Economy & Budget

Public Transit Projects will support and create hundreds of thousands of jobs

America needs new jobs to help turn our struggling economy around. For this reason, I am calling on Congress to invest at least $15 billion in our public transportation systems. This funding will support hundreds of thousands of jobs and stimulate essential economic activity.

The American Public Transportation Association (APTA) has just completed a survey of public transit systems nationwide which identified more than $15 billion in public transportation capital projects that can begin within 90 days. This investment in public transportation would create and support more than 450,000 jobs and bring much needed resources to local economies.  The vast majority of public transit systems also identified further needs for federal assistance beyond the $15 billion in order to avoid employee layoffs and service cuts.

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Coal must embrace the future (Sen. Robert C. Byrd)

For more than 100 years, coal has been the backbone of the Appalachian economy. Even today, the economies of more than 20 states depend to some degree on the mining of coal. About half of all the electricity generated in America and about one quarter of all the energy consumed globally is generated by coal.

Change is no stranger to the coal industry.  Think of the huge changes which came with the onset of the Machine Age in the late 1800’s.  Mechanization has increased coal production and revenues, but also has eliminated jobs, hurting the economies of coal communities. In 1979, there were 62,500 coal miners in the Mountain State. Today there are about 22,000. In recent years, West Virginia has seen record high coal production and record low coal employment.

And change is undeniably upon the coal industry again.  The increased use of mountaintop removal mining means that fewer miners are needed to meet company production goals. Meanwhile the Central Appalachian coal seams that remain to be mined are becoming thinner and more costly to mine. Mountaintop removal mining, a declining national demand for energy, rising mining costs and erratic spot market prices all add up to fewer jobs in the coal fields. 

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The Big Question: Will the jobs summit help or hurt Obama?

Some of the nation's top political commentators, legislators and intellectuals offer some insight into the biggest question burning up the blogosphere today.

Today's question:

Will today’s jobs summit help President Barack Obama politically or highlight a weakness?

Sen. Ted Kaufman (D-Del.) said:

After 36 years in Washington I can't be accused of being naive, but I think the point of a job summit is to get jobs. It may highlight a weakness, but he's going to do everything he can, and not for political reasons. 

The hardest thing in the world is to come home to your spouse and kids and say you lost your job. I know the president feels that, I feel that, and every senator feels that. This is a tragedy. If I were President of the United States right now, my number-one concern would be getting more jobs. If I could get a bunch of people together to help me get jobs and help me politically, I'd do it, and you'd do it to. And I assume that's what the president's doing today.

Sen. Lisa Murkowski (D-Alaska) said:

I don't hold a lot of hope for the job summit.

Sen. Mary Landrieu (D-La.) said

I didn't hear how the summit is structured, but I can say it is very important for this administration and for Congress to focus on job creation. Economist believe the recession is over, but that doesn't mean balloons are popping on Main Street -- actually, the opposite is happening. We've got to focus on creating jobs on Main Street and the way to do that is with strategic policy shifted to helping small businesses and entrepreneurs. That is what I will contribute to the job summit as chair of the Small Business and Entrepreneurship Committee.

I don't see how Obama can be hurt by it. I think it's good he's letting the American people know he knows our challenge is to create more jobs at home. There are exciting opportunities in this healthcare bill that will create opportunities for lots of entrepreneurs...and there are extraordinary opportunities in natural gas. If we can connect the jobs piece to the energy piece -- I think the president can do that, and it will be a very good victory for him.

Michelle D. Bernard, president and CEO of the Independent Women’s Forum, said:

The “Jobs Summit” isn't going to make a difference to President Obama's political fortunes. Unemployed Americans aren't going to feel better just because the president has shown that he's concerned about the job situation, but he also won't be hurt by reminding the public of a “weakness”--everyone is plenty aware of the dismal economy and alarming number of un- and under-employed.
 
The president and the congressional majority will be judged in the next election on their ability to actually improve the economy. These politicians should waste little time on photo ops and other PR stunts. They need to focus exclusively on advancing policies that will encourage private sector hiring (reducing regulations, streamlining the tax code, and signing new free trade agreements would be a place to start). This isn't something you can fake. The American people want -- and will judge their leaders on -- the results.

