Obama's Up, But The Jobs Still Must Come Back

The President is slowly moving back up the ladder.

President Barack Obama's approval ratings are starting to rise after declining ever since his inauguration, new poll figures show as the country's mood begins to brighten. But concerns about the economy, health care and war persist, and support for the war in Afghanistan is falling.

An Associated Press-GfK poll says 56 percent of those surveyed in the past week approve of Obama's job performance, up from 50 percent in September. It's the first time since he took office in January that his rating has gone up.

People also feel better about his handling of the economy and his proposed health care overhaul.

The tea parties of August appeared to be a dead cat bounce. Obama still has problems on the war in Afghanistan, but otherwise he's slowly starting to come back. Perhaps it was his assumption of authority in the Congressional speech. Perhaps it's that things are moving forward, however glacially, on health care. Perhaps it's a recognition that he's one of the few adults in the room, as the right descends into madness and begins to scuffle amongst themselves. For whatever reason, he's getting some goodwill.

Again, I still believe that ultimately, his fate is inextricably tied to the economy. Perhaps we will see some job creation efforts, although I'm still wary of the job creation tax credit because it can be so easily gamed. I trust EPI to come up with a decent version, though.

One version of the approach, to be unveiled next week by the Economic Policy Institute, a labor-oriented research organization, would give employers a two-year tax credit if they increased the size of their work force or added significant hours of work (for example, making a part-time worker full time). Employers would receive a credit worth twice the first-year payroll tax for each new hire, amounting to several thousand dollars, depending on the new worker’s salary [...]

States have dabbled with similar tax credits in recent years, with mixed results. The federal government last tried this measure in 1977-78. During that period, employment — which had been soft from the 1973-75 recession — climbed at a record pace. The creation of one out of three jobs that was awarded the credit then was attributed directly to the policy. But the permanence of those jobs was less clear, and some dispute how many of those positions would have been created eventually anyway.

Supporters say that improvements upon the 1970s policy would increase its potency. These include better publicizing the credit; making it available even to concerns that are not making money, in the form of a direct payout to nonprofits and companies in the red; and distributing the credit quarterly so that companies see it sooner.

One thing this will do is just freeze the job market until the moment it passes. If you're a business and you're going to get a tax credit for hiring workers, of course you would lower your workforce as much as possible to qualify for the maximum credit. In that sense, it really is corporate welfare. Not to mention that corporations just aren't as likely to hire people they feel they don't need if there's no work for them to do.

You know what could really help hiring? Fixing the credit markets for small business in particular. Those markets are still tight, and just returning to the 2007 system of shadow banking, instead of having banks just make loans out of their capital, won't work. If that doesn't get done, this small Obama bounce won't last long.

Movement By Inches On The Green Economy At The G-20

These international conferences rarely produce anything of value beyond some communique. In Pittsburgh at the G-20, leaders of the major nations congratulated themselves on saving the global economy and committed themselves to regulatory reform by 2012, with crackdowns on derivatives and banker pay and capital requirements. All of that's somewhat nebulous, however, and will be determined by national legislatures. I'm more interested in two measures. One is the pledge to phase out subsidies for fossil fuels. Again this is easier said than done, but it's good to put the nations of the world on the record, that artificially keeping polluting industries afloat is antithetical to the need to reduce greenhouse gases.

World leaders gathered in Pittsburgh for the Group of 20 summit agreed Friday afternoon to phase out fossil fuel subsidies over time, approving language that does not outline a specific timetable for the phaseout and makes clear that poorer citizens may still receive help in paying their energy bills.

But the wording of the statement, championed by the Obama administration, signals the world's most influential nations are taking an initial, tentative step away from the fossil fuels that power their economies.

"We commit to rationalize and phase out over the medium term inefficient fossil fuel subsidies that encourage wasteful consumption," the statement said. "As we do that, we recognize the importance of providing those in need with essential energy services, including through the use of targeted cash transfers and other appropriate mechanisms. This reform will not apply to our support for clean energy, renewables and technologies that dramatically reduce greenhouse gas emissions."

The other somewhat important announcement was the acknowledgement that the G-20 should be the key international economic conference going forward, rather than the more exclusive Group of 8. This gives emerging nations like China, India and Brazil more say in the global economic future.

Wasting An Opportunity

A poll on the economy has an interesting nugget about who the public blames for the nation's perilous state.

One year after Wall Street teetered on the brink of collapse, seven out of 10 Americans lack confidence the federal government has taken safeguards to prevent another financial industry meltdown, according to a new Associated Press-GfK poll.

Even more — 80 percent — rate the condition of the economy as poor and a majority worry about their own ability to make ends meet. The pessimistic outlook sets the stage for President Barack Obama as he attempts to portray the financial sector as increasingly confident and stable and presses Congress to act on new banking regulations [...]

Still, Obama generally avoided public blame for the recession or the condition of the banking sector.

Only one out of five surveyed said Obama bore responsibility for the recession; 54 percent blamed former President George W. Bush and 19 percent blamed former President Bill Clinton.

Financial institutions, however, bore the brunt of the criticism — 79 percent of those surveyed said banks and lenders that made risky loans deserve quite a bit of the blame. Sixty-eight percent held the federal government responsible for not adequately regulating banks and 65 percent blamed borrowers who could not afford to repay loans.

I love the blaming of the Clenis, presumably from the hardest-core teabaggers and conservative ideologues (yes, he ruined the country with all that peace and prosperity). But ultimately, the vast majority of Americans blame Bush. And in this respect, they are absolutely right and we have numbers to prove it.

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.

The Census' final report card on Bush's record presents an intriguing backdrop to today's economic debate. Bush built his economic strategy around tax cuts, passing large reductions both in 2001 and 2003. Congressional Republicans are insisting that a similar agenda focused on tax cuts offers better prospects of reviving the economy than President Obama's combination of some tax cuts with heavy government spending. But the bleak economic results from Bush's two terms, tarnish, to put it mildly, the idea that tax cuts represent an economic silver bullet.

Yet, this majority consensus that George Bush's economic plan was an unmitigated disaster for the country has flourished despite a virtual code of silence from Democratic leaders since the President entered office. People had to come to this conclusion all by themselves, and a lot of them did. But an effective campaign, armed with the facts, would go a long way to setting the record straight.

This should be something that every American knows. And every Republican should be asked why they voted for all the things that Bush wanted than made that happen. But for for some reason, Bush has been disappeared, as if the directive to "look forward" means that we can't even hold the Republicans responsible for their own political failure. (We already know that can't be held accountable for their illegal behavior.) And the result of that is very likely to be that blame for the failures of the Bush years will be applied to the Democrats. It already is among the teabaggers.

"The Republican recession" has a nice ring to it and should have been the mantra for months now. It certainly should be the mantra of the 2010 mid-term. And all those facts and figures about the Bush years should be part of every Democrat's stump speech. People need to know this stuff, not just for political reasons but because they need to start understanding where these conservative policies lead. If the Democrats don't use the greatest example of conservative failure since Hoover to illustrate that, it's going to happen all over again.

