Politics Blog

Category: The Economy

Give Thanks To Your Local Vendors

Fresh off the DetNews twitter feed, a reminder that in today's economy it's good to spend your money on companies located in your communities. According to the Michigan Department of Agriculture, "if each family started spending $10 per week of their grocery bill on Michigan products, we'd keep more than $37 million circulating in Michigan each week."

They tell us that "Faygo and Sanders are quintessential Michigan products, but there's a cornucopia of other ingredients to showcase a complete made-in-Michigan meal." Click the link for a suggested menu with recipes that can make your Thanksgiving dinner more than just a great meal, but a delicious way to help the local economy recover.

Category: The Economy

President signs extension of unemployment benefits

This is why it takes so long to get anything done in DC. The House finally passed a bill extending unemployment benefits, and also extending and expanding the homebuyer credit program along with tax breaks for small businesses. It passed after five weeks of wrangling with only 12 no votes. But in the course of those five weeks, Democrats had to break three GOP filibusters before the Republicans finally figured out broke voters won't be happy come election time.

To be fair, I think the business tax break was probably a good amendment and I won't fault the GOP for holding out on that one, but after they got it, they still dithered for weeks trying to force in an anti-ACORN amendment with the additional filibusters. As if that has anything to do with economic issues. In that interim an estimated 600,000 workers exhausted their benefits. Seeking meaningless vengence to make political points with their Palin-Beck worshipping base is not good governance.

In other GOP obstructionist news, we now know that Oklahoma Republican Tom Coburn is the one who put an anonymous hold on a major Veterans Benefits Bill holding up much needed assistance to the men and women who sacrifice so much for our country. There's no excuse for that kind of petty politicking. He should be ashamed and so should the voters who put him into office. One hopes they'll remember this if he runs for re-election and make a better choice next time.

Category: The Economy

Stimulus working: Ford posts third quarter profit - UPDATED

This is good news. Defying dismal expectations, "Ford Motor Co. posted a surprise third quarter profit of nearly $1 billion today -- its first operating profit in nearly two years."

Although sales that were still much lower than before the economic crash of '08, "Ford's third quarter results received a much-needed boost by the federal government's 'cash-for-clunkers' program, and by similar stimulus schemes implemented in other countries."

As I've been saying for a while now, the effects of the recovery spending weren't going to manifest overnight, but this seems to be another sign that it's working.

Update: In response to comments, many experts agree the stimulus spending was a help to turning around the economy. But of course, not all of them. Krugman says it worked like a Keynesian textbook case and the only problem is that it was too small. At the NYT there are four experts with those who don't believe in the Keynesian model declining to credit the recovery spending. Take your pick. Something to support everyone's point of view there.

Category: The Economy

GDP shows strongest growth in two years

While we may not be feeling it on the street just yet, good news on the economy. Third quarter growth "beat market expectations, as consumer spending and new home-building rebounded, signaling the end of the worst recession in 70 years."

The Commerce Department, in its first estimate of third-quarter gross domestic product on Thursday, said the economy grew at a 3.5 percent annual rate, the fastest pace since the third quarter of 2007, after contracting 0.7 percent in the April-June period.[...]

Consumer spending, which accounts for over two-thirds of U.S. economic activity, surged at a 3.4 percent rate in the third quarter, the fastest advance since the first quarter of 2007. Spending fell at a 0.9 percent rate in the previous quarter.

Economists are crediting government stimulus programs for the surge in consumer spending and residential investment. Steve Benen notes, "It was the strongest quarterly economic performance in two years, and it came 'without a major surge in inflation.'" He also has a chart to illustrate the trajectory over the last two years.

Meanwhile, unemployment figures are also slightly down but obviously, still higher than anyone would like. Well except for maybe the GOP. They don't seem to be concerned about the unemployed at all. People being out of work is good politics for them and they're still obstructing an emergency bill to extend benefits for those who are struggling to find employment.

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Category: The Economy

Another Michigan budget flop

Well, here we are past the original deadline to adopt a Michigan state budget. Gov. Jenneifer Granholm is threatening vetoes on some budget items the Legislature sent her.

In 2007 the governor backed a $1.5 billion tax hike instead of cutting spending to match existing revenue. She and lawmakers promised major changes to bring state spending in line with tanked economy. However, taxpayers were snookered. The tax hike took effect -- burdening businesses in a tough economy. But the necessary reforms didn't happen.

So here we are, two years later, with exactly the same problem.

Here for how a brassiere can save your life.

And here for the state budget.

Category: The Economy

Some good news for Michigan

Nice to see some good news for a change. General Motors Co. is reinstating 2,400 workers and some of those jobs will be coming to Michigan as a result of shifting production of the Chevrolet Traverse from its plant in Spring Hill, Tenn., to Delta Township near Lansing where they'll be starting a third shift in April 2010. It seems not everyone has given up on GM cars. Partly due to demand created by the cash for clunkers program they are "adding 60,000 cars and trucks to its third and fourth-quarter production schedule."

Also, if the deal to sell the Hummer line to a Chinese company goes through, they say they're likely to locate the brand's corporate headquarters near Detroit thanks to a $20.6 million state tax credit over 10 years approved by the Michigan Economic Development Authority. [via DetNews twitter feed]

On a different note, while some residents are giving up and moving out, global venture capitalist Jeff Bocan has moved his family into Michigan, seeing a bright future for "knowledge-based and high-growth sectors like clean tech, life sciences and health care." He says, "Yes, the current economic situation stinks, but Michigan has a lot to work with, namely a hard-working, well-trained labor force, an infectious local pride, and a united desire to make things better." Bocan's company manages the Invest Michigan! Growth Capital Fund, amongst others, and would be happy to hear any ideas from Michigan entrepreneurs. [via Stone Soup]

And on a totally unrelated note, fresh off the DetNews twitter feed, enter by Thursday noon to win tickets for Kiss, who will be playing this weekend at the Cobo Arena.