Craig Newmark, founder of Craigslist and a Pundits Blog contributor, said:

People who look at this seriously will note that we now have an Administration which takes job creation seriously.

Armstrong Williams, Pundits Blog contributor, said:

The American public is now bracing for another smack in the face, with the $787 billion stimulus package promised to create 3 million jobs over two years. The President's job summit today is just another disappointment to Americans who fell for his rhetoric and drank the kool-aid. Many of whom thought their hard earned tax dollars were going to be spent on alleviating their hardships only to find their dilemma is dramatically worst.

It is obvious unclear exactly how our President will deliver on his pledge, or whom or what will benefit from this Public Relations summit. But one thing is clear: the usual suspect is the enemy –private industry. Although senior advisor to the administration, Valerie Jarrett, claims they need the cooperation of the private industry, they are definitely blocking major trade associations. The U.S. Chamber of Commerce, which is expected to support export increasing policy, was never invited to participate. Just unbelievable!

But, of course the unions will be well represented at today's highly touted event. Reality check: those sane Americans that still have a basic understanding of economics 101 realize that the private industry with unions is private in name only. When bureaucracy is incorporated into the industry equation, market forces are inhibited from playing out. Therefore, one has to assert that union jobs and government jobs are without question one in the same.

As this drama worsens with each changing scene, the summit will supposedly revive failing aspects of the economy where money from the stimulus package was designated for spending. Have you now reached the conclusion that the American people deserve to know what happened to the $787 billion stimulus package?

Isn't it ironic that the Obama administration continues to recklessly spend the tax payers dollars as fuel to fuel a fire that will only keep those closest to this administration warm.

Dean Baker, Co-Director of the Center for Economic and Policy Research, said:

The key point to keep in mind is that there are no elections right now. In fact, there are no elections for another 11 months. What is going to matter for Obama and the Democrats is what the economy looks like in November, not what people write about the jobs summit today. For most people, this will mean jobs.

Jobs are the measure of the economy for the vast majority of the American people. They don't see GDP growth. This is a statistic collected by bureaucrats in the Bureau of Economic Analysis.

While stock market movements are the economy for the small group of relatively well-off people who comprise the country's punditry, in reality, they have very little to do with the economy. A relatively small segment of the population has any substantial stock holdings so most people will get little or no benefit from an increase in stock prices. The market itself fluctuates hugely for reasons that have nothing to do with the strength of the economy. Discussions of the stock market are probably better placed on the sports pages than in an analysis of the economy.

For most people, the economy means jobs. If the country sees the jobs being created by November, they will be in a much better mood toward the party in power. On the other hand, the baseline projections from the Congressional Budget Office, the Federal Reserve Board, and most private forecasters show the unemployment rate continuing to rise well into 2010. While it may peak before November, any improvement by election day will be too small for anyone to notice.

There are actions that President Obama and Congress can take. The most obvious is using work-sharing tax credits to get companies to have people work shorter hours rather than laying off workers. This has worked incredibly well in Germany, where there has been no increase in unemployment, even though their downturn was steeper than ours.

There are 2 million workers laid off each month. If work-sharing tax credits (like one proposed by Representative Conyers) can reduce this figure by 10 percent, or 200,000 a month, it would be the equivalent of generating almost 2.5 million new jobs by election day.

There are things that can be done to create jobs and improve the economy. President Obama and Congress just have to stop letting the Washington punditry scare them.

Bill Press, host of the Bill Press Show, said:

First and foremost, the "Jobs Summit" is important for America. The official unemployment may be 10.2 percent, the actual rate is closer to 18 percent. Almost two out of 10 American families see no paycheck in sight. That must be turned around if we are ever going to see any real economic recovery. As for Obama... If actions follow words, if new jobs are created, if unemployment starts to fall, it will be a big boost to Obama and Democrats in 2010. If not, there'll be hell to pay.