It's probably too late to get the maximum mileage out of this kind of education campaign. That's a damn shame, because we have a President who seeks post-partisanship instead of helping himself by laying out what choices destroyed the economy and what choices can fix it. But that would take a Party with the courage of their own convictions.

The Poor, The Adrift, The Uninsured

We interrupt yesterday, today and tomorrow's media soccer scrum ("Does Ellen DeGeneres Think Michael Vick Should Agree With Joe Wilson About Health Care?") to bring you the consequences of a Gilded Age economy:

The U.S. Census Bureau has just announced that the poverty rate for 2008 was 13.2%. This means the number of people in poverty has increased by about 2.5 million, to 39.8 million. To give you some perspective, 2.5 million is more than the number of people who live in Detroit and San Francisco combined.

The Census data is just devastating, particularly when you take into account that the numbers come before the job loss in the first 8 months of this year. In addition to the uptick in the poverty rate, real median household income fell 3.6%, the biggest drop in 40 years. The richest tenth of one percent saw their incomes rise by 35% over the last 10 years while median incomes stayed flat. And the number of Americans lacking health insurance increased by about 700,000 to at least 46.3 million, which does not account for the under-insured. In fact, if it wasn't for government programs, this number would be far worse.

Things would have been worse but for one thing: continued expansion of government-provided health insurance coverage. Between 2007 and 2008, the proportion of Americans reporting any private coverage fell by 0.8 percentage points, from 67.5 percent to 66.7 percent. Meanwhile, the percentage reporting some form of government coverage rose by 1.2 points, from 27.8 percent to 29.0 percent [...]

First, the absolute number of uninsured has increased. Second, employer-based coverage is eroding. Third, adverse trends in private coverage are partly masked in the overall numbers by the rise in public coverage.

Fourth, improved insurance coverage among children--thanks largely to Medicaid and SCHIP--is more than offset by increases in the number and proportion of uninsured working-age adults. As shown in the final column, the number of uninsured adults increased by almost 9 million in nine years. Since working-age adults are much more likely to actually get sick, this is a significant economic and public health concern.

Yes, it's been government - eeevil, socialist government - which has had to step into the breach and take care of its citizenry amid a failing private market. And that includes your local fire department, increasingly becoming a primary care doctor for millions of Americans.

In 2008, fire departments around the country responded to 15.8 million medicals calls, a 213 percent increase over the 5 million medical runs record in 1980. The combining of cities’ fire and emergency medical services accounts for some of the increase.

But as the logs of a Washington, D.C., fire company show, the lack of health insurance by too many people—especially low-income families—has turned some local fire departments into mobile emergency rooms.

In one 24-hour period this summer, D.C.’s Engine Company No. 10 responded to more than two dozen emergency calls—two fires and the rest were medical emergencies. It is the same throughout the District. The Times reports the D.C. fire department responded to more medical emergency calls per capita than any other in the nation—and most come from poor neighborhoods [...] such calls tie up a community’s resources and cost communities more because so many calls for emergency medical care aren’t true medical emergencies. Also, the increasing reliance on first responders and on 911 also comes at a time when firefighters and paramedics all across the country are being laid off, as the nation’s economic woes place a strain on public budgets. The recession is shrinking our resources and reducing manpower while the demand for emergency medical care is skyrocketing.

Best health care system in the history of man.

This is bigger than just health care, though, and it's driving a lot of the anxiety out there. Recessions are disruptive events, but in previous years quick turnarounds would blunt the pain. More recently, jobless recoveries that last years and years have become the norm, and as a result, people cannot keep up. Inequality has risen to an almost comical degree, while more and more people sit on the other side of a gated community. This breeds anger, unrest, and ultimately enormous amounts of needless suffering.

And as long as government is captive to interests which place their corporate well-being above the well-being of the people, it will remain this way.

You Mean People With No Money Aren't Spending?

Economists, living in their bubble, managed to be surprised by this.

U.S. consumer credit plunged more than five times as much as forecast in July as banks restricted lending terms and job losses made Americans reluctant to borrow.

Consumer credit fell by a record $21.6 billion, or 10 percent at an annual rate, to $2.5 trillion, according to a Federal Reserve report released today in Washington. Credit dropped by $15.5 billion in June, more than previously estimated. Credit fell for a sixth month, the longest series of declines since 1991.

The credit crunch, stagnant incomes and declines in household wealth are casting doubt on the strength of the economic recovery. The arrival of the government’s “cash for clunkers” program in late July wasn’t enough to keep credit that covers car loans from plummeting by a record amount, as consumers delayed other purchases [...]

Economists had forecast consumer credit would drop $4 billion in July, according to the median of 31 estimates in a Bloomberg News survey. Projections ranged from declines of $12 billion to no change from the previous month. The Fed initially said consumer credit decreased by $10.3 billion in June.

I'm guessing that cash for clunkers was the only thing bringing anyone out to purchase something on credit. Otherwise, people simply don't have the money after years of wage stagnation and record unemployment. People are learning the "new normal" of frugality out of complete necessity. In the long run, living within means is a good thing; in the short run, it's debilitating to the US economy.

And it's another example of how economists are not living in the real world with their models and charts. They don't see anything wrong with corporations making massive profits off the backs of consumers living on credit, or how that entire system could fold like a house of cards. They viewed capitalism as a shiny object and never saw its potential pitfalls in an unregulated form.

As I see it, the economics profession went astray because economists, as a group, mistook beauty, clad in impressive-looking mathematics, for truth. Until the Great Depression, most economists clung to a vision of capitalism as a perfect or nearly perfect system. That vision wasn’t sustainable in the face of mass unemployment, but as memories of the Depression faded, economists fell back in love with the old, idealized vision of an economy in which rational individuals interact in perfect markets, this time gussied up with fancy equations. The renewed romance with the idealized market was, to be sure, partly a response to shifting political winds, partly a response to financial incentives. But while sabbaticals at the Hoover Institution and job opportunities on Wall Street are nothing to sneeze at, the central cause of the profession’s failure was the desire for an all-encompassing, intellectually elegant approach that also gave economists a chance to show off their mathematical prowess.

Unfortunately, this romanticized and sanitized vision of the economy led most economists to ignore all the things that can go wrong. They turned a blind eye to the limitations of human rationality that often lead to bubbles and busts; to the problems of institutions that run amok; to the imperfections of markets — especially financial markets — that can cause the economy’s operating system to undergo sudden, unpredictable crashes; and to the dangers created when regulators don’t believe in regulation.

Of course, their salaries in part depend on them not knowing these facts, as the Federal Reserve has essentially bought off the profession and tilted it toward the principles of the unfettered free market. Ryan Grim's article is a must-read.

...the head of China's sovereign wealth fund: "Both China and America are addressing bubbles by creating more bubbles and we’re just taking advantage of that. So we can’t lose.”

