Unemployment

[kandrathe]

Recently, the US 2009 unemployment statistics were revised showing that 800,000 more people than earlier reported were unemployed in 2009 (bringing the total to over 8 million). This is odd, since the mechanism for gathering the rates would tend to over state employment, rather than understate it. Also, the largest deviation and correction in the past has been 80,000 jobs. I can only conclude that either the Bureau of Labor statistics in the US has a very poor methodology, or is intentionally painting a rosier than real scenario. There is also the problem of their statistic being measured by those people seeking unemployment compensation, rather than a true measure of the employable and employed. Our metric ignores the so-called disgruntled job seekers who've given up.

If they were miscalculating by as much as 10% last year, how can we trust what they are posting now?


From "Calculated Risk" Blog;

Britain posts both the employment rate, and the unemployment rate; National Statistics Online

[Jester]

Dig through the data. I'm pretty sure it's all in the stats somewhere. What do you want to know? The number of employed? That's there. The ratio of employed to population? Also there. The number of people considered outside the job market? That's there. Historical data for these things? Also there.

It's easy to calculate unemployment during normal times when it's around 4%. It's very difficult to calculate it during a massive crisis, when it's spiked to over 10% in a year.

So, can you trust it? The question is: trust it for what? And compared to what?

-Jester

[kandrathe]

So, can you trust it? The question is: trust it for what? And compared to what?

It seems to me that our government is reluctant to share bad news, but takes every opportunity to over sell any positive news. For example, in April when the rate at which people are losing their jobs seems to slow (which turns out to have been a lie all along), they claimed that the downturn was over and that the recovery was beginning. Actually, the bottom was probably more like August to November 2009, and dipped out of the slump due to the fall Christmas shopping season where retailers usually add temporary help through the holiday. This last January they were let go early rather than the usual practice of keeping some on to help process returns and rearrange the store for spring. Comparisons are always to the best looking statistic like "the same time last year", or compared to last month, or quarter.

<blockquote>"Ah, but that begs the question: if the government numbers are that grotesquely wrong, what does that say about the government’s policy with regard to joblessness, about it’s policy towards economic stimulus, about the government’s policy towards alleviating the suffering of the struggling citizenry? After all, policies are supposed to be designed around a solid set of facts."Government Labor Statistics: Lies and Damned Lies</blockquote>They made a 17% error! The government agency who's job is to calculate statistics! C'mon, you don't find that staggering. It would be like discovering that the Food and Drug Administration was allowing untested additives into food products. Or that the EPA intentionally allows some toxic waste dumping of garbage into the oceans.

Then there are more realistic views, like; http://www.shadowstats.com/

The US policy makers are insane! I nearly tossed my coffee cup at my TV this week when I heard about a couple of Sen. Kucinich's plans. First there was the plan to create a million jobs by lowering the SSI age and then in an interview Kucinich said that since the private sector was so sluggish, the public sector would need to pick up the slack and put people to work. Which has already happened as far as I can tell, the public sector has grown by 1%, while the private sector has contracted by 15% to 20%.

The question I ask is; Who will pay for the increased deficit spending? China? For how long?

Have you seen the DefeatTheDebt.com commercial? <blockquote>"I pledge allegiance to America’s debt, and to the Chinese government that lends us money, and to the interest, for which we pay, compoundable, with higher taxes and lower pay, until the day we die.”</blockquote>

[Jester]

1) Dennis Kucinich gets his way approximately 0% of the time. He is to the Dems what Ron Paul is to the Republicans - he has no broad support, and almost never influences policy. He is not, in any meaningful sense, a "policy maker". Also, for what it's worth, that's "Congressman Kucinich". He's not a senator.

2) Being wrong about unemployment numbers (or recovery times) does not equal lying about them. Since asking 200 million people about their jobs individually (and verifying their answers) is impossible, all calculations have to be based on assumptions. In a crisis, sometimes those assumptions are harder, and being wrong causes errors much larger than you would see normally. I don't find it staggering at all - just the normal consequence of hitting a fast moving target with the lights out. Remember, the labour market is huge. Being off by 800,000 seems like an impossibly large error, but in a 200,000,000 person market, it's less than half a percent unemployment. Glad to see the error fixed, but once again, what is it you're using these numbers for, that this changes your thinking? Obviously, unemployment is *far* above 4%, and whatever plan you prefer to reduce unemployment should be pursued post haste, regardless of whether it's 10% or 10.5%.

