Kevin Drum

John Boehner's Rich Fantasy Life

| Sun Jul. 4, 2010 1:44 PM EDT

I really enjoyed Dan Balz's piece on John Boehner in the Washington Post last night. Balz wanted to know what Boehner would do if Republicans won the House in November and Boehner became Speaker. Aside from a ritual call for repeal of healthcare reform, it turns out Boehner was none too eager to say:

First, he said, was a renewed commitment to fiscal discipline — a test his party badly flunked the last time it was in the majority. Second, he said, was to engage in "an adult conversation with the American people" about the need to rein in entitlement spending. And third, he wants to increase bipartisan cooperation in the House.

....Beyond saying Republicans would scrub the budget for wasteful spending, a pledge regularly made and ignored by politicians of both parties, he offered no examples of what programs Republicans would actually cut. Nor did he seem eager to tip his hand on the terms of entitlement reform. In his interview with the Tribune-Review, Boehner volunteered that the Social Security retirement age might need to be raised to 70 for younger workers but he would go no further.

Asked whether partial privatization of Social Security, which Republicans pushed unsuccessfully in 2005, would be part of a GOP agenda, he twice replied, "I have no idea." Later, he called back to clarify, saying that what he meant to say was that, until Republicans complete their process of soliciting ideas from the American people, there will be no answer to that question. "We're not going to prejudge what's going to come out of this listening project."

That hardly sounded like a politician eager to provoke an adult conversion with the American people.

Italics mine. You'd think that, by now, the GOP might have a decent idea of what it wants to accomplish without soliciting further ideas from the American people, but apparently not. They're still trying to figure it out.

In any case, to summarize, Boehner wants to restore fiscal discipline — even though he's never done it before and has no idea how to do it this time around. He wants to have an "adult" conversation with the American people about entitlements — even though the GOP has never done this before and he refuses to give even a hint about what this difficult conversation might entail. And most hilariously, Boehner insists that what he really wants to do if he becomes Speaker is restore a sense of civility and bipartisanship on Capitol Hill — even though he's been the GOP's point man for crude obstructionism from the day Barack Obama was sworn in. "Skeptics will doubt Boehner's sincerity or capability," Balz said dryly, and indeed they might. But points for chutzpah.

Advertise on MotherJones.com

Michael Steele Finally Goes Too Far

| Sun Jul. 4, 2010 1:14 PM EDT

Browsing through the news today, I see that RNC chairman Michael Steele is now being attacked from pretty much all corners. No one — not a single person — is defending him anymore. Which is interesting, no? It turns out that a Republican party chairman can survive calling Rush Limbaugh "ugly"; can survive calling abortion an individual choice; can survive an admission that the GOP has followed a racist strategy for the past 40 years; can survive accepting money for political speeches; and can survive a scandal over RNC spending at a lesbian bondage club. Sure, Steele had to apologize each time, but he survived.

But speaking out against a war? That, it turns out, is finally something that every faction of the Republican Party can agree on. For that, they're unanimously demanding Steele's head on a platter. Pretty interesting party, isn't it?

Lack of Growth Due to Lack of Customers

| Sun Jul. 4, 2010 12:43 PM EDT

Don Lee of the LA Times presents yet more pessimistic news about our anemic economic recovery:

In every recession over the last three decades, it has been America's small businesses — those Lilliputian companies with fewer than 100 employees — that stepped forward, began hiring and pulled the country out of the mire.

Not this time....A host of factors — some well-recognized and others seemingly unnoticed in the national debate over economic policy — are converging to restrain small-business owners from hiring. Among them:

  • Near-stagnant demand for goods and services as a result of consumers' reluctance to return to their free-spending ways.
  • A disturbing falloff in the creation of new small businesses.
  • The devastation of the real estate market.
  • Uncertainty about the economic outlook at home and abroad.

....The fact that many small firms are seeing little increase in demand for their services and products is decisive for Scott George, owner of Mid-America Dental & Hearing Center, which employs 55 people in the southwestern Missouri town of Mount Vernon.

"I'm not having any trouble getting money," said George, who recently got a $250,000 loan to renovate one of his buildings. But he's not hiring more workers because of little or no growth in sales.

As it happens, I've read conflicting evidence about whether or not it's really small businesses that are usually the engines of job creation when the economy comes out of a recession. It seems to vary with the recession, and in any case the net difference between job creation in small vs. large businesses appears to be modest. Still, most of what Lee says here applies to large businesses too: lack of expansion right now is due less to credit woes than to simple lack of demand. Until consumers start spending again, economic growth is going to be weak. But what's going to get consumers spending again?