How The Insurance Industry Is Destroying The Economy

I can't think of a state less equipped to deal with major health insurance rate hikes than Michigan, currently mired with - this will not be a typo - 15.6% unemployment. But that's exactly what they're getting.

In the past few days, 114,000 Michigan households have received bad-news letters from Blue Cross Blue Shield of Michigan, socking individual health insurance subscribers with premium increases averaging 22%, effective Oct. 1.

Blue Cross could have said, "Hey, things could have been worse. We asked for a 56% rate hike first and dialed it back to 22%" -- but that probably would have just made folks angrier.

Instead, the Blue Cross letters simply stated, "We know every Michigan resident faces financial challenges, and we thank you for your business and loyalty to the Blues."

The two numbers, unemployment and rate hikes, have a correlation. Individual insurance has expanded by 96% at Blue Cross of Michigan in the past two years. That's because they act like a non-profit state "co-op" would in a private sector allowed to discriminate against their customers:

In just the past two years, the number of under-65 individual subscribers has grown by 59,000, or 96%, at Blue Cross, the nonprofit "insurer of last resort" in Michigan. Private for-profit insurers tend to cherry-pick younger, healthier consumers, driving older and less-healthy people to Blue Cross if they have no employer-provided group coverage.

State law requires Blue Cross to offer insurance to anyone, but it also demands that the company not lose money on its insurance products. Therein lies the rub: Blue Cross lost $133 million last year on individual subscribers.

This is that "perfect market" that conservatives like to talk about. Given the ability to discriminate over its customers, private insurers dump the sick on to Blue Cross. And because the state requires Blue Cross to break even, they must raise their premiums basically at the rate of the cost of health inflation year-over-year, often on the poorest and most vulnerable members of society.

Michigan is not the only state seeing large rate hikes in its health insurance market. Oregon small businesses are seeing double-digit rate increases this year. In California, policies have gone up 9% since 2007, three times higher than the overall cost of living. Blue Cross and Blue Shield of Rhode Island has proposed a 16% rate hike, with UnitedHealth of New England up 11.6%. Washington state consumers will see large increases as well. Overall, increases by double digits are expected nationwide.

We hear from conservatives that businesses may drop their plans under health insurance reform. Actually, that's virtually assured if nothing is done. Companies, especially small businesses, will have no chance keeping up with these ever-increasing rates and hope to compete in the global marketplace. And ultimately, those businesses who do pay for these rate hikes do so out of potential wage increases for their employees. Wage growth stagnates and people wind up with less disposable income. The money funneled to health insurance companies could be used to reverse the recession and pull us into economic recovery. In this sense, insurance companies are acting like a siphon, reducing the fuel that can be used to drive the engine of growth.

And that siphon will take more and more money out of your pocket, unless we do something now.

Falling Down On Making The Argument For Good Government

I think this post from John Aravosis is a little bit unfair, but only a little. The White House has soft-pedaled their defense of the stimulus package, but really with the jobs picture as it is, it was always going to be a hard sell to tell people who are losing their job that the stimulus prevented things from getting worse. The problem lay in the lack of job creation in the stimulus itself, rather than job saving. Those who follow these things closely understand that the stimulus really saved us from a deep recession if not a depression. But we also know it didn't go far enough to truly bring about recovery. Those who look at their own lives and don't pay attention to the day-to-day debate only see that they and their colleagues can't find work.

I think the White House will eventually get some credit for the inevitable recovery, but only if it includes jobs. A second stimulus simply won't happen now, and we're basically at the mercy of large firms and when they decide to hire at this point, which isn't likely in the near term if they can increase productivity without bringing anyone back.

That said, when the White House goes out and defends the stimulus, the least they can do is defend the underlying ideology. This AP "fact check" on the stimulus is fairly ridiculous, more a nitpick than a fact check, but assuming they quoted Biden right, this is terrible:

Biden exercised some restraint in his praise for the stimulus' impact. He took a more cautious approach, for example, when asked if his declaration of stimulus success means Americans can now rethink the common view that government is wasteful and inefficient.

"I think it's too early to make that decision, to be very blunt about it," he said.

No, it's not too early to make that decision. The point of stimulus is to get money out quickly and into people's hands. If anything, Biden and his team are being too deliberate about that, to keep away the newspaper headlines of wasteful spending. Pro Publica, for example, needs to blow it out their ass. Anything that creates jobs is stimulus, people. Pro Publica tries to catch Biden in a lie by claiming that money isn't flowing to hard-hit communities, when Biden was clearly talking about increased unemployment benefits and food stamps and help for all low-income Americans. It's hoops like this which modern Presidencies have to jump through that create such a "common view" about inefficient government.

But Biden needs to attack that. The fact of the matter is that public investment creates jobs and saves people's lives. It's OK to state that aggressively. If he doesn't, Republicans certainly won't. And they'll continue to demonize government.

The Administration is in a tough rhetorical spot, considering the jobless recovery. But that's not a time to give ground.

Jobless Recoveries Aren't Recoveries

The President's poll numbers, which haven't slipped as much as has been reported if you take away crazy Zogby Internet polls (42%? Really, Zogby?), have little to do with his policies and much to do with the economy. Most political leaders are falling right now as the economic slump continues to worsen. The "recovery" that we're seeing is really more of a case of getting worse more slowly. The so-called "liberal interventions" that Obama has made in the economy clearly staved off a deep depression. Virtually everyone who's studied the issue would agree. But it's hard to prove a negative, and this is the source of Obama's troubles right now. For example, Joe Biden is right to say that the stimulus is working, but this is a difficult concept for people to wrap their heads around:

"The recovery act has played a significant role in changing the trajectory of our economy, and changing the conversation in this country," Biden said. "Instead of talking about the beginning of a depression, we are talking about the end of a recession."

Absolutely true, but if there are still no jobs, this won't register. People feel that the recession is still happening because, for their personal lives, it is. The rates of job loss have slowed but remain negative. That means less people working. That means less money available to spend. That means lower consumer spending. And so retailers feel the pinch, individuals feel the pinch, and even with economic growth, everyone feels like they're in a recession.

Jobs lag a recovery, so there's a chance for the White House to break out of this. But in recent times, the jobless recovery has become more and more prevalent. Know this - an economic "revival" which benefits elites and not the overall public will not be looked upon favorably. In fact, people will blame the President for failing to turn things around. You can put together all the white papers you want about the recovery meeting benchmarks, or whatever. But the only answer to the economic troubles are JOBS. If we don't value work over wealth in this country, we will not sustain an economic future.

...Biden's speech on the Recovery Act actually does some good message-building about the economy and the need for public investment, which is key.

We're also investing what everybody knows is necessary to build a 21st century economy. I have people sometimes say, aren't you guys doing too much? You know, Presidents in the past have been able to -- and I've been here for eight of them -- they've been able to take the problems that they have and segregate them -- said, we're going to take these two first. We'll put these other four or six or five aside, and we'll get to them next, because they know the status quo ante will pertain. But name me one problem that landed on the President's desk that allowed him to say, no, no, we're going to focus on this, and then in three years we'll get to this?

