HR 5618, Restoration of Emergency Unemployment Compensation Act of 2010, was passed by the House on 07/01/10. A previous vote was taken on 6/29/10 but did not achieve the required 2/3 majority vote to pass onto the Senate. However, the House vote on July 01 only required a simple majority. Interesting how the same bill, with no amendments can be passed in Congress under a different set of majority rules, than when it was voted on the first time under more stringent majority rules.
The major contention as to why fiscal conservatives from both parties were voting against HR 5618 was due to how this bill was going to be paid for. Under this resolution, the federal government will cover each states' cost by 100%. The question for fiscal conservatives was where were the funds to cover this cost coming from. This bill, which extends unemployment compensation till April, 2011 for those whose compensation ended several months ago, is to be funded by the Supplemental Appropriations Act of 2008 which, according to the latest CBO analysis report, is no longer fully funded. This bill states that it is subject to the "pay as you go" principle, but the questions still remains unanswered: Where are the funds to pay for this bill? Fiscal conservatives from both parties were lobbying for delegating funds from the unspent portion of last year's budget stimulus to pay for the compensation claims to come. However, the liberal "spend as you go" Socialists in Congress would not consider this option and passed this bill which is forecast to cost over $24 Billion by 2011, per the CBO estimate on 6/28/10.
Now this editorial is not intended to not extend a helping hand to the unemployed who are still looking for work since being layed off or released from work a minimum of three months ago. This editorial is directed at the typical approach by the House to spend tax revenues and supplement with newly printed money, as opposed to using over $200 billion in unused stimulus funds to pay for the unemployment compensation extension.
In addition, in both votes, 29 RINOs (who have voted irresponsibly on fiscal legislation, as researched in the past 24 months) voted for this bill. One RINO (Anh Caro, LA-2) recorded a "NO VOTE" on June 29th, then voted for the bill on 07/01/10. For sake of space, the reader can research HR 5618 on govtrack.us/congress to see the vote tally and the names of the RINOs who voted for this legislation on both occassions. You will see the typical RINOs from Florida [GUS BILIRAKIS (9),LINCOLN DIAZ-BALART (21),MARIO DIAZ-BALART (25),
BILL POSEY(15),ILEANA ROS-LEHTINEN (18)and BILL YOUNG (10)] and those from Pennsylvania [CHARLES DENT (15),JIM GERLACH (6),TIM MURPHY (18), and
TODD PLATTS (19)]. You will find some interesting names with the remainder of RINOs who voted Aye for HR 5618.
Showing posts with label unemployment. Show all posts
Showing posts with label unemployment. Show all posts
Monday, July 5, 2010
Wednesday, September 16, 2009
14% UNEMPLOYMENT: SOON UNLESS...
NOTE: THIS ARTICLE WAS WRITTEN BY LOUIS WOODHILL,(louis@woodhill.com), AN ENGINEER AND SOFTWARE ENTREPENEUR, AND MEMBER OF THE LEADERSHIP COUNCIL OF THE CLUB FOR GROWTH.
Released July 6, 2009:
The June "Jobs" report issued by the Bureau of Labor Statistics (BLS) on July 2 caused shock and dismay. Payrolls declined by 467,000 jobs, more than the 345,000 lost in May, and much more than the 363,000 that economists had predicted. The only reason that the reported unemployment rate rose by only 0.1 percentage points (to 9.5%) in June was that many jobless people became discouraged and stopped looking for work.
As bad as the BLS report was, it should not have come as a surprise. The deteriorating employment situation could have been predicted as early as April 29, when the "Gross Domestic Product: First Quarter 2009 (Advance)" report was issued by the Bureau of Economic Analysis (BEA).
The BEA numbers (which were revised slightly on June 25) show an accelerating decline in "real nonresidential fixed investment". This measure decreased 37.3 percent in the first quarter of 2009, compared with a fall of 21.7 percent in the fourth quarter of 2008. Given that employment is a direct, linear function of private business investment (PBI), unemployment can be expected to rise much farther in the months ahead.
Here's why. Because a lot of PBI goes toward offsetting depreciation and increasing productivity, it takes a 5% year-over-year increase in PBI to produce a 1% increase in the number of jobs. Correspondingly, a 5% decrease in PBI will yield a 1% reduction in total employment.
The unemployment rate a year ago was 5.5%. Because the potential labor force is growing, we need employment to increase by 1% annually to keep the unemployment rate from going up. The 37.9% investment decline reported by the BEA can be expected to eventually produce a reduction in total employment of about 8.5%. Accordingly, we can expect unemployment to rise to about 14% within a year unless the downward slide of PBI is reversed.
The current 9.5% unemployment rate is causing great economic pain, and life with a 14% jobless rate would be much, much worse. Unfortunately, almost everything that the government has done or is proposing to do to right the economy is actually counterproductive.