Jobs and Workers: A Note From the Field

| Sat Jul. 3, 2010 2:18 PM EDT

In comments to yesterday's post about firms having trouble finding qualified workers even with millions of unemployed to choose from, Bob offers this:

My day job is with a regional Workforce Investment Board and I might be able to offer some additional clarification based on what we are seeing in this job market.

There are indeed some jobs that remain vacant because employers cannot find workers with the right skills. You correctly noted that this problem was MUCH worse mid-decade when the economy (at least here) was doing well. At that time employers were willing to hire people as long as they had very basic employability skills (work ethic, attendance, hygiene, etc). They would train for job specific skills.

Today, I would break "the problem" into several problems.

  • First, there is a significant fraction of the unemployed who are reluctant to re-train. The reasons behind this are: (1) Early on in their unemployment, some feel they cannot afford to take time to go back to school — even if it is government financed like we provide. They need money today and figure looking is their best choice because they've "always been able to find a job." As unemployment lingers they start to broaden their horizons but can afford it even less. As background, one must be unemployed, through no fault of one's own, when applying for training. However, we will continue to pay for training if the client finds a job. In fact, we encourage and assist people in finding employment to pay for basic needs while training. (2) They were poor students and/or hated school the first time around. The idea of going back, sometimes after decades, is extremely intimidating.
  • Employers who once would take any warm body are becoming more choosy and, at the risk of overstating it a bit, feel they can find over qualified workers at bargain basement prices. It seems like this is what is happening with the pharmaceutical company in the NYT article.

    I read the issue a bit differently than you are. The 9th grade reading and math test, which a "significant" proportion failed (is that 25%, 50%, more, less???) is a floor. It is likely the company is looking for much more than that, a point that is alluded to by the disappointment with local training programs. Moreover, per the article, the company is paying 60-67% of the going rate for skilled workers. Workers who were living check to check before the recession will be reluctant to take a 30-40% pay cut. Also, many with professional backgrounds forget that factory work pay scales are pretty rigid. A worker who accepts a position 40% less that what they were making will likely never make up the difference. That is a tough nut to swallow.

    Here is where the right wingers have a partial point. Unemployment insurance (UI) is a cushion that has a tendency to delay that point at which such a worker as described above gets desperate enough to take anything. For my part, I don't think this is bad. When the economy rebounds, underemployment is a drag on growth. Fitting people to the best employment for which they are qualified is the optimal solution. To the extent that UI helps this, it is a good thing.

My region is quite diverse in that we cover urban, suburban and rural areas. Each brings its own challenges. Recently, a large paper mill closed in the rural part of our region putting 1,200 out of a job in the space of 4 months. Over 200 have found jobs, in manufacturing, with a local private shipyard. This company has been willing to take skilled machine operators and put them through an extensive, and expensive apprenticeship program. The vast majority of the workers leaving the paper plant have no more than a high school diploma yet the shipyard willingly took them on as trainees. In this instance, the shipyard is paying a decent apprenticeship wage, with the opportunity of moving into a more lucrative career path AND providing a "blue chip" training experience.

One could argue that this is "government funded" because the shipyard is a 100% Navy contractor and that other employers cannot profitably offer that same deal. However, the workforce investment system is able to provide on the job training funds to employers willing to hire and put workers through a legitimate training experience. Each workforce investment board is able to set its own policies. In our case we will pay up to 50% of a trainee's salary for up to 6 months. The primary requirements are that the newly hired employee does not displace an existing employee; the trainee gains measurable skills over the course of the training period; and the trainee's salary increases after the training period ends (commensurate with the increase in skills).

The system is flexible enough to accommodate the great variety of situations present in individual local job markets. Both employers and prospective employees need to be aware of the services and willing to take advantage of them.

Friday Cat Blogging - 2 July 2010

| Fri Jul. 2, 2010 2:42 PM EDT

Domino's new favorite place is inside our closet underneath Marian's clothes, and since I know that everyone wants the very latest on cat habits here at Drum Central I figured I'd better get a picture of it. Unfortunately, Domino was a pain in the ass this week. Every time I walked into the closet and put the camera down at floor level, she immediately popped up and came out to investigate and be petted. Also unfortunately, although my camera has a terrific red-eye reduction for pictures of humans, it completely lacks laser-eye reduction for pictures of cats. So this is the best I could do. This is where Domino hides out for her afternoon snooze these days.