I say to my friends, does anybody think we can lead in the 21st century without a radically altered energy policy? Does anybody think we can sustain our position in the world without a radically altered education system, where we're no longer 17th in the world in the number of college graduates we graduate? Does anybody think we can sustain without radical change in the cost of health care in this country, and bending that curve? [...]

To state the obvious, we will emerge from this great recession. And I believe that is only -- that's necessary but not sufficient. We have to emerge better positioned to lead the world in the 21st century as we did in the 20th century.

Where the last cycle generated billions of dollars -- billions from investments made via high-speed trades, this cycle needs to make real investments in high-speed rail.

In the last cycle, "innovation" meant bundling and selling subprime mortgages. In this one, our innovations will bundle and sell technologies to produce clean, efficient, renewable energy.

Where the benefits of productivity have not grown in the past, from 2000 and 2007, productivity grew 20 percent; yet the middle-income households fell 3 percent, their income. In this cycle, we're determined to make sure that productivity doesn't elude the poor and the middle class. And this cycle must be one in which, once again, American workers get his or her fair share of the wealth they helped produce.

Um, The Stimulus Is Working

Conservatives very smartly conflated the bailout and the stimulus in people's minds, and traded off public anger with one to demonize the other. They're still doing it, too, with Eric Cantor today suggesting to cancel the rest of the stimulus and "pay off the debt." Most of the debt comes from Bush-era policies, so this is nonsense. It's also wrong to state that the stimulus should be cancelled because it's not working. In fact, Rupert Murdoch's Wall Street Journal tells us the opposite today:

The U.S. economy is beginning to show signs of improvement, with many economists asserting the worst is past and data pointing to stronger-than-expected growth. On Tuesday, data showed manufacturing grew in August for the first time in more than a year. "There's a method to the madness. We're getting out of this," said Brian Bethune, chief U.S. financial economist at IHS Global Insight.

Much of the stimulus spending is just beginning to trickle through the economy, with spending expected to peak sometime later this year or in early 2010. The government has funneled about $60 billion of the $288 billion in promised tax cuts to U.S. households, while about $84 billion of the $499 billion in spending has been paid. About $200 billion has been promised to certain projects, such as infrastructure and energy projects.

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.

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. Some economists say the 1% contraction in the second quarter would have been far worse, possibly as much as 3.2%, if not for the stimulus.

The recovery is still jobless thus far, which means it's not a real recovery yet. And the White House made two mistakes - one, they soft-pedaled the recession, claiming that unemployment would not go above 9% or so, leaving them susceptible to the charge that the stimulus isn't working; and two, they put too much of the stimulus into tax cuts instead of the public investment that would have made it even more successful, particularly on the jobs front.

But without the public investment the stimulus has thus far provided and will continue to provide, we'd be mired in more negative growth and a near-depression. That's the reality.

The President has actually tried to talk up the benefits of the stimulus, but not in a forceful way. As a result, the conservative conflation has led to a souring on government, directly attributable to a lack of leadership and messaging.

Paul Krugman argued recently that Obama hadn't effectively used the bully pulpit to slay "government-is-bad fundamentalism." This is only one poll, but it's fair to ask whether these numbers bear that out.

Obama's poll slide has prompted some to ask whether his presidency might fall short of the transformative moment many expected. I think it's too early to reach a conclusion on this. If Obama pulls out a health care victory, everything will shift again.

But for a time it seemed like shattering the government-is-bad paradigm was distinctly within Obama's reach. General confidence in the government's ability to secure the public's well being seems like pretty good number to keep an eye on when gaming out the potential for transformation of this moment, and of this presidency.

This has mostly resonated in the health care debate, with insurance companies inexplicably getting somewhat higher marks now than government as a health care provider, despite the fact that the groups with the highest satisfaction with their health care are seniors (government-provided single-payer system), and veterans (government-run NHS-style system).

Politics is about storytelling. Obama during his campaign actually started to tell a pretty decent story about government as a guarantor of basic rights, which can equalize opportunity and give everyone a shot. He told a story of community, where we take care of each other and use government as a means to do so.

That's basically gone. And as a result, the public investment program that averted a depression is considered a failure.

Very dangerous.

Japanamania!

Japan is often referenced when talking about their "Lost Decade" in the 1990s, a time when growth stagnated and economic activity flatlined. For ten years. And after that, the ruling party was STILL in power. So when the opposition party actually captures control of the government in the Land of the Rising Sun, it's a big deal.

Japan's opposition swept to a historic victory in elections Sunday, crushing the ruling conservative party that has run the country for most of the postwar era and assuming the daunting task of pulling the economy out of its worst slump since World War II.

A grim-looking Prime Minister Taro Aso conceded defeat just a couple hours after polls had closed, suggesting he would quit as president of the Liberal Democratic Party, which has ruled Japan for all but 11 months since 1955.

"The results are very severe," Aso said. "There has been a deep dissatisfaction with our party."

Unemployment and deflation — and an aging, shrinking population — have left families fearful of what the future holds.

Fed up with the LDP, voters turned overwhelmingly to the opposition Democratic Party of Japan, which ran a populist-leaning platform with plans for cash handouts to families with children and expanding the social safety net.

"This is a victory for the people," said Yukio Hatoyama, leader of the Democrats and almost certainly Japan's next prime minister. "We want to build a new government that hears the voices of the nation."

The new party plans for real economic stimulus and appears to be far more interested in reversing the effects of climate change. It looks like the Democratic agenda includes practically everything but the kitchen sink, so there are bound to be disappointments. But they actually have a two-thirds majority needed in their lower House to pass bills (I'm thinking about Japan's perpetual economic troubles, and the similarity to California, based mainly on that process obstacle).

Meanwhile, here's a look at Japan's health care system, among the best in the world (though lifestyle plays a big role in that).

...interesting op-ed from the likely new Prime Minister Yukio Hatoyama, arguing for a new progressive economic structure and not "unrestrained market fundamentalism and financial capitalism, that are void of morals or moderation, in order to protect the finances and livelihoods of our citizens."

Cash For Clunkers, Consumer Savings, Increased Fuel Efficiency And Jobs

With the cash for clunkers program winding down, we can start to measure its effectiveness. And guess what, it was effective! The program sold almost 700,000 cars, many of which would not have otherwise been sold. It saved consumers money in both purchasing the automobile and long-term gasoline costs. Dealers who were facing hard times due to the Chrysler and GM bankruptcies will now have a boost to get them through. Third-quarter economic figures expect to have a .3-.4 increase in growth (from just a $3 billion outlay). And despite naysayers like Edmunds.com, the most tangible impact of the program is the 39,000 jobs it created:

One auto analyst called the program a success, if only because his research showed that it was responsible for saving 39,000 jobs that otherwise would have been eliminated.