Like the Bush administration before it, the Obama team is pinning its hope for economic recovery on "stimulus". Despite the fact that Bush's $168 billion stimulus package in early 2008 had no impact at all, Obama rammed a $787 billion stimulus bill through Congress in January. Now the administration is waiting anxiously for the "stimulus" to take effect. It should not hold its (collective) breath.
"Stimulus" is based upon the superstition that government borrowing and spending creates "demand". In reality, it does no such thing. "Stimulus" is like trying to raise the level of the Hudson River by dipping out a bucket of water, walking five feet downstream, and pouring it back in. The only difference between the Bush and Obama plans is that Obama's bucket is bigger (and will create more debt). Ironically, the July 2 jobs report prompted calls from leftist economists for Obama to go back to the river with an even bigger bucket.
While doing nothing to boost demand, Obama's "stimulus" will depress PBI, and therefore employment. This is because the "stimulus" plan requires selling an additional $787 billion in government bonds. The money to buy these bonds will have to come from somewhere, and much of it will come from people who would otherwise invest in starting or expanding businesses. Indeed, the bonds will have to be priced so that this risk-free investment is more attractive to investors than their other alternatives.
In the fourth quarter of 2008, the Federal government ran a deficit of $303 billion (and therefore had to sell $303 billion of new bonds) and business investment fell by 21.7%. In the first quarter of 2009, the Federal deficit was $650 billion and business investment fell by 37.3%. The economy is being forced to invest in Barack's Bailout Bonds rather than in businesses that create jobs.
Virtually everything the Obama administration wants to do will have the effect of increasing unemployment. As bad as joblessness is now, be prepared for it to get much, much worse.
Released July 6, 2009:
The June "Jobs" report issued by the Bureau of Labor Statistics (BLS) on July 2 caused shock and dismay. Payrolls declined by 467,000 jobs, more than the 345,000 lost in May, and much more than the 363,000 that economists had predicted. The only reason that the reported unemployment rate rose by only 0.1 percentage points (to 9.5%) in June was that many jobless people became discouraged and stopped looking for work.
As bad as the BLS report was, it should not have come as a surprise. The deteriorating employment situation could have been predicted as early as April 29, when the "Gross Domestic Product: First Quarter 2009 (Advance)" report was issued by the Bureau of Economic Analysis (BEA).
The BEA numbers (which were revised slightly on June 25) show an accelerating decline in "real nonresidential fixed investment". This measure decreased 37.3 percent in the first quarter of 2009, compared with a fall of 21.7 percent in the fourth quarter of 2008. Given that employment is a direct, linear function of private business investment (PBI), unemployment can be expected to rise much farther in the months ahead.
Here's why. Because a lot of PBI goes toward offsetting depreciation and increasing productivity, it takes a 5% year-over-year increase in PBI to produce a 1% increase in the number of jobs. Correspondingly, a 5% decrease in PBI will yield a 1% reduction in total employment.
The unemployment rate a year ago was 5.5%. Because the potential labor force is growing, we need employment to increase by 1% annually to keep the unemployment rate from going up. The 37.9% investment decline reported by the BEA can be expected to eventually produce a reduction in total employment of about 8.5%. Accordingly, we can expect unemployment to rise to about 14% within a year unless the downward slide of PBI is reversed.
The current 9.5% unemployment rate is causing great economic pain, and life with a 14% jobless rate would be much, much worse. Unfortunately, almost everything that the government has done or is proposing to do to right the economy is actually counterproductive.
Like the Bush administration before it, the Obama team is pinning its hope for economic recovery on "stimulus". Despite the fact that Bush's $168 billion stimulus package in early 2008 had no impact at all, Obama rammed a $787 billion stimulus bill through Congress in January. Now the administration is waiting anxiously for the "stimulus" to take effect. It should not hold its (collective) breath.
"Stimulus" is based upon the superstition that government borrowing and spending creates "demand". In reality, it does no such thing. "Stimulus" is like trying to raise the level of the Hudson River by dipping out a bucket of water, walking five feet downstream, and pouring it back in. The only difference between the Bush and Obama plans is that Obama's bucket is bigger (and will create more debt). Ironically, the July 2 jobs report prompted calls from leftist economists for Obama to go back to the river with an even bigger bucket.
While doing nothing to boost demand, Obama's "stimulus" will depress PBI, and therefore employment. This is because the "stimulus" plan requires selling an additional $787 billion in government bonds. The money to buy these bonds will have to come from somewhere, and much of it will come from people who would otherwise invest in starting or expanding businesses. Indeed, the bonds will have to be priced so that this risk-free investment is more attractive to investors than their other alternatives.
In the fourth quarter of 2008, the Federal government ran a deficit of $303 billion (and therefore had to sell $303 billion of new bonds) and business investment fell by 21.7%. In the first quarter of 2009, the Federal deficit was $650 billion and business investment fell by 37.3%. The economy is being forced to invest in Barack's Bailout Bonds rather than in businesses that create jobs.
Virtually everything the Obama administration wants to do will have the effect of increasing unemployment. As bad as joblessness is now, be prepared for it to get much, much worse.
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