3) You can say the government has not been calculating its statistics properly if you like - feel free to use an alternate set. I think the official methods look pretty good, if you look at the data overall, and not just fixate on the one-number percentage figures. I'm really not sure shadowstats.com provides a "more realistic" set of figures, but I don't have the specialist knowledge to say for certain. Use it if you prefer.

4) The US can currently borrow at almost absurdly good rates. This is not the problem. The increased debt service will not be pleasant, but neither will it be crippling. The problems are short term recovery, and reducing long-run spending. (Hint: Try health care reform.)

-Jester

[kandrathe]

1) Dennis Kucinich gets his way approximately 0% of the time. He is to the Dems what Ron Paul is to the Republicans - he has no broad support, and almost never influences policy. He is not, in any meaningful sense, a "policy maker". Also, for what it's worth, that's "Congressman Kucinich". He's not a senator.

Right, Representative. He's in the top 35 of 525 for cosponsoring legislation, although correct that he doesn't author many bills on his own. He's the Chairman of the progressive caucus. So... Not a policy maker?

2) Being wrong about unemployment numbers (or recovery times) does not equal lying about them. Since asking 200 million people about their jobs individually (and verifying their answers) is impossible, all calculations have to be based on assumptions. In a crisis, sometimes those assumptions are harder, and being wrong causes errors much larger than you would see normally. I don't find it staggering at all - just the normal consequence of hitting a fast moving target with the lights out. Remember, the labour market is huge. Being off by 800,000 seems like an impossibly large error, but in a 200,000,000 person market, it's less than half a percent unemployment. Glad to see the error fixed, but once again, what is it you're using these numbers for, that this changes your thinking? Obviously, unemployment is *far* above 4%, and whatever plan you prefer to reduce unemployment should be pursued post haste, regardless of whether it's 10% or 10.5%.

This is the same government that has a tax id for every single person (paying or not), and corporate entity (paying or not), and has laws that require withholding to be collected from every paycheck for individuals, and from every company at least quarterly. So, how hard would it be to count how many of those tax id's contributed? Having worked on automation projects for my own states Dept. of Revenue, I can tell you that the State government has a weekly measure of payers and revenue. How hard is it to add up 50 states contributions?

3) You can say the government has not been calculating its statistics properly if you like - feel free to use an alternate set. I think the official methods look pretty good, if you look at the data overall, and not just fixate on the one-number percentage figures. I'm really not sure shadowstats.com provides a "more realistic" set of figures, but I don't have the specialist knowledge to say for certain. Use it if you prefer.

The BLS is the agency charged with producing THE number. A man with two watches doesn't really know what time it is, unless they agree. What I do know is that the BLS is wrong, and not by a little.

4) The US can currently borrow at almost absurdly good rates. This is not the problem. The increased debt service will not be pleasant, but neither will it be crippling. The problems are short term recovery, and reducing long-run spending. (Hint: Try health care reform.)

Servicing the debt is now the 2nd largest portion of the US budget, slightly below runaway social program spending. But, yes, the $100 trillion of unfunded (that being above our projected revenue stream) social program spending for the next 75 years is equally troubling.<blockquote>As for the deficit, CBO shows that over the first three years of the Obama Presidency, 2009-2011, the federal government will borrow an estimated $3.7 trillion. That is more than the entire accumulated national debt for the first 225 years of U.S. history. By 2019, the interest payments on this debt will be larger than the budget for education, roads and all other nondefense discretionary spending. --WSJ -- The Obama Fisc</blockquote>

[Jester]

Right, Representative. He's in the top 35 of 525 for cosponsoring legislation, although correct that he doesn't author many bills on his own. He's the Chairman of the progressive caucus. So... Not a policy maker?

Well, his job is literally to make policy, so he's not just a lump occupying a seat. But an influential policy maker? Someone who actually has clout in how the US government acts? Not really. Most of his ideas fall flat on their face - how'd the Cheney impeachment go? He's too far to the left. He introduces an enormous number of bills, but very few of them actually shape policy.

Also, he's not Chairman of the Progressive Caucus. He used to be, back in 2001-2004... when the Dems were out of congressional power and could accomplish nothing.