"It's really more substantial than we had thought in terms of stimulus," said David Cole, chairman of the Center for Automotive Research. "This is companies putting people back to work."

General Motors announced last week that it will reinstate 1,350 workers and add overtime for about 10,000 at three plants, as the automaker replenishes inventory sold during the government program. Honda also said it will increase U.S. production.

The other big winners in the program were Asian automakers. Eight of the top 10 new cars purchased through the program came from Honda, Hyundai, Nissan and Toyota, which claimed the top spot with its Corolla. The Corolla, Honda Civic and Ford Focus are manufactured in the United States.

I don't know how anyone in their right mind could find the program to be anything other than a fantastic success.

...Joe Romm concurs.

Obama And The Base

Everybody has gotten to this before me, but I did want to say a few words about Obama and the progressive base. You can see in recent polling that the slide in the President's numbers is coming not from the right, who have already lined up against him, but from the left. Liberals and Democrats are not seeing the change they voted for, and are responding by rejecting this President. Liberals tolerated a lot of the slow-walks and aping of Bush policies in the areas of civil liberties, gay rights, the banks, and other realms, but the wobbling over the public option was the last straw, as they say. Digby explains it well.

There have been a series of issues, one on top of the other and each one more distressing, in which the fundamental principles on which Obama ran have been either betrayed or compromised. It's been too much, too many, in too short a time, from civil liberties to secrecy to cozying up with industry behind closed doors. These aren't minor issues --- they go directly to values and principles.

He's losing trust among the base because he appears to believe that those constituents have no serious claim on his agenda. Even the appointment of Sotomayor did not reflect a liberal commitment beyond the breaking of ethnic barriers, which is wonderful, but cannot be seen as a substitute for progressive principle. Bargaining away the one substantial progressive demand in health care reform is seen as simple bad faith.

I'm not one to trust politicians, but I recognize that most people do, even ardent partisans. They are busy, they don't want to have to follow every detail of the political sturm and drang or try to read between the lines of the NY Times every day to try to figure out what's going on. They more or less inform themselves before an election about what their representatives say they believe in, they assess their sincerity and commitment to certain broad principles and values, and then they leave the governing in their hands, trusting them to do what they said they would do to the best of their ability. Obama promised a lot. A whole lot. And he garnered the trust of many millions of liberal minded folks. When that kind of trust is betrayed, it's very hard to get it back.

I certainly hope they are not fighting the last war. Bill Clinton did not suffer a backlash in his base because he was operating in an environment of conservative dominance and a very weak left flank. The base was desperate and demoralized. But it's not 1996 anymore and that strategy just won't work this time. The conservatives are a clownish group of know-nothings whose approval ratings are in the single digits. They should not, in a democratic society, have the power to shape strategy to the extent they are and the president should not be empowering them. Big business and finance is even more discredited and has no trust among the poeple whatsoever. Openly catering to them in this environment is nothing short of defiant (and politically suicidal.)

Glenn Greenwald and Joan Walsh make largely the same points. I want to say a few things about it.

• There is no question that the Obama Administration isn't getting a lot of credit among the public at large from essentially preventing a Great Depression. If the environment was such that the crises happened a year earlier, and Bush's bumbling put us firmly into Depression, Obama would probably have received a lot more credit for digging us out that preventing things from getting to that point. You can argue with his team's methods for preventing such a crisis, namely shoveling all kinds of money to the banks. But EJ Dionne is right - this prevention has led conservatives to go right back to talking up deficits and spending and big government, as if big government didn't just prevent the worst economic calamity in post-war history.

• That said, Obama isn't blameless for the problems with the base. Indeed he has cozied up to industry in unseemly ways - playing golf with the head of UBS, a company his Justice Department is trying to investigate for harboring illegal tax shelters, is just a metaphor. Bungling multiple gay rights issues and the open hostility of the DOMA brief was just stupid.Joe the Nerd was correct when he told the President on Michael Smerconish's radio show that his "knees were buckling" a bit by trying to compromise with people who have no interest in such a compromise. And the civil liberties outrages are truly contemptible, amounting mainly but not totally to covering up the sins of the past, and in turn abetting them.

• The actual tipping point for all of this was not necessarily the weak-kneed language on the public option, but something that happened a little before, when it came out that the backroom deals Obama cut with industry would save them plenty in the health care reform and shield their profits. Bob Herbert wrote about this last week, but it's been rumbling under the surface for a while. In fact, it was my question to the President at that blogger conference call a few weeks back:

I asked the President about this tension between these buyoffs to stakeholders and his goal to "bend the cost curve" and make health care cheaper and more effective in this country, and here's a paraphrased version of his answer.

"I cannot expect the hospital association, for example, to sign up for something they don't think is right for hospitals and exepct them to back reform. So I understand what they're doing to protect their interests. I think we can negotiate and find a good way to go about this. In theory we could cram down additional savings, but to have the American Medical Association, the American Nurses Association, the drugmakers, the insurance companies, all of them on our team, that does help us move the process forward. Theoretically, there should be enormous savings inside the system. We all know that we pay more for health care than we should, and we shouldn't need additional revenue. But that's harder to do in practice, because all these powerful interests block the efforts. What I think is that we can get a framework where reform begins, one with an insurance exchange, and a robust public option, concrete reductions in cost, prevention, health IT, comparative effectiveness research, and it will be possible to achieve greater savings with a more efficient system down the road. And we can revisit the policy 10 years from now and possibly see even more savings than what was scored and anticipated."

He's basically admitting that he allowed industry to cut favorable deals to keep them on the side of reform. This is still reverberating. Today's New York Times has hospital associations crowing about the benefit to their members over the 10-year window in the form of reimbursement payments for the newly insured. Drug companies are seeing a freer hand to deny access to affordable drugs abroad so they'll keep their end of the bargain on health reform. When people started to put two and two together, and realize that the health reform bill looked more like a giveaway to the stakeholders, they got extremely upset. I don't begrudge hospitals and drugmakers the ability to make money if they are healing more people, but there's a real disconnect when the groups who profited from the broken system stand to profit more off of something called reform. THAT was the moment things went off the rails.

• Nevertheless, I think that Obama has a chance to turn this around. It's not just about progressive outreach, however; it's about the actions he will take, or be forced to take. The President late last week started to use forceful, moral language about the need for health care reform, and that's great too.

It has never been easy, moving this nation forward. There are always those who oppose it, and those who use fear to block change. But what has always distinguished America is that when all the arguments have been heard, and all the concerns have been voiced, and the time comes to do what must be done, we rise above our differences, grasp each others’ hands, and march forward as one nation and one people, some of us Democrats, some of us Republicans, all of us Americans.

This is our chance to march forward. I cannot promise you that the reforms we seek will be perfect or make a difference overnight. But I can promise you this: if we pass health insurance reform, we will look back many years from now and say, this was the moment we summoned what’s best in each of us to make life better for all of us. This was the moment when we built a health care system worthy of the nation and the people we love. This was the moment we earned our place alongside the greatest generations. And that is what our generation of Americans is called to do right now.