As for Inkblot, here he is on top of a bureau in the kitchen. He loves it whenever I put him up there, but for some reason he never jumps up himself. I'm really not sure what the deal is with this.

Need more? Well, the economic news has been pretty dismal this week, so courtesy of my sister, click here to read the inspiring story of Oscar the bionic cat. Oscar lives on the island of Jersey, and following a run-in with a combine harvester he became the star of the first episode of a new BBC show, The Bionic Vet. Oscar has been outfitted with a pair of titanium legs, and although he now has to stay inside he's apparently pretty happy with his new prosthetics. Enjoy!

Are There Jobs But No Workers?

| Fri Jul. 2, 2010 2:07 PM EDT

I'm trying to make sense out of today's New York Times piece about factories having difficulty hiring the right kind of workers, but I'm having trouble. The basic story we've been hearing for the past few years makes sense: broad sectoral shifts in hiring mean that firms with job openings can't always find good candidates even though the recession has provided them with millions of unemployed workers to choose from. Lots of construction workers have lost their jobs over the past couple of years, but that doesn't do you much good if you're looking for experienced lathe operators.

But that's not quite the story the Times is telling. First, there's this:

Here in this suburb of Cleveland, supervisors at Ben Venue Laboratories, a contract drug maker for pharmaceutical companies, have reviewed 3,600 job applications this year and found only 47 people to hire at $13 to $15 an hour, or about $31,000 a year. The going rate for entry-level manufacturing workers in the area, according to Cleveland State University, is $10 to $12 an hour, but more skilled workers earn $15 to $20 an hour.

This is a little fuzzy, but at first it sounds as if Ben Venue isn't willing to pay enough to get skilled workers, who typically earn $15-20 per hour. "The problem appears to be that manufacturers don't want to pay the market wage for the skills that they need," says Dean Baker. "This is like someone who wants to buy a 4-bedroom home with a yard in a good neighborhood in Washington for $200,000, and then complains that there is a shortage of good homes."

But then there's the next paragraph:

All candidates at Ben Venue must pass a basic skills test showing they can read and understand math at a ninth-grade level. A significant portion of recent applicants failed, and the company has been disappointed by the quality of graduates from local training programs. It is now struggling to fill 100 positions.

Now it sounds like Ben Venue is indeed looking merely for entry level workers who have ninth-grade math abilities. But they can't find them.

This is, however, not a sectoral shift problem. It's a claim that they can't find entry level workers who can do — what? Algebra? Simple percentages? I'm not sure what counts as ninth-grade math here. But something doesn't sound quite right. If Ben Venue is struggling to find people to fill these positions now, they must have really been struggling to fill them before the recession, when workers had a lot more choices than they do now. Their requirements can't have changed too much just in the past couple of years.

My guess: in addition to a simple aggregate lack of jobs due to the recession, what we're suffering from right now is still more of a sectoral shift issue more than a basic skills issue. If you look at lists of the fastest growing occupations, they've always been populated mainly by jobs that require a high school degree and some specialized training. Lots of them are in healthcare (physical therapists, dental assistants, etc.) and lots of them require specific computer skills. Laid off factory workers just can't jump into these jobs without retraining, and as Matt Steinglass points out, the success of government retraining programs has been pretty dismal over the years:

Still, it's striking that Congress may be grudgingly willing to spend on extending unemployment benefits, but not on doing anything geared towards addressing the structural reasons why Americans are unemployed....Maybe government isn't very good at worker training, and investments in other kinds of capital, such as improved infrastructure (high-speed trains, bridge and highway improvement, low-emission energy generation) may produce better returns. But what Congress seems to be saying, at this moment of increasing deficit hawkishness, is that government can't do anything at all about high structural unemployment. All it can do is maintain a safety net for the unemployed. Perhaps severe cutbacks in state government spending, forced by lower tax revenues, will induce the private sector to regain confidence in the economy. Alternatively, we'd better just get used to paying a lot of money for indefinite extensions of unemployment insurance.

That's a grim forecast. Unfortunately, it also seems pretty persuasive.

Advertise on MotherJones.com

Playing With Economic Fire

| Fri Jul. 2, 2010 12:48 PM EDT

If the United States reduces spending and cuts its budget deficit, will that restore consumer confidence and help economic growth? Well, it's worked before — in other countries, other eras, and under other circumstances than today's. Bruce Bartlett summarizes the historical record:

Thus it turns out that fiscal contraction isn’t really expansionary except under conditions that do not exist today, and only when complimented by policies the U.S. is not free to pursue. Inflation and interest rates are at historically low levels and are not going to fall much lower even if the deficit disappears. As noted earlier, the Fed has limited capacity for further easing, and we can’t really depreciate our currency because it floats, nor is there any country to which we could realistically raise our exports to any great extent. Moreover, just about every other country is trying desperately to increase their exports to stimulate growth and all can’t do so simultaneously.