John F. McManus, president of The John Birch Society, said:

Meaningful jobs are created by manufacturers, not by governments. In fact, wealth should be known as productivity, the creation of goods from the raw materials of the earth. A nation is wealthy when its people are engaged in manufacturing, but America has lost close to half its manufacturing jobs during the past three decades. The chief impediment to wealth production is always government -- with its taxation and regulatory burdens. Most of these impediments are not faced in such competitors as China. If Mr. Obama does not lead an effort to reverse government's job-destroying policies, he should certainly be hurt politically. But, sadly, fewer and fewer Americans realize that government is the real reason why job are disappearing here at home. 

Justin Raimondo, editorial director of Antiwar.com, said:

The study of history teaches us there is very little that is new under the sun – and that goes for “job summits.”

There are two ways to deal with the economic depression – and it is a depression, not a recession, when the real rate of unemployment hits over 10 percent, as it has. The first is the classical laissez-faire solution: Let the bubble burst, and the market will liquidate the inflated estimates of value that have been pumped up by the arbitrary expansion of bank credit (engineered by the Federal Reserve). This method has been rejected by the present administration, as well as the previous one, in pursuit of the second solution, which is massive government intervention designed to re-inflate the bubble. Readers may be surprised to learn that the administration of Herbert Hoover, often condemned as standing by and doing nothing as the first Great Depression collapsed the U.S. economy, chose the same course: that is, government intervention. Aside from initiating a massive public works program, one of the first things the Hoover administration did was to inaugurate a – you guessed it! – Jobs Summit. As the economist Murray N. Rothbard described it in America’s Great Depression:

“All the great industrial leaders of the country were there, including such men as Henry Ford, Julius Rosenwald, Walter Teagle of Standard Oil, Matthew Sloan, Owen D. Young, Edward Grace, Alfred P. Sloan, Jr., Pierre DuPont, and William Butterworth. The businessmen asked Hoover to stimulate the cooperation of government and industry. Hoover pointed out to them that unemployment had already reached two to three million, that a long depression might ensue, and that wages must be kept up! Hoover explained that immediate "liquidation" of labor had been the industrial policy of previous depressions; that his every instinct was opposed to both the term and the policy, for labor was not a commodity: it represented human homes. . . . Moreover, from an economic viewpoint such action would deepen the depression by suddenly reducing purchasing power.”

The idea was to make this kind of cooperation between government and business appear “voluntary,” but the implicit threat of coercion was ever present. If the barons of industry didn’t keep wages up, and start investing in new projects, the government would force their hand. Hoover held a series of such “job summits,” which all resulted in declarations from the assembled industrial leaders – including union chieftains – that they would do their “patriotic” duty to re-inflate the economy so that “great hardship and economic and social difficulties would be avoided,” as one such declaration read. Yet it was all to no avail, as we now know: the Depression only deepened, in part due to the very efforts Hoover was so instrumental in initiating. The malinvesttment occasioned by the bubble economy had to be sweated out, or otherwise liquidated – it could not be ignored. So, good luck with that “Jobs Summit,” Mr. Obama – because you’re going to need it.

Tad DeHaven, budget analyst at The Cato Institute, said:

The so-called “jobs summit” is more political theater. Scheduled to attend are economists, union leaders and business leaders who supported the president’s failed stimulus package and who will simply recommend more government spending. In other words, the event isn’t a jobs summit, it’s an echo chamber.

It bears repeating that the government cannot simply wave a magic wand and “create” jobs. Every dime the government spends trying to boost employment has to be taxed or borrowed out of economy. There is no free lunch.

Perhaps the White House should start listening to the entrepreneurs and businesses shedding employees or not hiring because they’re worried about the administration’s agenda. Potential health care mandates, higher energy costs due to climate change legislation, new burdensome regulations, and potential tax increases to pay for the government’s rising debt could make hiring cost prohibitive.

Anna Burger, secretary-treasurer of SEIU, said:

Our jobs crisis didn’t happen overnight. And it didn’t happen by accident. 



We’re paying the price for a system that for too long valued wealth over work, ignored the warning signs of crisis, and failed to meet the new challenges of the 21st century. Eighty years ago, we found ourselves facing similar challenges. A reckless financial system crashed our economy -- leaving millions without jobs, without homes, and without hope. 

But we know what happened next. 