But actions will now drive the outcomes, because liberals have heard enough talk throughout the campaign and the first seen months of the first term. Whether the White House likes it or not, the public option has become central to most progressive conceptions of the health care debate. Calling it a source of confusion or a sliver or reform simply won't work. And liberals who are needed at the end of this fight will not work for a policy in which they do not believe. The President put himself down this rabbit hole, and only he can bail himself out. Because progressives are going their own way.

For many Obama supporters who supported President Obama's candidacy because they believed he would rally the public to pass a reform agenda, the White House focus on legislative chess in the healthcare debate has resulting in grumbling about whether or not President Obama is the President they voted for. Fairly or unfairly, Obama now faces a rising tide of doubt in his administration from the very supporters who have backed him most steadfastly since the election.

Many of these supporters are now using internet tools and small donations to signal that their support of healthcare reform anchored in a robust public option would be stronger than their support for an Obama administration willing to negotiate away or weaken a public option.

Thus, weeks before any final bill has actually been written, the healthcare debate has already brought about the most significant change in the American political landscape since Obama won the Iowa caucus to become the leading contender for the Democratic nomination.

The idealists who elected the President are siding with their ideals rather than their candidate.

Obama can choose to live up to those ideals, and turn the tide at this stage of his Presidency, or he can play the same games he's been playing, and lose the base - perhaps permanently.

...Arianna has some very good thoughts on this.

About That Deficit

Many are speculating that the President re-appointed Ben Bernanke in the middle of his vacation to get the story away from this:

The Obama administration, citing an economic downturn that has been deeper than it had first thought, raised its estimate on Tuesday of the government’s deficit over the next decade to $9 trillion from $7.1 trillion.

Despite the shortfall, White House officials said they saw no reason to back away from President Obama’s ambitious and costly goal of overhauling the health care system. The new amount includes the cost of the health care overhaul as well as about $600 billion in additional revenue that the administration hopes to raise, two initiatives Congress has yet to approve [...]

Analysts at the Congressional Budget Office put their 10-year deficit estimate slightly lower, at $7.14 trillion, though the agency uses a slightly different method to reach its number. The budget office takes into account only policies already in place, while the administration can consider policies and budget decisions that its hopes to install.

White House officials predicted that the budget deficit this year will peak at $1.58 trillion, though they said the 2009 shortfall will be about $261 billion lower than they had predicted in May. The main reason is that officials have decided that they will not need another round of bailout money for the nation’s banks. The Congressional Budget Official also estimated a deficit this year of about $1.6 trillion.

Paul Krugman puts the numbers in perspective, saying that the added debt in the next decade is bad, but would equal 40% of annual GDP, which is comparable to what many other countries have dealt with in the past. What I'm wondering is if the deficit has ever actually been registered that way. I've certainly never seen it reported in the papers in ten-year increments - you usually see what the annual deficit is, and then the total debt. This seems like a new tactic that plays to the fiscal scolds.

Meanwhile, the way to reduce deficits is to increase productivity, output and employment, and that's the real problem with these numbers.

The real story in the new CBO projections should be the more dire economic outlook. CBO now expects the unemployment rate to be near 10 percent through most of 2010. Its new projections will show that the unemployment rate will only return to more normal levels in 2013 or even 2014, more than six years after the collapse of the housing bubble threw the economy into recession.

The implication of the new CBO projections is that millions more people will be needlessly suffering because of the economic mismanagement of the Greenspan-Bernanke-Bush crew. CBO views 4.5 percent unemployment as being the sustainable rate of unemployment. If the unemployment rate is 10 percent, more than 8 million people are needlessly out of work, with another 5 million or so being forced to work part-time because they cannot find full-time employment. These people will be struggling to pay their health care bills, cover their mortgage or rent payments, and meet other necessary expenses for themselves and their families.

The rational response to the news that the economy will be far worse than had previously been projected should be a demand for more stimulus. After all, why should millions of people lose their jobs, their homes, and their health just because the people who managed the country's economic policy over the last decade were incompetent?

But the focus is placed on the deficit, meaning that the ability to spend our way into full employment has become politically impossible. A second stimulus looks unliklely at this point.

...by the way, a good bit of these 10-year projected deficits - probably half of the total - comes from Bush Administration unfunded mandates. Ten years' worth of Bush tax cuts for the wealthiest Americans could have filled the rest.

...And also note that this near-term projection has a deficit that's $260 billion less for FY2009 than expected, because there is no need for another bank bailout. That could be a headline too, if reporters wanted to write it, especially considering that near-term projections are more reliable than ones about what the economy will look like in 2019.

Bernanke Is Back-y

The kid stays in the picture:

President Barack Obama will announce Tuesday that he is nominating Ben Bernanke for a second four-year term as chairman of the Federal Reserve, White House Chief of Staff Rahm Emanuel said.

Mr. Emanuel said Mr. Obama will make the announcement from Martha's Vineyard Tuesday. He said the president credits Mr. Bernanke for "pulling the economy back from the brink of depression."

Mr. Bernanke's term as Fed chairman expires in January. His renomination requires Senate confirmation.

Dean Baker said at Netroots Nation that he supported Bernanke's re-confirmation because "otherwise, Larry Summers would become the chair, and that would be awful."

Not exactly praiseworthy. But probably where we're at.

I'd say that, as a condition of Bernanke's re-appointment, we need a full audit of the Fed so we can figure out where the trillions of dollars that they used to staunch the bleeding in the financial markets has gone. But Senators may disagree with me.

A California Economy In Free Fall

Whether it's the continued foreclosure crisis, the impact of state budget cuts or the cumulative effect of depressed consumer spending, it's now extremely clear that the state's employment picture shows no sign of bottoming out, reaching an all-time high in the post-war period.

California's unemployment rate took an unexpected leap in July, reaching a post-Word War II high of 11.9%. The increase contrasts with the national rate, which declined slightly over the same period, and reflects ongoing weakness in the state's battered construction and financial services industries.

The state lost a net 35,800 jobs last month, more than any other state, the U.S. Labor Department said today. It has lost 760,200 jobs over the last year.

Every category of nonfarm jobs in the state except education and health services experienced year-over-year losses. The construction sector was the hardest hit, shedding 18.6% of its jobs. Manufacturing jobs fell 8.7% from the same time last year.

Job loss did slow relative to the previous two months. But I don't think anybody believes that 11.9% is a floor. Los Angeles, where the jobless rate jumped 0.7% in just a month, is one of the worst big cities to find a job in America. The city has 15,000 homeless veterans. And areas of the Central Valley and the Inland Empire are in far worse shape. It's basically a depression in those parts.