This is not an experiment that's going to turn out well. Consumer spending isn't going to rise while unemployment is high and wages are stagnant. (Former Jeopardy! champ James Pethokoukis on today's employment news: "If workforce had not shrunk so dramatically, the unemployment rate would have risen to 9.9 percent. Yes, I did the math.") Nor are consumers likely to draw down their savings or increase their borrowing. Just the opposite, in fact. And businesses aren't going to increase investment as long as consumers are in the doldrums. All of this remains true regardless of the state of the deficit. So how exactly is fiscal austerity going to help the economy?

It's possible, I suppose, that the economy will recover strongly and a few years from now we'll all figure out the mechanism that made it happen. But I doubt it. We're playing with fire here.

Is Democratic Unity Possible?

| Fri Jul. 2, 2010 12:26 PM EDT

I think my general feeling about Bob Shrum is that if he says Democrats should do something, their best bet is to do the opposite. But this advice actually sounds fairly plausible:

Why should Congress take its annual August vacation while 15 million Americans are unemployed and millions more are underemployed, underpaid, or under the radar of official statistics because they are so discouraged they’ve stopped looking for work? With oil gushing into the Gulf, why should senators and representatives be rushing out of Washington to travel, raise money, and campaign?

Democrats in the House will respond that they’ve done their job; the Senate is the roadblock. Democrats in the Senate will plead that they’re not the problem; a willful GOP minority is blocking progress not just out of spite, but calculation. Republicans figure that a slow recovery and the lingering oil slick will drive a protest vote for them in November.

The Democratic arguments are right, but largely irrelevant and generally ignored by a fearful and frustrated electorate. Ironically, the way to break through is not to flee the Beltway, but to keep Congress there in a drama that plays out on center stage — in front of the cameras — with the president calling a special session of Congress to deal with too-long delayed issues of urgent national necessity.

This would sound plausible, anyway, if Democrats had their act together a little better. In general, the idea here would be for Obama to submit a raft of popular, highly targeted jobs bills to Capitol Hill and insist that Congress vote on them. One by one, either Republicans would defect and Dems would get a series of wins, or else, one by one, we'd get a series of 59-41 votes that would showcase Republican intransigence on the economy.

But would it work if, instead, each bill were the source of intra-party bickering that turned off the voters, long delays that made Washington seem impotent, and votes that ended up 53-47 because a handful of centrist Democrats insisted on breaking ranks? Probably not. And unfortunately, that's probably what we'd get. Better Democrats, please.

RNC Chair: Obama Started War in Afghanistan

| Fri Jul. 2, 2010 11:59 AM EDT

Adducing yet more evidence that Michael Steele is a mendacious clown hardly seems worth the bother, but this is pretty spectacular even by his standards:

Keep in mind, again, federal candidates, this was a war of Obama's choosing. This was not something that the United States had actively prosecuted or wanted to engage in....But it was the president who was trying to be cute by half by flipping a script demonizing Iraq, while saying the battle really should in Afghanistan. Well, if he's such a student of history, has he not understood that, you know, that's the one thing you don't do, is engage in a land war in Afghanistan? All right? Because everyone who has tried over a thousand years of history has failed, and there are reasons for that. There are other ways to engage in Afghanistan without committing U.S. troops.

It starts around the 0:20 mark. I'm taking bets in comments: what Bush-era policy will Steele repudiate next? I'm hoping he blames lower tax rates on Obama.

Boston With Good Weather

| Fri Jul. 2, 2010 11:28 AM EDT

Matt Yglesias on his visit to California:

Every trip I ever take to this state is a time to become frustrated anew that the bulk of America’s walkable urbanism exists in the horrible-weather locales of the Northeast or else the even-worse-weather locale of Chicago. Head west to California and the climate is lovely — tons of great places to walk around — but the built environment is inhospitable to such endeavors. It’s a huge shame. If you took Boston and relocated it to somewhere in California, it would possibly be the greatest place on earth. Instead it’s Boston.

Hmmm. That's been done, hasn't it? I think they called it San Francisco, and its residents are indeed convinced that it's the greatest place on earth. Just ask them. And with all the hills, it's much better for your cardiovascular health, too!