This is the same government that has a tax id for every single person (paying or not), and corporate entity (paying or not), and has laws that require withholding to be collected from every paycheck for individuals, and from every company at least quarterly. So, how hard would it be to count how many of those tax id's contributed? Having worked on automation projects for my own states Dept. of Revenue, I can tell you that the State government has a weekly measure of payers and revenue. How hard is it to add up 50 states contributions?

Would these numbers precisely equal the number of unemployed? Or only approximately? I'm certainly no expert in these calculations, but I suspect those numbers already go into the model - they just don't cover everything.

Servicing the debt is now the 2nd largest portion of the US budget, slightly below runaway social program spending.

No. Military spending is still no. 1, followed by social security, followed by medicare. Debt service is about half of any of those three. Where did you get your information that says otherwise?

The BLS is the agency charged with producing THE number. A man with two watches doesn't really know what time it is, unless they agree. What I do know is that the BLS is wrong, and not by a little.

Their numbers are (apparently) based on models until they have the final data to confirm. Things like seasonal adjustments make this nontrivial. When they get the final data, they correct their numbers, as they have here. If you prefer more inclusive measures of unemployment, use U6 rather than U1, which would tell you the unemployment rate is more like 16%. If you want a precisely accurate, up-to-the-minute unemployment statistic that doesn't rely on estimations or models for their first-pass calculations, then you want something they can't provide.

If you're accusing them of playing politics, then why on earth did they correct the numbers? And why now, voluntarily? It's not like someone caught them cheating - they fixed the number themselves, apparently in line with the kind of corrections they always do as data gets better. Surely the Obama administration has nothing more to gain today than it did last month, or four months ago. It wasn't an election year. What's the motive?

The Bureau of Labour Statistics press release is here. Maybe I'm not reading it critically enough, but it doesn't sound ominous.

-Jester

[kandrathe]

Well, his job is literally to make policy, so he's not just a lump occupying a seat. But an influential policy maker? Someone who actually has clout in how the US government acts? Not really. Most of his ideas fall flat on their face - how'd the Cheney impeachment go? He's too far to the left. He introduces an enormous number of bills, but very few of them actually shape policy.

Cheney imprisonment sounds like pandering to the progressives, whether or not it's realistic doesn't seem to enter into their philosophy.

Would these numbers precisely equal the number of unemployed? Or only approximately? I'm certainly no expert in these calculations, but I suspect those numbers already go into the model - they just don't cover everything.

The actual number of Tax Id's generating revenue last month, versus this month is not such a hard statistic. Number of new Id's gives you the net immigration, the ones with no income maybe lost their job, or moved out of the state. Even separating individual income from corporate, you can take gross revenue collected from individual income, and divide by the average to estimate the number of tax payers.

No. Military spending is still no. 1, followed by social security, followed by medicare. Debt service is about half of any of those three. Where did you get your information that says otherwise?

http://www.federalbudget.com/
I guess it depends how you slice it up. SSI and the department of health and human services are higher than the department of defense. Also, this table is actual, rather than budget.

Their numbers are (apparently) based on models until they have the final data to confirm. Things like seasonal adjustments make this nontrivial. When they get the final data, they correct their numbers, as they have here. If you prefer more inclusive measures of unemployment, use U6 rather than U1, which would tell you the unemployment rate is more like 16%. If you want a precisely accurate, up-to-the-minute unemployment statistic that doesn't rely on estimations or models for their first-pass calculations, then you want something they can't provide.

But, how about something that is within 2%-3% of accurate?

If you're accusing them of playing politics, then why on earth did they correct the numbers? And why now, voluntarily? It's not like someone caught them cheating - they fixed the number themselves, apparently in line with the kind of corrections they always do as data gets better. Surely the Obama administration has nothing more to gain today than it did last month, or four months ago. It wasn't an election year. What's the motive?

In my profession, people play this game as well (however I don't to the consternation of some of my colleagues.) Eventually, the deception is revealed. So, I guess for them it's better to confess to an oversight, and then return to the manipulation as usual. I think the motive is to convince people that the recession is over, so back to business as usual.

[Jester]

Cheney imprisonment sounds like pandering to the progressives, whether or not it's realistic doesn't seem to enter into their philosophy.