And we are just starting to add a round of painful state budget cuts to increase the economic shortfall. Whether it's closing parks that provide economic benefits, or dropping or cutting aid to 100,000 IHSS recipients, or wiping out the entire domestic violence budget, the cuts will not only force the poor and infirm to slip through the cracks and cause mass suffering and even death, but the economic impact will be profound. Caregivers will lose their jobs. Relatives will shift their schedules to care for their families. Productivity will reduce. It's just a plain fact that lowering public spending during a deep recession will negatively impact the economy. Consumers aren't spending, companies aren't trading and businesses aren't investing. Government is the spender of last resort. And that spending has been slashed.

I honestly don't know where the bottom is.

Florida's High-Tax Population Flight?

Via Joe Mathews, here's yet another powerful piece of evidence that the Yacht Party scaremongering over how high taxes force people to leave California is a load of fertilizer.

TALLAHASSEE -- For the first time since the end of World War II, the growth state of Florida lost population, researchers say, in a sign that the economic recession is even worse than many had feared.

In all, the state lost about 58,000 people from April 2008 to April 2009, according to a new estimate from the University of Florida's Bureau of Economic and Business Research.

"It's such a dramatic shift from what we've seen in the past,'' said Stan Smith, the bureau's director.

"Florida's economy is, in a lot of ways, driven by population growth,'' he said. "Perhaps more importantly, population growth is a reflection of how the economy is doing both in Florida and in the nation.''

It goes without saying here that Florida has no state income tax.

Attributing population shifts to taxes is about as rational as attributing student test scores to rain. If you want to correlate populations and the economy, the Occam's razor explanation would be that people go where the jobs are. And I would add that people who cannot find a job probably won't stay around a place long if the social safety net is vaporized.

The lack of political media in the state allows urban legends like this to take hold through the only outlets left, right-wing radio and persistent rumor. You get the falsehoods you pay for listening to such garbage. If we had 100 Peter Schrags in the media and twice that in the Democratic Party leadership forcefully rebutting such misinformation and making the value-based case for the kind of progressive government they'd like to see, at least there would be a counterweight. But it's hard to argue something with nothing.

Wildly Successful Government Program

Americans have been conditioned by wingnut rhetoric into believing that government cannot possibly work well. I think that ought to be contradicted by the success of the Cash For Clunkers program, which leveraged $4-5 billion into the economy in seven days, got consumers spending again on big-ticket items, and improved fuel efficiency on 250,000 cars well above expectations (preliminary Congressional reports show a 69% increase in fuel efficiency - most people are trading in SUVs with 100,000 miles or more on them for solid passenger cars). The program is working so well that Congress wants to continue it.

Congress is moving quickly to save the depleted cash-for-clunkers program, as the House passed a $2 billion spending measure Friday afternoon that would keep alive a program that has encouraged American car owners to trade in their old gas guzzlers for more fuel efficient vehicles.

Despite some criticism from Republicans who called the legislation another bailout for another industry, the bill easily passed on a 316-109 bipartisan vote.

Under the fast-track bill, Democratic leaders will use funds from a renewable energy loan guarantee included in the stimulus. The bill would extend the program through Sept. 30, 2010. Democrats have portrayed the run on cash for clunkers cash as a great success for the $1 billion program, which allows car owners to turn in older, less fuel efficient cars for a $4,500 rebate to purchase higher gas mileage vehicles.

These are the same Republican stooges who complained that GM and Chrysler were shutting down too many auto dealers. Now the government designs a program that massively helps dealers, achieves fuel efficiency and with a small investment gets a lot of economic activity going, and they scream "bailout." Hypocrites. There's also the fact that this is not even new money, but money already in the stimulus package. They're also whining that the dealers haven't been paid yet, even though the program kicked off a WEEK ago. Apparently they all receive their paychecks instantly for all work they perform.

Sadly, too many people see a government program run out of money and think it failed. No, that means demand was so high that it fulfilled its purpose in a matter of days. I see Claire McCaskill rejecting the idea of "subsidizing auto purchases forever." Apparently "forever"=anything more than one week.

We still have a tough economy. The recession has leveled off into something approaching stagnation. And there is compelling evidence that the stimulus package is responsible for even getting us back to the stagnation point. Consumers still aren't spending and a lot of people still have no job. Until businesses start hiring again government needs to drive economic activity, which is why you're seeing second stimulus packages proposed in the form of extending measures from the initial stimulus.

Except lots of those extensions revolve around corporate tax breaks and not things that put money into the economy. Things like Cash for Clunkers. And Democrats ought to tell the story that this successful government program, going deliberately and directly to Main Street, represents our best hope for economic recovery.

UPDATE: Obama said this today:

Now, one of the steps we've taken to boost our economy is an initiative known as "Cash for Clunkers." Basically, this allows folks to trade in their older, less fuel-efficient cars for credits that go towards buying fewer, more -- newer, more fuel-efficient cars. This gives consumers a break, reduces dangerous carbon pollution and our dependence on foreign oil, and strengthens the American auto industry. Not more than a few weeks ago, there were skeptics who weren't sure that this "Cash for Clunkers" program would work. But I'm happy to report that it has succeeded well beyond our expectations and all expectations, and we're already seeing a dramatic increase in showroom traffic at local car dealers.

It's working so well that there are legitimate concerns that the funds in this program might soon be exhausted. So we're now working with Congress on a bipartisan solution to ensure that the program can continue for everyone out there who's still looking to make a trade. And I'm encouraged that Republicans and Democrats in the House are working to pass legislation today that would use some Recovery Act funding to keep this program going -- funding that we would work to replace down the road. Thanks to quick bipartisan responses, we're doing everything possible to continue this program and to continue helping consumers and the auto industry contribute to our recovery.

So I'm very pleased with the progress that's been made in the House today on the "Cash for Clunkers" program. I am guardedly optimistic about the direction that our economy is going. But we've got a lot more work to do. And I want to make sure that all the Americans out there who are still struggling because they're out of work or not having enough work know that this administration will not rest until the movement that we're seeing on the business side starts translating into jobs for those people and their families.

Absolutely true. Democrats don't accentuate enough positives.

UPDATE: McCaskill backtracks, says she would consider using existing fund for C4C, wants to study program's effectiveness.

UPDATE: Enviro-blogger Adam Siegel, a critic of the C4C program initially, has some thoughts, conceding that the program is working very well but suggesting some tweaks. The best critique of the program is that it props up the car culture, which I don't doubt, but people with 140,000 miles on their Hyundai SUVs probably aren't candidates for biking or the subway, and what's more, this is a successful economic program with definable environmental benefits, not vice-versa.

Cash For Clunkers Looks To Be Success

So the government inaugurated that cash for clunkers program this week. How's it going? Well...

The U.S. government will suspend the popular cash-for-clunkers program after less than four days in business, telling Congress that the plan would burn through its $950-million budget by midnight, several sources told the Free Press [...]

The decision to suspend the plan came after auto dealers warned the government today that it was in danger of losing track of how many trades had actually been made.

