The Economy, Stupid
Reading Harold Meyerson’s column on the looming devastation of California public services was yet another reminder of the remarkable extent to which the terrible continuing economic situation has bizarrely dropped off the political agenda. Even the whole “green shoots” debate is really about whether we can expect things to be somewhat better or somewhat worse six months out from now. In either case, things really are really bad right now. And a whole bunch of states—including large ones like California and Pennsylvania—are soon to implement substantial cutbacks in services at just the time when the objective need for social services is going up.
This stuff is a big deal, but absolutely nobody’s talking about it. Instead, the federal government seems paralyzed by some poll numbers indicating that the voters are worried about the deficit. And maybe they are. But the voters aren’t going to be very happy if we head into the midterms with 12 percent unemployment.
39 Responses to “The Economy, Stupid”
Register
RSSLogin
Topic Cloud
ArchivesBlog RollAbout Matt YglesiasContact Me
Donate
July 1st, 2009 at 12:18 pm
None of David Broder’s friends, or Richard Cohen’s, or George Will’s, or Robert J. Samuelson’s, or Charles Krauthammer’s, or Michael Gerson’s, have been affected by the recession.
So nobody worth thinking about has lost their jobs.
The rest of you, just suck it up. Jeez.
July 1st, 2009 at 12:19 pm
The reason why supermajorities and referendum are a terrible way of running a government is that voters are really only good at voting out ruling party when things go south. They are absolutely atrocious at figuring out what policies they want or how to assign blame in congressional fights. But if they like the outcome, they’ll reward the party in power. Otherwise, not. People need to keep this in mind.
July 1st, 2009 at 12:20 pm
In related news, the BLS releases its Unemployment Situation Summary for June tomorrow.
July 1st, 2009 at 12:26 pm
But the voters aren’t going to be very happy if we head into the midterms with 12 percent unemployment.
No, but the Republicans will be tickled pink. And at least a third of the Democrats in office don’t have the stones to use their numbers to enact progressive economic policy. As I’ve said before, I blame it all on the first Johnson administration. And whichever loser thought up the idea of the senate.
July 1st, 2009 at 12:27 pm
The elites don’t worry about unemployment. The rest of the country sees unemployment as a bigger personal problem than the financial crisis.
July 1st, 2009 at 12:28 pm
“This stuff is a big deal, but absolutely nobody’s talking about it.”
Beg to differ. Jim Kunstler has been ringing alarm bells for a good long time.
http://www.kunstler.com/
July 1st, 2009 at 12:31 pm
We already have 12 % nominal unemployment, and the real unemployment rate (counting discouraged workers who have quit looking for a job) is much higher.
We’re going to go into the mid-terms with 15 – 18 % unemployment, maybe higher, and with house prices having continued to fall for two solid years, and with several states in default on their credit.
Interesting times.
July 1st, 2009 at 12:34 pm
Hey all,
Can someone point me to some kind of recent history of California’s budget problems. With such wealth and high economic development (as well as high housing costs), I seem to be missing the reasons for this economic crisis there.
July 1st, 2009 at 12:35 pm
If I remember correctly, much of the money in the stimulus bill that would have specifically helped states overcome these problems was cut. Go Blue Dogs.
July 1st, 2009 at 12:38 pm
The main reason for California’s budget problems is that during the boom years they seemed to think that this was an eternally upward trend and commited themselves to lots of new programs with recurring anual expenses and I think also some tax cuts.
July 1st, 2009 at 12:40 pm
Go read up on behavioral economics. The problem is already solved. We have willed it solved.
See how easy it is.
July 1st, 2009 at 12:43 pm
joel hanes:
I say, “Bring it on!!”. There are reasons for that. First, it means that neither Summmers or Bernanke will be Fed Chair by then. Second, it means that Obama will have to get off his DLC ass and start going all FDR on us. Third, it would likely mean Blanche Lincoln and some other Blue/Bayh Dogs sent packing.
July 1st, 2009 at 12:43 pm
But don’t you understand — MICHAEL JACKSON DIED!!!!!!!!!!
July 1st, 2009 at 12:57 pm
With such wealth and high economic development (as well as high housing costs), I seem to be missing the reasons for this economic crisis there.
Ask Steve Sailer.
July 1st, 2009 at 12:57 pm
It seems to me that “we” have to give the pres political cover by loudly and persistently reminding folks that repeated rounds of tax cuts have a serious cost.
