Monday, January 25, 2010

How's That Bogus Employment Metric Working Out?

Congressional Democrats and White House Officials are busy trying to claim that they've created and saved jobs. Too bad the bogus metric of "jobs created or saved" means that no one actually has to figure out how many jobs there actually are that fit the definition. It's convenient politically, but it's dishonest and doesn't reflect the reality of ongoing unemployment rates at or above 10% (and much higher if you factor in those who are discouraged or underemployed).

The White House sent Robert Gibbs, David Axelrod, and Valerie Jarrett out to the Sunday shows to talk about the economic recovery and it was a farce on display. None could agree with each other on just how many jobs we're talking about.

Gibbs said 1.5 million jobs; Jarrett even less than that. Axelrod threw out the 2 million jobs, and not a single one of them was convincing in making anyone believe that the bogus metric of jobs saved or created means anything other than a fancy way of avoiding the fact that unemployment rates are above 10% (and that the only way they're staying at 10% is by decreasing the size of the workforce to compensate for additional job losses). There isn't job growth, and throwing more money at jobs that were safe jobs isn't stimulus. It's a waste of a trillion dollars.

It's little wonder that House Speaker Nancy Pelosi was peddling the 2 million jobs saved or created as well.

But the one thing we have to keep in mind with the stimulus/porkfest is that it's turned out to be a 1-year gap filler for state budgets across the country. It meant that states could avoid the tough decisions for at least one year. The piper is to be paid this coming fiscal year - and the list of states with multibillion dollar deficits continues to grow (and the deficits themselves are huge). Without additional federal funds (which aren't coming), those states are finally going to have to make massive cuts, and it's going to be painful to watch, especially for those who said - I told you so (like I have been saying).

States are required to be in fiscal balance at the end of the fiscal year. They can't print money. That means that they have to either get more money from the feds (which isn't happening) or they've got to cut spending hard. Operating budgets are being hammered; not merely the capital projects like those proposed in the stimulus package to improve infrastructure or funding for Medicare/Medicaid.

That means that the bloated budgets in places like NY, where they imposed a bunch of new taxes and still raised spending even more, are finding huge shortfalls that aren't being made up (and are still proposing still more taxes to raise the state budget even more). It's unsustainable, and the stimulus isn't going to help these states meet their budgetary requirements. That means more money will be needed from somewhere - or they're going to have to impose significant cuts.

And if Obama decides to take on Wall Street as the root of all evil, he'd only be taking on one of the world's largest economies in the process - the NYC metro region would rank as the 12th largest in the world if it were an independent nation ahead of places like India, Mexico, or Australia. Whack the Wall Street types, and the economy will slump here, and those already imperiled state budgets will get whacked (heck, the reason they're in so much trouble is the lack of tax revenues from Wall Street firms).

All the overblown spending and new taxes are just going to hamper the economic recovery. We're already seeing the effects of heavy handed government intervention as housing sales of preexisting homes dropped by the largest margin in the 40 years the statistic has been kept, primarily because of the homeowner tax credits shifting sales and cannibalizing sales from future periods. It's the same thing that happened with cash for clunkers.

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