Dennis Kucinich isn't pandering to the progressives. He *is* a progressive. (I also think he's a loon.) Like I said, the Ron Paul of the left. I'm sure he is entirely genuine in his belief that Cheney should have been impeached. On this much, Mr. Kucinich and I are in agreement.

Regardless, this is very much my point. What Kucinich believes is too far in left field to actually make it into policy. He opposed the Iraq war. He opposed the health care bill - from the left! He very nearly opposed cap and trade as well. He believes in all sorts of hippie stuff that makes no sense. This is not Ted Kennedy. He does not make a lot of policy.

http://www.federalbudget.com/ I guess it depends how you slice it up. SSI and the department of health and human services are higher than the department of defense.

Um, lunatics, much?

They claim their numbers come from here. Their press release indicates what I said is true: interest on the debt, both to government accounts and the public, is 383 billion.

Looking at this chart, debt service is a distant 4th behind the DoD, Health Services, and Social Security. It is around half any of those things - exactly as I said. So, no, it doesn't "depend how you slice it up" - unless you're doing something totally dishonest, like adding all Treasury expenditures (the TARP money included) into the interest on the federal debt, which obviously gives a much inflated, and wrong, figure.

Also, this table is actual, rather than budget.

It all has to go into the budget somewhere, retrospectively, which this is. Last I checked, the DoD can't print its own money, and neither can Health Services.

But, how about something that is within 2%-3% of accurate?

Well, this is just lies, damn lies, and statistics. By measuring a % of different things, you end up with vastly different accuracies. The unemployment correction was less than 0.5% of the total labour market- that is to say, less than 0.5% unemployment. It's maybe 5% of total unemployment, if you prefer measuring it that way. If you measure it as a % of the *change* in unemployment, then yes, it's somewhere around 17%. But that's just a manipulation of numbers to make the problem sound very drastic - we're talking about revising the unemployment rate by less than half a percent, not seventeen percent!

So, in other words, 2-3% of what? Measuring it as a % of the change is a uniquely stupid way to go - if the economy only lost 100 jobs, but they said it had lost 1000, that would be a 900% error! But they'd only have been off by 900. (Incidentally, this kind of "% of the change" statistic is commonly used in poor reporting on medical science to create sensational stories out of trivial results.)

In my profession, people play this game as well (however I don't to the consternation of some of my colleagues.) Eventually, the deception is revealed. So, I guess for them it's better to confess to an oversight, and then return to the manipulation as usual. I think the motive is to convince people that the recession is over, so back to business as usual.

This doesn't make any sense. "Eventually, the deception is revealed," so they might as well cheat, then reveal it themselves within one year? To what? Win an election? There was no election. "Manipulation as usual"? Manipulating what? They report almost everything you'd ever want to know - number employed, number unemployed, number who have stopped looking, whatever you want, broken down by age, sex, race... if they were going to cheat, wouldn't they have to do it consistently?

What do you want, exactly? Other than to accuse the government of vague malfeasance?

-Jester

[--Pete]

Hi,

What do you want, exactly? Other than to accuse the government of vague malfeasance?

Exactly, which is why it's not worth the electrons wasted in debating.

--Pete

[kandrathe]

This doesn't make any sense. "Eventually, the deception is revealed," so they might as well cheat, then reveal it themselves within one year? To what? Win an election? There was no election. "Manipulation as usual"? Manipulating what? They report almost everything you'd ever want to know - number employed, number unemployed, number who have stopped looking, whatever you want, broken down by age, sex, race... if they were going to cheat, wouldn't they have to do it consistently?

What do you want, exactly? Other than to accuse the government of vague malfeasance?

Vague!!!

What do you call it when a company falsifies their income reports to make themselves appear more favorably to the markets? I call it fraud. That is exactly what this is. The government is trying to make the numbers look better than they actually are in order to manipulate the markets. This is why Greenspan's "irrational exuberance" comment had the ultimate effect of popping the tech bubble. The government used the bully pulpit of an open congressional committee to reign in a market that was vastly over bought. They only need to cheat, and in a particular direction when it suits their purposes.

Unfortunately, the American people are very gullible. Look at the shiny... you want the shiny... Don't pay attention to the "correction" of last years GDP adjusted downwards... Ignore the understatement of 800,000 unemployed people. The economy is fine... We're growing again. So, go on, go invest your money. Make those unsecured loans again. Back to normal.