July 1st, 2009 at 12:58 pm
IIRC, it takes roughly 150,000 new jobs/month just to avoid higher unemployment. I think the recent average is over 400,000 job losses/month.
A huge turnaround is required and I don’t see one coming.
July 1st, 2009 at 12:58 pm
The “economy” will be a big story when the stock market goes down again. They have that pretty well in hand however so not to worry, for now. Sit back. Relax. Watch others re enact the Donner Party.
July 1st, 2009 at 1:00 pm
Since the solution to all of our current economic problems is to slash taxes, slash government spending and abolish the central banks, why should anyone be surprised at the looming catastrophe caused by you Keynesian noodle-brains?
July 1st, 2009 at 1:06 pm
somebody nudge rapier back in line.
July 1st, 2009 at 1:06 pm
What no one is talking about is prioritizing spending plans, at either the state (any state, but especially CA) or the federal level. You want health care reform? Fine, maybe we don’t need so many overseas military bases then. Perhaps we could let South Korea, Russia, and China deal with North Korea, and get our army out of there.
Perhaps we could decide that large segments of the Interior Department (pick any, that’s just one) are less important than the things we think we need now.
The biggest problem is that we never, ever make those decisions. Businesses make them all the time when forced, but government never does.
All of this has less to do with the current level of taxation than it has to do with the current level of spending. We could do with making some choices there, and then pitching whatever the required tax rate would be based on services that had been actively chosen.
July 1st, 2009 at 1:08 pm
Don’t you understand – we need to ignore the economy so that we can focus on legislation that might decrease global temperatures by 0.09 degrees by 2050. Because that extra 0.09 degrees in 2050 is a CRISIS!
July 1st, 2009 at 1:14 pm
I used to rant here. The economy was going to be the biggest story in the lifetimes of many Americans. I didn’t quite grasp it would only be millions of little stories. Not a big story.
The losers slink away. Unnoticed.
July 1st, 2009 at 1:16 pm
The CA budget crisis does receive front-page, daily coverage here in CA.
The causes are
(1) Proposition 13 capped property tax increases and made the state over-dependent on sales and income taxes;
(2) those taxes fluctuate with our boom-and-bust economy while property taxes are a much more stable funding source;
(3) CA voters through initiatives have mandated specified funding or percentages of revenues for various programs they like and
(4) the Legislature is unable to find a solution because the budget requires 2/3 vote in the Leg and the GOP, led by some talk-radio personalities, refuses to vote for any tax increases.
We have the worst features of all 50 states’ fiscal structures.
July 1st, 2009 at 1:19 pm
Al,
You do know that the bill requires buildings to be more energy efficient this requirement forces property owners to hire construction workers to make those buildings meet these requirements.
July 1st, 2009 at 1:25 pm
I think the original plan was always to reassess things this fall and see if another big stimulus package (or other new action) was warranted. And although the economy definitely is still getting worse, the cliff-diving aspects have moderated enough that I think the original plan is still in effect.
July 1st, 2009 at 1:25 pm
mimikatz,
Not to minimize the issues you raise, but California has also increased spending 40% just since Arnold came in.
So the question is, can anyone say what that extra 40% is giving you? Does it have value? Is there any spending CA is doing that could be done without?
Those questions are simply never asked. And on Prop 13, it really only helps existing homeowners. We have neighbors who relocated into our very overpriced neighborhood from CA because they could not afford the raw price or property taxes of a home in CA. Prop 13 is ugly, but it was a response to an ugly problem. What California really needs is a new Constitution and a clean slate.
July 1st, 2009 at 1:30 pm
Did you know that damns in Turkey and the weather has reduced the flow of the Tigris and Euphrates by 75% or so since the occupation started? That the disappearance of the water has lead to the abandonment of a huge percentage of Iraqi farmland that relies upon irrigation? Land that for 10,000 years more often than not that has been in production. That the Iraqi ag sector is in total collapse?
Did you know that arguably the greatest fishery in the world the, the cod fishery of the Grand Banks has collapsed? That the cod are for all practical purposes extinct?
It’s funny what can be ignored. When we have our military impeachment I’m sure there will be a lively debate about it.
