of contraction.

Public employees outnumber those in manufacturing, health and other areas typically considered engines of the economy. Local government provides the bulk of those jobs. In 2010, local governments had 12.2 million full-time equivalent employees, while state governments had 4.4 million.

The housing bust, financial crisis and recession devastated state and local tax revenues. For more than three years, states, cities and counties have cut spending, hiked taxes, borrowed and turned to the federal government for help in keeping their budgets balanced.
 
"Most state governments saw small decreases in full-time or full-time equivalent employment between 2009 and 2010," the Census said.

Rhode Island, Idaho and Connecticut state governments had the largest declines, each losing 5 percent of their workforces.

The tiny state of Rhode Island has endured pension funding problems and other budget headaches. Earlier this month its city of Central Falls filed for bankruptcy. Now the New England state is recovering from Hurricane Irene.

Most state governments increased their part-time workforces, especially Wisconsin, which picked up 5,063 jobs. Florida shed the most part-time positions, 3,555, or 7.5 percent of the jobs.

Wisconsin Gov. Walker Threatens 1500 Layoffs if Senate Democrats Don't Return

Friday, March 4, 2011 by The Canadian Press
by Scott Bauer

MADISON, Wis. — Thousands of Wisconsin state workers were bracing for layoff notices Friday as the Republican governor and absent Democratic lawmakers remained in a standoff over a budget balancing bill that would also strip public workers of their collective bargaining rights.

Gov. Scott Walker said he would issue 1,500 layoff notices Friday if at least one of the 14 Senate Democrats doesn't return from Illinois to give the Republican majority the quorum it needs to vote. Senate Republicans voted Thursday to hold the missing Democrats in contempt and force police to bring them back to the Capitol.

Walker wants to decrease funding to school districts and local governments to ease a budget deficit. He says taking away public employees' collective bargaining rights is necessary because schools and local governments would have a tough time making cuts if they have to negotiate with unions.

The statewide teachers union and state workers unions have said they would agree to Walker's proposed benefit concessions — which would amount to an 8 per cent pay cut — as long as they retain collective bargaining rights.

Labour leaders say the measure is really meant to weaken the power of unions, which count many government employees among their ranks and provide a key voter base for Democrats.

Senate Majority Leader Scott Fitzgerald cancelled Friday's floor session, saying in a statement that Republican senators want time to allow law enforcement to adjust their staffing levels and "help the Capitol to return to something of a sense of normalcy."

The budget balancing legislation has led to nearly three weeks of protests — some attended by tens of thousands of union supporters — in and around the state capitol, which was completely cleared of demonstrators late Thursday for the first time in 17 nights after a judge ordered the building closed during non-business hours.

The protesters' dramatic departure capped a day full of developments, including Walker's threat of massive layoffs he said would be needed to make up for savings not being realized in the stalled bill.

With the labour bill stalled, Walker said he has to issue layoff notices starting Friday so the state can start to realize the $30 million savings he had assumed would come from the concessions. The layoffs wouldn't be effective for 31 days, and Walker said he could rescind them if the bill passed in the meantime.

Democratic Senate Minority Leader Mark Miller confirmed there were talks with Walker, but he did not think they were close to reaching a deal.

Economy loses 95K jobs due to government layoffs

Economy sheds 95K jobs in September due to government layoffs; unemployment remains 9.6 pct.
By The Associated Press - Friday, October 8th, 2010

A wave of government layoffs in September outpaced weak hiring in the private sector, pushing down the nation's payrolls by a net total of 95,000 jobs.

The unemployment rate held at 9.6 percent last month, the Labor Department said Friday. The jobless rate has now topped 9.5 percent for 14 straight months, the longest stretch since the 1930s.

The report is the final one before the November elections, which means members of Congress will face voters next month with an economy that is still struggling to create jobs.

The private sector added 64,000 positions, the weakest showing since June.

A net total of 159,000 government jobs were lost in September. Local governments cut 76,000 jobs last month, most of them teachers. That's the largest cut by local governments in 28 years. About 77,000 temporary federal census jobs ended and state governments shed 7,000 jobs.

The cuts reflect the toll the recession is taking on state and local government budgets. Falling home values are just beginning to push down local governments' property tax revenues. Most state and local governments are required to balance their budgets, which means drops in revenue are forcing cuts in services.

Nearly 14.8 million people were unemployed last month. That's almost 100,000 fewer than in August.

Including those who have given up looking for work, and those who were working part time but wanted full-time jobs, the so-called "underemployment" rate jumped to 17.1 percent last month from 16.7 percent in August. That reflected an increase of more than 600,000 involuntary part-time workers.

The weak job market makes it more likely that the Federal Reserve will take additional steps to boost the economy. Most economists expect the Fed to decide at its meeting next month to buy government debt in an effort to lower interest rates and spur more borrowing.

Even areas that were strong are weakening.

Manufacturers cut 6,000 jobs, the second straight month of losses. The sector drove job growth earlier this year, adding 134,000 positions in the first five months of 2010, but factory employment has been flat since then.

Construction firms cut another 21,000 jobs, hampered by weakness in commercial real estate development. Information services lost 5,000 positions.

Other sectors showed job gains: Health care added 32,000 jobs, the leisure and hospitality sector added 38,000, and retailers added 5,700. Temporary help services hired nearly 17,000 workers.

Employers, faced with slow sales and a weak economy, see little reason to ramp up hiring. The economy expanded at a feeble 1.7 percent annual rate in the April-June quarter. Most analysts think the economy will fare little better for the rest of this year.

Since the recession ended in June 2009, (gee, feels like it's still going strong--jef) the economy has grown 3 percent, according to economists at Deutsche Bank. That's less than half the average 6.5 percent pace in postwar recoveries.