President Roosevelt created the New Deal and he did it by empowering Frances Perkins to shake things up across government and business. She worked around the clock to not only put people back to work -- but to build an entirely new economy. 

She focused on innovative public works programs to put millions of people back to work quickly and efficiently. And she ensured workers could share in the productivity of a growing new economy by protecting their freedom to join unions—laying the foundation for the greatest middle class the world has ever seen.



If we are going to come out of our current crisis stronger and better prepared for the challenges of a 21st century economy, we need someone to take charge, to focus -- 24/7 -- on job creation until we see results. 

It’s time for President Obama to empower the 21st century Francis Perkins, someone to speak for him and someone who has the authority across government to shake things up. It’s time to create a country that works for all of us. And that starts with jobs.  
Creating jobs isn’t rocket science. We just need the political will, courage and determination to make it happen. 

Now it’s time to get to work.

(Read the rest of this submission after the jump.)

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Free trade will boost jobs (Rep. Aaron Schock)

Today, President Obama is hosting a jobs summit at the White House with union bosses and corporate CEOs to discuss ways to accelerate job creation in the US. Noticeably absent are any representatives from the Chamber of Commerce or the National Federation of Independent Businesses, who represent most of the employers throughout the country.

While not receiving invitations from the President might not stop everyone from attending events at the White House, the absence of the Chamber and NFIB reveal this summit for what it really is: just another PR stunt. If the President was serious about creating jobs, he’d immediately submit the three pending free trade agreements with Colombia, Panama and South Korea.

For months, House Republicans have been asking “Where are the jobs?” as the Democrats ignore the rising unemployment rate and instead pass a cap and tax bill that, according to independent estimates, will cost us between 2.3 and 2.7 million jobs each year for twenty years and a health care bill that President Obama’s own economic advisor estimated would cost as many as 5.5 million jobs.

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Advocates call on Congress, Administration to address affordable housing shortage through National Housing Trust Fund

With growing numbers of vacant homes in our communities, and many property owners not receiving their asking prices when they sell, it may seem that housing is becoming more affordable as a result of the recession.
 
We need to remember, however, that affordability is defined by the relationship between what you earn and the cost of your housing. For the first part of this decade, housing prices greatly outpaced Americans’ incomes. Even rents, which grew more modestly, became more unaffordable for the typical renter. Eventually all the mortgage “innovation” in the world couldn’t obscure the very real chasm between what the typical household could pay and the market price of its housing.  Once the housing market began to stumble, it took Americans’ confidence, jobs, hours and raises with it.

Today, housing prices are being dragged down. However, while in the boom incomes lagged behind home prices, in the current market, it is prices that are lagging, falling more slowly than incomes.  The perverse result is a worsening housing crisis for the lowest income households.

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Level the playing field for small businesses (Rep. Scott Murphy)

We frequently talk about how small businesses are the backbone of our economy but it’s important to support small businesses with good policy, not just words.  There are some cases where the government tends to get in the way with excess regulations preventing our entrepreneurs from succeeding.   For too long we’ve actually been penalizing our small businesses for being small businesses.  That’s why I introduced The Business Checking Fairness Act which would level the playing field for small businesses, giving them access to more capital and increasing their job creating potential.

When you or I put our money into our checking accounts we receive interest on our deposit.  However, the same cannot be said for small businesses.  In fact, the Banking Act of 1933 actually prohibits banks from paying interest on business checking accounts.  While large corporations are able to use high balance sweep accounts to earn interest on their cash, these accounts do not work for small businesses due to high balance requirements.

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America needs more jobs, not more debt (House GOP Leader John Boehner)

Last week, as the national debt topped $12 trillion for the first time in U.S. history, one influential policymaker said, “I think it is important, though, to recognize if we keep on adding to the debt … that at some point, people could lose confidence in the U.S. economy in a way that could actually lead to a double-dip recession.”

This analysis was delivered by President Barack Obama, on whose watch “red ink as far as the eye can see” has become the status quo.