July 1st, 2009 at 1:39 pm
DTM:
I think the original plan was always to reassess things this fall and see if another big stimulus package (or other new action) was warranted. And although the economy definitely is still getting worse, the cliff-diving aspects have moderated enough that I think the original plan is still in effect.
That’s how I see it. They’ll probably do another stimulus or try, but at least there haven’t been any more Lehman Brothers. And now the Dems have 60 Senators.
July 1st, 2009 at 1:45 pm
They’ll probably do another stimulus or try, but at least there haven’t been any more Lehman Brothers. And now the Dems have 60 Senators.
There is also the possibility of “stealtj” stimulus measures, such as through the upcoming transportation bill. Basically, that just means authorizing more spending than you would have in absence of the need for an additional stimulus.
July 1st, 2009 at 2:16 pm
Prop 13 only helps homeowners who have been in the same place since the 70’s and commerical real estate owners (since they never sell the building it’s self, just the holding corp for the building so the tax rate never goes up). It’s absolutely crippled the rest of the state and forced new home owner to pay much higher rates due to having to make up the lost funds from the previous homeowners and to directly cover specific nieghborhood improvements like streets since the cities and counties have no cash.
It was one thing to cut the rate, but another thing entirely to prevent in dollar values an existing owners rate to basically never increase. It screwed the stated and completely warpped the local housing market.
July 1st, 2009 at 2:30 pm
“Not to minimize the issues you raise, but California has also increased spending 40% just since Arnold came in.”
Wow. Really 40 percent of total state spending, or just Republican math 40 percent – counting federal mandates as discretionary spending and stuff like that?
But if you’re telling the truth, yeah, that seems like a pretty damn big number. (But then again, maybe not. How have other states done in the meantime?) Do you have a link or cite or any other source?
July 1st, 2009 at 2:54 pm
That should have been “stealth”, of course.
July 1st, 2009 at 3:05 pm
Not to minimize the issues you raise, but California has also increased spending 40% just since Arnold came in.
Nominal? Real? Percentage of GDP? Just state? State and local?
July 1st, 2009 at 3:18 pm
Mimikatz has it right, particular #4: Prop 13. The GOP is not a majority party in California, and won’t be for the foreseeable future.
But, it won’t matter, because their nutjob libertarian impulses won’t need to be moderated as long as 1/3 of the Legislature is all they need to advance their core policy: prevent the state government from administering any services.
If Prop 13 went away, you’d see the state GOP change it’s tune in two election cycles, tops: 1st cycle to find themselves irrelevant in Sacramento, 2nd cycle for primary voters to start winnowing out the knuckle-draggers.
July 1st, 2009 at 3:30 pm
Not to minimize the issues you raise, but California has also increased spending 40% just since Arnold came in.
False. In 2003-4, the CA budget was $98.9 billion. The 2008-9 budget spent $91.1 billion. (After the revisions enacted early this year; as passed in 2008 it was $101.9 billion.)
But, yeah, spending is totally out of control!
July 1st, 2009 at 4:09 pm
[...] Continued here: Matthew Yglesias » The Economy, Stupid [...]
July 1st, 2009 at 7:06 pm
dbeach Says:
July 1st, 2009 at 3:30 pm
Not to minimize the issues you raise, but California has also increased spending 40% just since Arnold came in.
False. In 2003-4, the CA budget was $98.9 billion. The 2008-9 budget spent $91.1 billion. (After the revisions enacted early this year; as passed in 2008 it was $101.9 billion.)
But, yeah, spending is totally out of control!
===========================================================
ACtually you need to look here:
http://www.dof.ca.gov/budgeting/budget_faqs/information/documents/CHART-B.pdf
2003-4 $104.2 B
2008-9 $136.1 B
That’s 31% – not quite 40%
July 1st, 2009 at 9:16 pm
not quite 31% either
Arnold’s first budget was 04-05 at $107.6 B
this year’s budget for 09-10 is at $131.4 B so
CA’s budget is 22% larger than when the governator took over. The governor did go o a bit of a spending spree in FY07 and FY08 to bolster his reelection chances.
July 1st, 2009 at 10:20 pm
Arnold’s first budget was 04-05 at $107.6 B
this year’s budget for 09-10 is at $131.4 B so
CA’s budget is 22% larger than when the governator took over.
And those appear to be nominal numbers. If my calculations are right (admittedly a big if), the real increase is something like 8%. And spending as a percentage of GDP actually seems to be down (very, very slightly, but down).