Also, by my figures ~800,000 / 6,800,000 is about 12% error.

[Jester]

Vague!!!

Yes, vague. A small adjustment in the unemployment rate, which was corrected months later by the very same Bureau - this is the horror? This is the fraud? This is what makes you unable to trust the government because it's just lying to you to lull you to sleep? This is a statistical error, caused by the difference between survey results and modelling, and the eventual full data. Sucks that it was lower, but this makes no sense as a conspiracy.

What do you call it when a company falsifies their income reports to make themselves appear more favorably to the markets?

The idea is what, that the government needs to raise money? They can already borrow at absurdly good rates. Investors are scared, and would dearly love to buy more safe, gentle US government bonds.

They only need to cheat, and in a particular direction when it suits their purposes.

Okay. What purpose did it serve? And why did they re-adjust the numbers? If they needed a temporary boost that they could pay for later, then fine, but there was nothing they needed the boost for - no election, no nothing. This doesn't make sense. There's no reason to commit fraud if you're just going to admit to it right afterwards, for no gain.

Also, by my figures ~800,000 / 6,800,000 is about 12% error.

If you're going to join in the nitpicking, you might want to nitpick something other than me quoting you quoting the article you cited.

From your own link, it's the difference between 4.8 million jobs lost and 5.6 million. That's a difference of 800,000 jobs over a denominator of 4.8 million (not 6.8 - where's that from?) for a total of 17%, rounded up. The whole calculation is worthless, as far as I'm concerned, but we might as well do our arithmetic right.

-Jester

[kandrathe]

The idea is what, that the government needs to raise money? They can already borrow at absurdly good rates. Investors are scared, and would dearly love to buy more safe, gentle US government bonds.

Yes, the government needs to raise money. Borrowed money is not free money, it is merely deferred taxation. You can't just recoup 2008 through 2011's lost revenue all of a sudden. Why? Well, because they don't want to be forced to cut programs. They can't in good conscience raise taxes in the midst of a recession (which isn't stopping them from trying). So, their "Change" is on hold until the revenue stream exists to possibly support it. The progressives are the party of "You can have it all!" -- War in Afghanistan, Iraq, Iranian sanctions, Haiti relief, government run health care, Cap and tax, lower taxes for the middle class, social security, Medicare parts A, B, C and D, Medicaid, SChip, NASA, 24 months of unemployment benefits, etc. etc. etc.

So, what irony that under their tenure they would be the ones to be forced to admit that the gravy train stops here. Real change will occur once we re-rationalize all of our spending to the reality of our actual projected revenues over the next 20 years. Its not going to happen. They are already cooking the books to count revenues from bills they haven't even passed yet. The only thing more shocking than the current administration cutting social programs would be if they would opt to return to the gold standard.

Sorry, I think debt is the road to our ruin. Do you really want China bossing the US around the way the US bossed around Europe in 1917?

[Jester]

Sorry, I think debt is the road to our ruin. Do you really want China bossing the US around the way the US bossed around Europe in 1917?

Not really, no. But does this actually come back to unemployment somehow?

-Jester

[kandrathe]

Not really, no. But does this actually come back to unemployment somehow?

Indirectly. Unemployment leads to a 20% loss of revenue both in income tax and corporate profits from consumption, which means a greater share of deficit spending to sustain the federal budget. In a way, it all leads back to the bubble, which in its last incarnation was a product of reckless lending and packaging debt into derivatives (junk bonds). The origin of the bubble... Now that gets to the real economic war.

States are screwed, since they can't print their own money, or build their budgets on sustained borrowing for that matter. States, like Florida, are doing ok, because they don't have an income tax, only sales tax and property tax. This is why Congress is so very keen to pass the "Jobs" bill now, in which they can slip in the 2010 $200 billion bail out of the states, just as they hid the 2009 $200 billion bail out of the states in the "Stimulus" bill. In that regard, the only jobs saved by the stimulus bill were public sector jobs. If the feds stop sending the states money, then they also will need to trim their budgets to fit their revenues. Residents of non-bailout states should be outraged that they will be taxed to pay for the fiscal mismanagement of certain states(i.e. California).

[Jester]

Florida's unemployment rate is a whopping 12%. It's not "doing fine." Last year, their budget gap was enormous. They're getting slammed just like everyone else, if not worse.