While mostly accurate, President Obama’s comments actually miss the fact that our rapidly decaying fiscal situation has already undermined confidence in the U.S. economy.  Washington Democrats saw to that with a trillion-dollar ‘stimulus’ that was supposed to be about creating jobs, but has instead produced countless examples of wasteful government spending while more than three million more Americans have lost their jobs.

It’s no wonder, then, that the Chinese government, which controls about one out of every four foreign dollars invested in our debt, has been asking detailed questions about the long-term fiscal impact of a government takeover of health care.

The Chinese have every right to be concerned.  The head of the Concord Coalition, an independent fiscal watchdog, recently described the Senate’s 2,074-page government takeover of health care as “basically, a big entitlement expansion, plus tax increases.”

Much more is at stake here than the short-term status of our economy. The federal government is currently operating on a budget that doubles the national debt in the next five years and triples it in the next 10.

By the time the next decade is out, interest payments to sustain the national debt will exceed $700 billion. That is more than what our nation will spend this year on education, energy, homeland security and the wars in Iraq and Afghanistan – combined.

Out-of-control spending has been a problem for years in Washington, but instead of hitting the brakes on spending as they promised they would, President Obama and Washington Democrats have stepped on the accelerator.  Now, instead of working with Republicans to impose real fiscal discipline, Washington Democrats believe the answer is more of the same unsustainable spending and borrowing. Our kids and grandkids should not have to foot the bill because out-of-touch Washington Democrats will not make the same tough choices required of every family struggling to make ends meet.

Our government is out of money and Washington Democrats are out of ideas. At every turn this year, Republicans have offered better, fiscally-responsible solutions to tackle the immediate challenges facing the American people, including an economic recovery plan that would have created twice the jobs at half the cost, a budget that would impose strict caps to limit federal spending on an annual basis, and the only health care bill that would cut the deficit and consistently reduce federal spending on health care over the next two decades.

Families are asking ‘where are the jobs?’ but all they are getting from out-of-touch Washington Democrats is more spending and more debt piled on our kids and grandkids. The American people deserve a government that lives within its means and fully commits itself to creating good-paying jobs, and only Republicans have proposed solutions to give them exactly what they want.  Now more than ever, America needs more jobs, not more debt.

(Cross-posted from Biggovernment.com)

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The Big Question: Does the jobs bill push mean the stimulus failed?

Some of the nation's top political commentators, legislators and intellectuals offer some insight into the biggest question burning up the blogosphere today.

Today's question:

Is the rush toward a jobs bill an implicit admission that February's $787 billion economic stimulus failed?

Glenn Reynolds, the Instapundit blogger, said:

Admission or not, it's obvious that the stimulus has been a miserable failure, with unemployment much worse than the Obama Administration said we'd see without the stimulus, and much, much worse what they promised us we'd see if the stimulus passed.  Arianna Huffington is calling unemployment Obama's Katrina, increasing pressure for action. But a "jobs bill" is likely to prove yet another expensive flop. Legislation doesn't create jobs. Investment creates jobs, and in the current political environment, you're crazy to invest unless the political fix is in.

Much of the unemployment problem stems from uncertainty created by the Administration and Congress, as they rush one poorly thought out gimmick after another through the system and create the sense that the only good investment is one that's government-approved.  The best thing they could do is probably nothing, but since doing nothing offers no opportunities for political posturing and graft, I predict that we'll see another expensive yet ineffectual program instead.

Craig Newmark, founder of Craigslist, said:

The jobs bill reflects that the damage done in the prior eight years will take more work to repair. There are many good people in Washington and elsewhere, working very hard on that.

Daniel J. Mitchell, senior fellow at The Cato Institute, said:

The so-called stimulus was a massive waste of tax dollars, but this should not be a surprise.

The $787 billion spending spree was based on the discredited Keynesian theory that did not work for Hoover and Roosevelt in the 1930s and did not work for Japan in the 1990s. It also did not work for Bush last year, so it is baffling that anybody would think it would work this year. Borrowing money out of the economy’s right pocket and then having politicians put the same money in the economy’s left pocket was the political equivalent of a perpetual motion machine. The only surprise was that the White House was foolish enough to make specific claims of the good results that supposedly would flow from all the pork-barrel spending. In part, this is the absurd notion of claiming 600,000-plus “jobs saved or created” when total employment actually has fallen by more than 3 million. But the bigger mistake was claiming that the faux stimulus would keep the unemployment rate from rising above 8 percent and that failure to squander $787 billion would cause the jobless rate to climb to 9 percent. The politicians got their wish, yet now the unemployment rate is above 10 percent. Brilliant.