Category: The Economy

Did Bush leave you better off?

While I understand the concerns of the Tea Party protesters about runaway spending and in fact share it, for the life of me, I can't understand why they're blaming Obama for it. It didn't start under his watch and he's been doing everything humanly possible to turn it around. How can people not remember that they started losing their jobs and they lost all their retirement money under Bush's watch. Defenders of conservative economic policy can twist the statistics any way they want, but the facts all point to the failure of those policies.

The US Census Bureau's latest report shows real median household income in the US fell 3.6 percent between 2007 and 2008, from$52,163 to $50,303. The number of people living in poverty increased by a staggering 2.5 million, to 39.8 million: 13.2% of the population, the highest poverty rate in over a decade. Poverty being defined as $22,025 for a a family of four and individuals at $10,991. One child in every five is living in poverty in the US today.

Many conservatives say the poverty rate is overblown. For instance the Heritage Foundation asks how can they be poor if they have air conditioning? They conveniently ignore that an AC unit that costs $100 today would have cost $700 in 1970. Neither do their stats account for whether AC comes with their apartments, or whether they have a used unit that they got for free. Furthermore, it ignores a root cause of poverty. "Back in 1970, there were 17.8 million manufacturing jobs. That number fell to 17.3 million in 2000 and has plummeted since, to 13.4 million in 2008." We have allowed globalization to destroy our industrial base in the name of corporate profits. The sort of blue collars jobs that had been the traditional path for the poor and undereducated to work their way out of poverty and into the middle class are gone.

And no, I haven't forgotten NAFTA. I'll concede globalization has been pushed by both parties but outsourcing jobs spread to the white collar class and has been expanded under the conservatives watch. The bottom line is the Census Report showed this:

On every major measurement, the Census Bureau report shows that the country lost ground during Bush's two terms. While Bush was in office, the median household income declined, poverty increased, childhood poverty increased even more, and the number of Americans without health insurance spiked. By contrast, the country's condition improved on each of those measures during Bill Clinton's two terms, often substantially.

John Cole has more on that and on a related note, for all those who keep telling me our rich people are going to leave the country if we raise the tax rate for billionaires by a couple of percentage points, I ask where are they going to go? Since the worldwide economic meltdown under George Bush's watch, countries around the world are raising tax rates for the wealthy at a much higher rate than any proposal here.

And one last thought for all the conservatives who so concerned about the deficit. Chris Hayes of The Nation notes "Letting Bush tax cuts expire in 2010 reduces by almost half the projected annual deficits (as % of GDP.) Almost half. " So it would seem that true fiscal conservatives should be supporting any measure that asks those who profited the most from the Bushenomic "boom" to kick in a few more bucks to save our economy and our middle class.

Category: The Economy

Stimulus spending showing results

Wall Street Journal has an article today saying the recovery/stimulus spending is working.

Economists say the money out the door -- combined with the expectation of additional funds flowing soon -- is fueling growth above where it would have been without any government action.

There is disagreement over which particular part of the spending worked the best. Opinions vary from the TARP bailout to the actual stimulus bill, but the consensus is the economy is improving because of government intervention.

Many forecasters say stimulus spending is adding two to three percentage points to economic growth in the second and third quarters, when measured at an annual rate. The impact in the second quarter, calculated by analyzing how the extra funds flowing into the economy boost consumption, investment and spending, helped slow the rate of decline and will lay the groundwork for positive growth in the third quarter -- something that seemed almost implausible just a few months ago.

Meanwhile, I hear a lot of concern, especially among those who predicted it wouldn't work at all, about whether the growth will continue once the stimulus spending ends, but I don't see why that should matter. That's purely a political concern about who gets credit for it. It seems to me, even if it is temporary, it's still a whole lot better than having done nothing and allowed the economy to crash altogether. As the old song goes, something is better than nothing.

Category: The Economy

Time to break the roadblock

ABC News is reporting the unemployment rate in Detroit rose to 28.9 percent in July with other cities in Michigan doing as bad, or even worse. "Nearly 3 in 10 residents of Detroit need a job" yet, as the study I posted earlier shows, the state is sitting on a large amount of stimulus funds that are still unspent. Only 62 of 325 projects have been started.

I would hate to think your GOP majority in the state Senate deliberately slowed things up for political reasons and I have no idea if the 14 metropolitan planning organizations who also have to sign off on the projects are politically motivated to slow things down either. But whether the reasons are political or they're simply slacking, it's clearly time for these folks to get off their duffs and get these projects rolling. The working class people of Michigan are hurting out there. The stimulus projects would help ease some of that pain.

Category: The Economy

The deficit in context

Tim Fernholz explains why the projected ten year deficit shouldn't prevent us from passing health insurance reform. Read it all for the full explanation but this quote struck me as an important point.

Opponents of health-care reform are using that jaw-dropping number to say that Americans can't afford to pursue health-care reform, never mind that the president and congressional Democrats intend for the bill to be deficit neutral or that the math and budget experts both testify that most of the deficit is a hangover from the Bush years. (Indeed, all of the measures enacted by President Barack Obama to combat the recession have only added about $300 billion to what the deficit would have been had President George W. Bush's policies continued through 2009.)

I keep wondering where all these people who are complaining about runaway spending were when Bush doubled the deficit of all previous administrations combined during his tenure and he did it by choosing to go into an unneccesary war while giving huge tax breaks to the corporations and the extremely wealthy. In fact, although Obama now owns the problem, it's good to remember he didn't cause it. It was Bush's screwed up policies that made all this spending now, necessary.