Residents of non-bailout states should be outraged that they will be taxed to pay for the fiscal mismanagement of certain states(i.e. California).

Really? Because since time immemorial, California has been receiving only 0.80 back in spending for every dollar it sends to the feds. California has been footing the bill for the rest of the country for ages.

Is California (or New York, or Illinois) allowed to send their bills to New Mexico, or Alaska, or practically the entire Southern US? Because they're the ones who send pennies and get dollars back, year in and year out.

State bailouts are a fantastic idea, and need to be pursued rigorously. All the job creation programs in the world are not going to help if most states are making deep budget cuts for temporary lack of funds. I'm none too thrilled with the management of California, which appears to be a cautionary tale against combining drug use and direct democracy, but if they start slashing jobs, that just sinks the economy deeper into recession.

The money going to states was also hardly hidden. From the Act's statement of purpose:

The purposes of this Act include the following: (...)
(5) To stabilize State and local government budgets, in order to minimize and avoid reductions in essential services and counterproductive state and local tax increases.

Hidden in plain sight, I guess.

Regardless, how does any of this give the US government a motive to make a moderate error in unemployment figures, and then correct it? Just because you can draw a general link between economy and employment (no kidding...), it doesn't mean any of it has relevance for this topic.

-Jester

[kandrathe]

Florida's unemployment rate is a whopping 12%. It's not "doing fine." Last year, their budget gap was enormous. They're getting slammed just like everyone else, if not worse.

This is an example of how to lie with statistics. It seems wrong somehow. http://www.ebudget.state.fl.us/bdagencies.aspx

1.4 million is not a crisis, even if it is 8% of the general fund budget. A few car washes and a bake sale could get them on budget again. That is like a 20 person lay off, or perhaps a small cut in state employee salaries across the board.

]Really? Because since time immemorial, California has been receiving only 0.80 back in spending for every dollar it sends to the feds. California has been footing the bill for the rest of the country for ages.

Not quite. California in particular results in a huge influx of illegal immigration funded by the tax payers of California, and the rest of the US. Also, measure by outlay. On average over 40% of state budgets are now funded by the feds. California's BOP problem is a direct result of the dismantling of the military infrastructure in the state coupled with the rapid increase in income during the GWB years. Their contribution is also unfair due to progressive Federal income taxes which treat the high cost of living in California equal to low cost of living in rural Alabama.

Is California (or New York, or Illinois) allowed to send their bills to New Mexico, or Alaska, or practically the entire Southern US? Because they're the ones who send pennies and get dollars back, year in and year out.

In short, yes. High tax, high benefit states attract free loaders and discourage business. I live in one of those states. If it weren't for our brutal climate, we'd be over run as well. California has augured itself into the ground by passing so many laws, raising taxes, driving costs too high, and creating a climate of uncertaintly so high that business is fleeing.

State bailouts are a fantastic idea, and need to be pursued rigorously.

State bailouts are a horrible idea. States need to get that federal monkey off their backs, and regain their fiscal independence. My idea is that anything that can be done by business, should be done by business. Anything that can be (or already is) administered at the state level, should be administered (and legislated) at the state level. Keep the Federal concerns out of the states, and focused on those things that require a federal perspective, like defense, or even interstate commerce or transportation.

All the job creation programs in the world are not going to help if most states are making deep budget cuts for temporary lack of funds. I'm none too thrilled with the management of California, which appears to be a cautionary tale against combining drug use and direct democracy, but if they start slashing jobs, that just sinks the economy deeper into recession.

I disagree again. For every job creation dollar spent, a government job will return on 15% of what a private sector job produces. If you cut 100 California State employee jobs, and offered that money as tax relief, or hiring incentive you'd replace the 100 employees in the private sector you would quickly recoup the small amount lost in revenue with the increases in corporate tax paid by firms.

The money going to states was also hardly hidden. From the Act's statement of purpose: Hidden in plain sight, I guess.

Not hidden for those who read legislation. But, it is hidden in a bill called "Stimulus". It should have been a separate bill called "State Bailout Bill".

Regardless, how does any of this give the US government a motive to make a moderate error in unemployment figures, and then correct it? Just because you can draw a general link between economy and employment (no kidding...), it doesn't mean any of it has relevance for this topic.