Dean Baker, co-director of the Center for Economic Policy Research, said:

There is little dispute among economists that the stimulus helped to boost growth and prevented the unemployment rate from rising even higher. This can be seen very clearly in the data. For example, consumption grew in the 2nd quarter even though wage income fell. This was obviously due to the increases in unemployment insurance and other benefits, as well as the Make Work Pay tax cuts. Everyone who has looked at the data recognizes the positive role that the stimulus played.

The reason why there is a need for a jobs bill is that the economy was hit harder than President Obama and most private forecasters anticipated. They can be blamed for not getting their forecast right (they are supposed to be good economists), but on the other hand, President Obama was not the person who let an $8 trillion housing bubble grow unchecked, or insisted that its collapse would be no big deal when it started to deflate. (That person would be Federal Reserve Board Chairman Ben Bernanke).

Anyhow, the economy was worse than was generally recognized, as some of us did try to warn last winter. This means that much more stimulus was needed at the time. The story here is of a hugely overweight person who cut back their food intake by 300 calories a day. If this person had originally been consuming 3000 calories a day, then this reduction in food consumption will probably not be adequate to get their weight down. But the conclusion is  not to go back to eating 3000 calories a day, but rather to cut food intake more.

The Republicans will try to take advantage of the Obama administration's forecasting mistake to claim stimulus doesn't work. However, if the public gives into this nonsense then we will all end up fat and unemployed.

Bernie Quigley, Pundits Blog contributor, said:

Yes. If you drove south from northern New Hampshire to North Carolina on I-95 as I have done this past weekend, you would see extensive work conspicuously done by women and men in lime green clothing here in the frozen north where almost no one lives. Every road has been resurfaced; the ledges have been torn off the high cliffs by the highways that just last year housed hawks and peregrine falcons, lines have been painted everywhere.

Much of this work has been voted down again and again locally as work that did not need to be done, work that we did not want done; labor that we do not respect; work that we do not consider to be real work. Increasingly, the feds need to New Jersey-fy us so as to removeth chill of the cold, clear, northern night and the coyote’s chant that sends the willies up their spines. But there is less than 2 percent unemployment up here in these parts. This money is a complete waste by nostalgicos channeling the Inner Roosevelt and longing for the days of Woody Gunthrie and Big Bill Broonzy singing folkloric ditties in a box car heading across the western plains on the government’s tab.

Commodities guru Jim Rogers, in comparing the Obama spending to that of the Chinese, points out that the Chinese are correctly spending infrastructure money by applying it where it is needed for the 130 million new workers recently arrived in the industrial centers. Here it is just tossed anywhere, as if out of an airplane, regardless of need. All patterns of population and economy today point west. When people here in the Land of the Free move they tend to move today to Texas and Alaska. There has been no attempt to follow patterns of rising karma. And then when you get south to New York City, where employment is now most probably above 20% the roads and infrastructure are a mess and not a finger has been lifted. There appears to be no plan whatsoever as Rogers says.

Rep. John Carter (R-Tx.) said:

There is no doubt that the original Stimulus failed to create jobs, and has in fact probably cost additional jobs and prolonged the recession.  To create jobs we need to lower the tax burden to stimulate investment, which is the exact opposite of what the Democrats did earlier this year and now contemplate again.

Rep. Mike Honda (D-Calif.) said:

The damage done to our economy by Bush policies will take longer than months to fix, especially to help the millions of American families who are still struggling to make ends meet. The economic recovery package was an important step in a new direction but we need to do more to help Americans who have lost their jobs due to years of deregulation and harm done to our social and economic fabric by failed Republican policies and tax cuts to the wealthiest. 

Dick Morris, Pundits Blog contributor, said:

It is the political and economic equivalent of the escalation of the Vietnam war.  If 100K troops don't win, send in 200K and so forth until the fact that the program isn't working becomes obvious to everyone, even its advocates.
 