The plan offering owners of old cars and trucks $3,500 or $4,500 toward a new, more efficient vehicle has proven wildly popular, with 22,782 trades certified by federal officials since Monday. But the National Highway Traffic Safety Administration told dealers Wednesday that a vast majority of transactions submitted were being rejected for incomplete or illegible paperwork.

A survey of 2,000 dealers by the National Automobile Dealers Association, the results of which were obtained by the Free Press, found about 25,000 deals not yet approved by NHTSA, or about 13 trades per store. With 23,005 dealers asking to be part of the program, auto dealers may have already arranged the sale of more than the 250,000 vehicles that federal officials expected the plan to generate.

OK, so some problems with implementation. But in general, you're talking about a wildly popular program. I think that the speed of the deals shocked those carrying out the rebates, but I expect that to get ironed out soon enough. And you're basically talking about $1 billion dollars leveraging about $4-$5 billion dollars through the economy within four days and saving an unspecified amount of oil through the sale of almost a quarter of a million more fuel-efficient cars. The fuel efficiency standards could have been higher, no doubt, but taking out a quarter of a million crappy gas guzzlers is great, and $5 billion in economic activity where none would otherwise exist is an excellent mini-stimulus.

I also like DiFi's stand, after Michigan lawmakers vowed to seek additional funds for the program, that she would block anything unless the fuel economy gains were boosted. The taste has been offered to Detroit, and now they'd be hard pressed to say no.

Now, let's offer money to people to paint their roofs white.

Tostitos State Park

This is the legacy of historically unpopular Governor Arnold Schwarzenegger and his friends in the Yacht Party - corporate sponsorships for state parks.

State parks officials and nonprofit organizations scrambled Wednesday to find funding and possibly new corporate sponsors to keep as many as 100 parks and beaches open after Gov. Arnold Schwarzenegger slashed an additional $6.2 million out of the state parks system [...]

State officials won't finalize a list of park closures until Labor Day and said they hope to see the parks reopened in one to two years.

"We are actively seeking anyone who can help us with these places, all of them jewels, at a time when people need them most," said state parks Director Ruth Coleman.

"There are many groups and corporations that will step up to the plate and try to help," said Elizabeth Goldstein, executive director of the California State Parks Foundation, a nonprofit organization dedicated to protecting state parks. "But it would be a mistake to think that these efforts will be sufficient to replace the public funds being extracted." [...]

The crisis also triggered debate over the kinds of recognition corporate sponsors could expect in return for helping to subsidize a state park.

"We're reaching out to all possible partners -- cities, counties, nonprofits, banks, corporations, newspapers, individuals -- who would be interested in helping us," said Roy Stearns, spokesman for the state parks department. "Maybe we can find agreements that don't alter, commercialize or degrade our state park system.

"For example, if Budweiser came forward with money for Malibu Beach State Park, we wouldn't change the name to Budweiser Beach," he said. "But why not put up a banner saying, 'This park is kept open by Budweiser' for as long as they continue helping us?

If this isn't a hop, skip and a jump to unique licensing agreements to sell products on site, I don't know what is.

The article makes pretty clear that, while state parks and beaches may not be financially self-sustaining, they generate major amounts of economic activity. In fact, over the past year, the system "is currently packed with the highest visitation rates ever recorded," according to the parks director. This leads to residual spending in the areas around parks and beaches, increased tourism, etc. The natural beauty of California is a major attraction throughout the world.

Thanks to Governor Hoover we must lock them up or turn to the private sector to sustain them.

All part of his plan.

...I want to also address George Skelton's complaint that progressives somehow made their bed by voting down the May 19 ballot measures and now they must lie in it. I'll ignore for the moment this major error in the piece, the assertion that "state revenue has been plummeting, down 13% in the last two years even with February's tax increases." (um, they didn't take effect until April, not over the "last two years") And I won't comment on his barely suppressed glee over eliminating cost-of-living adjustments for poor people on welfare.

Schwarzenegger and the Legislature were widely accused of scare tactics -- crying wolf -- when they warned about the consequences of voters rejecting the May ballot measures. The wolf just broke down the door.

So let's do Skelton's counterfactual. Let's envision a world where the ballot measures that impacted the bottom line passed.

Those were worth a little less than $6 billion.

The deficit was $26 billion.

$1 billion of those $6 billion were cuts to different programs. If a world where cuts to certain programs means we wouldn't feel cuts to other programs is a world you populate and exalt, I think you're alone.

The other $5 billion was dubious borrowing. The most contentious item in the budget, and the most likely to have been dropped in your counterfactual... was $5 billion in dubious borrowing, only to local governments.

So the consequences of voting down very unwise ballot measures was... what, exactly? Different cuts to vital services and different dubious borrowing?

(And of course, we'd have a permanent spending cap, rather than the political spending cap we have now thanks to the conservative veto.)

Playing Defense vs. Playing Offense

Joe Biden took to the pages of the New York Times to defend the stimulus package on Sunday.

The single largest part of the Recovery Act — more than one-third of it — is tax cuts: 95 percent of working Americans have seen their taxes go down as a result of the act. The second-largest part — just under a third — is direct relief to state governments and individuals. The money is allowing state governments to avoid laying off teachers (14,000 in New York City alone), firefighters and police officers and preventing states’ budget gaps from growing wider.

And those hardest hit by the recession are getting extended unemployment insurance, health coverage and other help to get through these tough times. The bottom line is that two-thirds of the Recovery Act doesn’t finance "programs," but goes directly to tax cuts, state governments and families in need, without red tape or delays.

As for the final third, the act is financing the largest investment in roads since the creation of the Interstate highway system; construction projects at military bases, ports, bridges and tunnels; long overdue Superfund cleanups; the creation of clean energy jobs of the future; improvements in badly outdated rural water systems; upgrades to overtaxed mass transit and rail systems; and much more. These investments create jobs today — and support economic growth for years to come. Far from being a negative, the wide array of these investments is needed given the incredible diversity of the American economy.

Projects are being chosen without earmarks or political consideration, and many contracts have come in under budget. More than 30,000 projects have been approved, and thousands are already posted on recovery.gov — providing a high level of transparency and accountability. Taxpayers should know that we have not hesitated to reject proposals that have failed to meet our merit-based standards.

None of this is false - in fact, some of us objected to spending so much of the Recovery Act on non-stimulative tax cuts, which some, though not all, of the tax cuts in the package are. But when faced with an economy like this, you can do one of two things. You can defend the actions taken to this point, or you can look at the economic picture as it is, and make changes based on those evolving conditions. This would require admissions that the package may have been too small, but it's better than the alternative, defending a faulty program while unemployment heads into double digits. That's why it's sad to see Nancy Pelosi tossing aside talk of a second stimulus. By the time people realize something has to be done, it'll be too late to do it.

I recognize the political difficulty in getting another round of stimulus passed, but it becomes impossible if nobody is willing to say what needs to be said.

Also, Mr. Vice President, a little less emphasis on projects coming in "under budget" when the whole point is to get as much money out into the economy as possible would be helpful.