The same motive they had in vastly increasing the number of IRS audits and auditors within the last year. They desperately need tax revenue, and re-inflating the bubble will best serve their purposes, hence "cash for clunkers", "home mortgage reduction money", and "cash for caulkers". They want us to borrow money to buy a car, borrow money to buy a home, or borrow money to repair our existing homes. They want us to get that freshly minted money out of the banks and into consumer debt, rather than in federal debt.

What happens to a consumption driven economy when the people run out of cash, and credit? America.

[Jester]

1.4 million is not a crisis, even if it is 8% of the general fund budget.

Surely that must be a mistake of "million" vs. "billion". 1.4 million could not possibly be 8% of the general funds budget of Florida, unless Florida's works on a level four orders of magnitude below comparable states.

A few car washes and a bake sale could get them on budget again. That is like a 20 person lay off, or perhaps a small cut in state employee salaries across the board.

If I am correct, and the mistake above is millions to billions, then no, you're not going to make up 1.4 billion dollars by laying off 20 people. You wouldn't even make it up laying off 20,000 people.

I live in one of those states.

You live in Minnesota, do you not? You guys do even worse than California - 72 cents federal spending for every dollar contributed in federal taxes. When they build that Bridge to Nowhere, that's 28 cents of your dollar off to a place a lot colder than Minneapolis.

California has augured itself into the ground by passing so many laws, raising taxes, driving costs too high, and creating a climate of uncertaintly so high that business is fleeing.

This is a novel concept of California, almost entirely at odds with reality. Let's run it down:

1)The most dynamic sector of the US economy is based in California, as are many of its most dynamic companies. Google isn't based out of Kentucky.

2)Per capita income, far from weighed down with freeloaders, is well above the national average, ranking only behind the Northeast - the other "high tax, high benefit" states.

3) Taxes in California are barely higher than the national average.

4) California faces deficits it can't support. California voters didn't vote themselves high taxes, they voted themselves low taxes - and now they're suffering for it. They exacerbated their housing bubble and killed revenue with the craziest proposition of all time.

State bailouts are a horrible idea. States need to get that federal monkey off their backs, and regain their fiscal independence.

Let me get this straight. The States are in deep, deep fiscal trouble, and yelling as loudly as they can for bailout money. Your idea is that the drowning man needs his life preserver taken away, because it's holding him down? The alternative to bailouts is a *massive* slashing of programs and services. Millions of jobs evaporating. Necessary services, including obligatory ones, being destroyed right when people are having to rely on them. No preparation, no softening the blow, just triage.

This would be an utter disaster. Hell, it already is an utter disaster. This would be throwing the drowning man an anchor, and telling him that once he learns how to swim with it, he'll be better off.

For every job creation dollar spent, a government job will return on 15% of what a private sector job produces.

Source?

If you cut 100 California State employee jobs, and offered that money as tax relief, or hiring incentive you'd replace the 100 employees in the private sector you would quickly recoup the small amount lost in revenue with the increases in corporate tax paid by firms.

Shorter: "The government should increase revenue by giving away money."

Right. Give that a try, see how it works. I can only think of one situation where it would: if you were on the downslope of the Laffer Curve. The chance of that is pretty much zero.

The private sector can already hire people dirt cheap. Wages are down, productivity is way up. People are scared and desperate for jobs. The unemployment rate is through the roof. If there was really tons of money to be made in hiring more people, don't you think they might have already done it?

Not hidden for those who read legislation. But, it is hidden in a bill called "Stimulus". It should have been a separate bill called "State Bailout Bill".

It's on the first fracking page, that one of five objectives of the stimulus is to bail out state governments. You don't have to read the legalese. You can stop after page one!

If your idea is that they're "hiding" this by not having a completely separate bill, then I think you're nuts.

What happens to a consumption driven economy when the people run out of cash, and credit? America.

No doubt, the US will have to get back on more secure footing. Private debt was out of control, and public debt threatens to swallow the budget in about twenty years. You know what's driving both things? Health care. You know how you can fix it? Health care reform. Fix that, and you're more than halfway out of the hole before you even need to start on anything else.

-Jester

[kandrathe]

Private debt was out of control, and public debt threatens to swallow the budget in about twenty years. You know what's driving both things? Health care. You know how you can fix it? Health care reform. Fix that, and you're more than halfway out of the hole before you even need to start on anything else.