The stimulus spending is not failing because it is inadequate but because it is counter productive.  The capital it absorbs could be better spent investing in private sector job growth.  All the stimulus is, is a heart lung machine to keep the economy alive.  it does nothing to assure that it will be able to live on its own once the machine is disconnected.  In fact, by absorbing all the oxygen in the room to pay for its deficit, it assures that it will not be able to do so

Read more after the jump.

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Washington's elusive quest for jobs (Rep. Paul Ryan)

With unemployment at 10.2%, it is imperative that we focus on job creation. In the halls of Congress, there are reports of yet another "stimulus" spending bill. It is great that jobs are again on the agenda, but to continue to do the same thing (simply spend more money) and expect different results is the definition of insanity. As the private sector continues to shed jobs, the size and scope of the federal government is expanding at breakneck speed: trillions in new taxes, spending, and debt; the creation of new government entitlement programs; unprecedented power grabs over our financial, health care, and energy sectors. Washington needs to drop its adherence to the notion that spending your money and printing new money are the only answers to promoting jobs here at home.

As we open another stimulus debate, it is instructive to revisit the passionate and vocal case recovery2.gifmade earlier this year for the trillion dollar spending package (H.R. 1). In January of 2009, President-elect Obama's economic team released a detailed report that made clear the need for their spending bill and the consequences if we didn't rush one-trillion dollars out the door. The following chart, along with updates that mark the actual unemployment data, makes clear the disparity between Washington's promises and the dismal results.

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Unregulated derivatives are holes in our economic boat (Sen. Maria Cantwell)

If your boat had twelve holes in the bottom, you wouldn’t fix eleven of them, congratulate yourself on a job well done and take it out to sea.

Any loopholes in proposed regulatory reform for the derivatives market work much the same way. In derivatives markets, as in boating, one hole can sink the entire vessel.

That’s why it is so important that Congress respond to the derivatives market meltdown with a thorough, leak-proof, loophole-free regulatory reform bill. Last year, we saw how much damage loopholes can cause. The economic collapse in 2008 stemmed in large part from banks recklessly gambling in the unregulated derivatives market. When the bottom fell out, the banks tapped taxpayer dollars to avert disaster. Now they are using the bailout money to place more bets in a derivatives market that remains unregulated.

Until 2000, as a matter of federal law, all derivatives were required to be traded on regulated central exchanges overseen by the Commodity Futures Trading Commission, unless specifically exempted by the Commission. The oversight protected the public from the chaos that could result from unscrupulous or reckless trading.

Then in 2000, Congress passed a provision in the Commodities Futures Modernization Act of 2000 that exempts derivatives trade from federal regulation. At the same time, Congress also preempted state gambling regulations, the point being to strip away all regulatory control – federal or state – over derivatives trading.

When federal regulators are stripped of their ability to oversee dangerous derivatives trades, states should not be blocked from protecting their citizens. I have introduced legislation to empower state gambling regulators and attorneys general to examine unregulated derivatives trading and take appropriate action to protect citizens from practices which can harm the foundations of our economy.

But to protect taxpayers from the boom-bust-bailout cycle, we must fight strong Wall Street and corporate lobbying campaigns and pass derivatives reform legislation that contains absolutely no holes.

I applaud Senate Banking Committee Chairman Christopher Dodd for offering strong draft legislation to shed light on the dark derivatives market. It is a constructive beginning of what will likely be an extensive Senate debate – that will also include the Agriculture Committee – over how to strengthen our financial regulatory structure.

Wall Street is spending hundreds of millions of dollars lobbying Congress to protect its financial interests, which might explain why nothing has been repaired in our financial regulatory system. Knowing that public trust of Wall Street is at a low ebb, the big bankers are enlisting some of their clients – big companies that employ thousands of workers in states and districts – to lobby on their behalf.

The big companies may be arguing against their own interests. The unregulated speculation in derivatives has hurt, not helped, big businesses by siphoning money away from productivity and putting it into what amounts to sophisticated gambling. This is the hole in the bottom of our economic ship that we must repair.

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