President Obama has nominated Princeton University’s Alan Krueger for Chairman of the White House Council of Economic Advisers (CEA), and if approved by the Senate, Krueger, a labor economist and the Treasury Department’s former chief economist, will replace Austan Goolsbee. "I am very pleased to appoint Alan and I look forward to working with him," Obama stated, shifting his eyes between two flat-screen teleprompters during a statement on Monday. "I have nothing but confidence in Alan as he takes on this important role as one of the leaders of my economic team."
Not surprisingly, reports that the Federal Emergency Management Agency (FEMA) is running out of money have surfaced. The fund’s capacity has been maximized by the most recent natural disaster, Hurricane Irene, which is estimated to cost billions of dollars.
With less than $800 million in its disaster aid coffers, the Federal Emergency Management Agency has been forced to freeze rebuilding projects from disasters dating to Hurricane Katrina to conserve money for emergency needs in the wake of Irene. Lawmakers from states ravaged by tornadoes this spring, like Missouri and Alabama, are especially furious.
In its annual Index of Economic Freedom, the joint effort by the Heritage Foundation and the Wall Street Journal, Canada ranks 6th among the 179 countries of the world, ahead of the United States (9th), the United Kingdom (16th), Japan (20th) and Germany (23rd). Considering ten components of economic freedom (among them: Business Freedom, Fiscal Freedom and Government Spending), the report ranks countries on the degree to which “individuals are free to work, produce, consume and invest in any way they please, with that freedom both protected by the state and unconstrained by the state.”
The latest report from the Canadian Labour Force Survey illustrates the degree to which Canadians have benefited from the rebound from the global recession by exercising their freedom to work, with employment increasing by 215,000 from July, 2010 and 675,000 since the bottom of the recession in July, 2009. In a workforce of 17 million, this represents an improvement of 4 percent at a time when employment in the United States has remained flat over that same period. Unemployment in Canada is 7.2%, a full two percentage points lower than in the United States.
Many in the media are saying how unusual it is for our economy to be so sluggish for so long, after we have officially emerged from a recession. In a sense, they are right. But, in another sense, they are profoundly wrong.
The American economy usually rebounds a lot faster than it is doing today. After a recession passes, consumers usually increase their spending. And when businesses see demand picking up, they usually start hiring workers to produce the additional output required to meet that demand.
Some very sharp downturns in the American economy, such as in the early 1920s, were followed quickly by bouncing back to normal levels or beyond. The government did nothing — and it worked.
Overall U.S. unemployment is 9.1 percent. For white adults, it's 8 percent, and for white teens, 23 percent. Black adult unemployment stands at 17 percent, and for black teens, it's 40 percent, more than 50 percent in some cities, for example, Washington.
Chapter 3 of Race and Economics, my most recent book, starts out, "Some might find it puzzling that during times of gross racial discrimination, black unemployment was lower and blacks were more active in the labor force than they are today." Up until the late 1950s, the labor force participation rate of black teens and adults was equal to or greater than their white counterparts. In fact, in 1910, 71 percent of black males older than 9 were employed, compared with 51 percent for whites. As early as 1890, the duration of unemployment among blacks was shorter than it was among whites, whereas today unemployment is both higher and longer-lasting among blacks than among whites.
How might one explain yesteryear's lower black unemployment and greater labor force participation?
President Obama’s constant refrain about the government’s unprecedented levels of red ink points to “millionaires and billionaires” as the problem, not the massive amounts of waste, fraud, and inefficiency in government operations. Remember when a million per mile seemed like a crazy price for a new road? Now it’s a billion per mile for a transportation project and the politicians are just fine with it, even if the project is totally unnecessary, even if we’re already broke.
To make it allegedly easier for people in San Francisco to get in and out of Chinatown in a hurry, a new 1.7 mile subway line is in the works.
The original projected cost was $647 million. Now it’s $1.6 billion, and growing.
Though Hurricane Irene — later downgraded to a tropical storm — did not cause anywhere the level of devastation initially predicted, it still made a major impact on the East Coast. At least 24 are known dead, thousands are without power, and some areas along the east coast are still under water. Estimates of the damages are in the billions of dollars.
The state of Vermont has been declared a federal disaster area, with many small towns experiencing historic flooding. According to Fox News, “Hundreds of Vermonters were told to leave their homes after Irene dumped several inches of rain on the landlocked state.” Governor Peter Shumlin called it the worst flooding the state has ever seen. As well, he added, there is “extraordinary infrastructure damage” across the state. One video shows a small bridge over Williams River — which had stood since 1870 — swept away by rushing floodwaters.
Every road in the state of Vermont, with the exception of two major highways, was closed at some point over the weekend as a result of the storms.
Punch and Judy Show continues — this time in South Africa.
Speaking to reporters at a breakfast sponsored by the Christian Science Monitor, AFL-CIO President Richard Trumka made it clear that his union is backing off from supporting President Obama and the Democrats in the 2012 elections and is instead going to funnel union funds into attempts to influence state outcomes.
We’re going to use a lot of our money to build structures that work for working people. You’re going to see us give less money to build structures for others, and more of our money will be used to build our own structure….
Let’s assume we spent $100 in the last election. The day after Election Day, we were no stronger than we were the day before. If we had spent that [$100] on creating a structure for working people that would be there year round, then we would be stronger.
Since there has been so much talk among Tea Partiers of returning to the good old, pre-trillion-dollar days of Ronald Reagan’s administration, I thought it would be a good idea to go back to that inspiring time to see what has been happening to the growth of the federal government and how the Great Communicator sought to deal with that problem.
In 1960, Uncle Sam, (better known these days as Uncle Sap), spent $76.5 billion to run the federal government. In 1970, a mere ten years later, that figure almost tripled to $194.9 billion. And ten years later, in 1980, federal spending tripled again to $579 billion.
By then Congress had lost complete control over federal spending. It had enacted so many entitlement programs that the budget had become a locomotive going full-speed down-hill with no brakes. By the time Ronald Reagan became President, the spending momentum was so great that the most a fiscally conservative president could do immediately was to slow down the rate of growth just a little. Momentum is a powerful force, and even a fiscal conservative cannot stop a locomotive on a dime. And that is why Reagan’s 1983 budget reached a new high of $757 billion, with a projected deficit of $98.6 billion.