Actually, entitlement ponzi scheme. You cannot sustainably outlay more services to the present generation than you take in in taxes, and finance it with debt from subsequent generations. We blew through the social security trust fund, through the ability to tax people and corporations, and now we've run out of credit. Health care costs are just something the government should abandon, and let the private sector resolve in whatever manner it can. The answer is to get government out of the health care business entirely. States can focus on helping their own poor, but the feds should get themselves out of citizens lives.

[Jester]

You cannot sustainably outlay more services to the present generation than you take in in taxes, and finance it with debt from subsequent generations. We blew through the social security trust fund, through the ability to tax people and corporations, and now we've run out of credit.

If the government doesn't stick to PAYGO, then there will be serious problems. However, your picture is much too dire. Tax levels in the US are abnormally low for a developed country. There is certainly room to increase revenue that way, although there will be a corresponding cost in output.

The US government hasn't run out of credit - rates are extremely favourable right now. This is not a situation that can continue indefinitely, but for the moment, the US is in an enviable borrowing position.

Health care costs are just something the government should abandon, and let the private sector resolve in whatever manner it can. The answer is to get government out of the health care business entirely. States can focus on helping their own poor, but the feds should get themselves out of citizens lives.

Health care is a social cost. If it's not paid for by the government, it's paid for in one of two other ways: either private purchases, or through people getting sick and dying without treatment. (I'm going to assume the second option is off the table for now.) We've been over the data a bazillion times already, but once again, if you want to reduce per capita expenditures on health care, you're going to have to reform the health care system. Just giving it over entirely to the private sector will simply shift the burden from public to private - robbing Peter to pay Paul.

Now, since you're ideologically opposed to government, I'm sure this seems like a good thing in any case. But it's not a savings, just a different method of accounting. Money being spent on health care directly is not much different from money being taxed, and then spent on health care - except that it appears to be much less efficient. Health care is already a leading cause of bankruptcies and private debt. How much worse would it get if you revoked all government support? And how much more expensive would emergency care get?

-Jester

[kandrathe]

Just giving it over entirely to the private sector will simply shift the burden from public to private - robbing Peter to pay Paul.

Wait. Isn't taxing Peter to pay for Paul's health insurance part of the problem. Paul has no remorse for using as much as he can, while Peter healthy or not must continue to pay an ever increasing portion of their combined health care costs. Peter needs to buy his own insurance, and also pay for those who cannot afford it. The pool of Peters is decreasing, and the pool of Pauls is increasing and they want increasing amounts and quality as well. Again, I would say, if this works for health care, why not food?

Now, since you're ideologically opposed to government, I'm sure this seems like a good thing in any case. But it's not a savings, just a different method of accounting. Money being spent on health care directly is not much different from money being taxed, and then spent on health care - except that it appears to be much less efficient. Health care is already a leading cause of bankruptcies and private debt. How much worse would it get if you revoked all government support? And how much more expensive would emergency care get?

I would say that credit cards are the largest cause of private debt (not counting mortgages). The problem with catastrophic illness is that you lose your employment. Not many people have very well thought out insurance for death, disability, dismemberment, etc. In the US, when you lose your employment you can keep your health insurance (COBRA -- for some limited number of months), however you pay 100% of the cost rather than just the 40% you paid as the employee. Then, also, they now have no income stream, so the additional unexpected expense drives people off of insurance. We definitely need to get employers out of the equation, and return the purchase of insurance to a consumer choice. But, we don't need a nanny state to sort this all out for people. People should be able to save (HSA), or purchase adequate affordable insurance for low probability events. The other item we need to sort out is what commitment the government has to keep people alive, or repair people who haven't adequately insured themselves. Once you set that standard, you have to be prepared to pay it for everyone (because eventually it becomes the rule, rather than the exception). I'd say we dump the FICA tax, and employer driven health insurance. Replace it with a combined retirement/HSA account that is set at a minimum of 10% of earnings which you can use for health maintenance as needed. Employers can opt to contribute to an employees HSA/retirement account. When you reach 65, all restrictions are lifted. Then, also as with IRA's or 401K accounts, there can be emergency provisions, and penalties for early withdrawals. The bottom line is that we get the money out of the Federal treasury so they cannot spend it.