Economy & Budget

Administration alseep at the wheel on FHA oversight (Rep. Darrell Issa)

Have you heard? Wall Street -- stoked by never-ending taxpayer largesse -- is again chugging down the rails. Destination: raising its own stock prices in the midst of a jobless recovery. But don't be fooled: the engineers of this paper recovery are still asleep at the wheel, allowing runaway mortgage giants Fannie Mae and Freddie Mac to burn through billions more tax dollars without an Inspector General or independent oversight.

Meanwhile, the capital reserves of the Federal Housing Administration (FHA) have dropped dangerously low, raising the specter of another taxpayer bailout of a federal housing agency. As these Casey Joneses watch the next economic train wreck pick up steam, Congress should slam on the brakes and take a long hard look at whether it makes sense to continue pouring public money into a broken federal housing bureaucracy without holding it accountable for every tax dollar it receives.

We recently learned that the Justice Department ruled in September that the Inspector General of the Federal Housing Finance Agency (FHFA) -- the regulator of Fannie Mae and Freddie Mac - could not continue as an independent overseer of the mortgage giants. Instead, IG Ed Kelley has been relegated to the position of "internal auditor," lacking independence and reporting to a political appointee.

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Passage of Small Business Development Centers bill will help small businesses, stimulate economic growth and increase American competiveness (Rep. Aaron Schock)

On Saturday, as we awaited action on Speaker Pelosi’s massive health care legislation, the House passed H.R. 1845, legislation I introduced earlier this year to help modernize the Small Business Development Center Program. This legislation will provide SBDC’s with the resources they need to deal with increased demand and usage.

This bill is a text book example of how a bipartisan House should work.  I worked with both Chairwoman Nydia Velazquez and Ranking Member Sam Graves to write, tweak and improve this legislation as it moved through the Small Business Committee and to the House Floor.

Nationwide, the over 1000 SBDCs serve as important and informative resources for growing small businesses. SBDC’s provide emerging entrepreneurs with the tools needed to successfully take their small business concepts into reality. Additionally, they provide existing small business owners with important financial and budgeting consulting to assist in long-term growth and management. The investments made into the SBDC network provide a cost effective way to help grow the economy while enhancing American competiveness.

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Cap-and-Trade creates more certainty… for higher unemployment

The Senate Finance Committee yesterday convened a hearing to consider the impacts to jobs in the United States that would result from approval of pending climate change legislation. Given the state of the financial markets, how a carbon trading scheme would operate and who would be in charge of it, it is entirely appropriate that this Committee be involved in the process.

The National Petrochemical & Refiners Association (NPRA) submitted written testimony for the record highlighting the effects pending climate legislation would have on American energy jobs.  Simply stated, NPRA believes that both H.R. 2454 and S. 1733 would drive domestic gasoline and diesel production offshore, resulting in lost jobs for American workers and the outsourcing of our nation’s energy security to regions of the world that do not follow our already stringent environmental protections.  Dr. Kenneth Green of the American Enterprise Institute delivered essentially the same message to the Committee orally:

As energy prices rise, and American companies find themselves less competitive, businesses and jobs will flow to countries without greenhouse gas controls, and without stringent environmental controls of any kind, potentially allowing emissions to increase. The remedy to this, border tax adjustment, is only likely to cause a trade war that will further damage the U.S. economy. As increased energy costs raise the cost of all U.S. goods and services, consumption will decline, causing still more job losses.
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Increase job opportunities for unemployed veterans (Rep. John Boozman)

As the son of a Master Sergeant in the Air Force, I grew up in a family that had values rooted in military tradition and today I carry those with me as I craft legislation to help our veterans. As a member of the House Veterans' Affairs Committee and Ranking Member of the Economic Opportunity Subcommittee, I am uniquely positioned to usher legislation through Congress that provides our veterans with the tools they need to succeed in today's competitive economy.

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Too big to fail--too big to exist (Sen. Bernie Sanders)

More than a year has gone by since Congress passed the $700 billion bailout of Wall Street. The Federal Reserve has committed trillions of additional dollars in virtually zero-interest loans and other assistance to large financial institutions resulting in the largest taxpayer bailout in the history of the world.

President Bush and Ben Bernanke told us we needed to bail out Wall Street because we could not allow big financial institutions and insurance giants to fail because if they failed it would have led to the collapse of the U.S. and global economies.

Today, most of the huge financial institutions still standing have become even bigger -- so big that the four largest banks in America (JP Morgan Chase, Bank of America, Wells Fargo, and Citigroup) now issue one out of every two mortgages; two out of three credit cards; and hold $4 out of every $10 in bank deposits in the entire country.

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Hell No! We Won’t Send Our Tax Dollars to China

Taking candy from a baby: A consortium of Chinese and American companies goes to Washington and announces plans to build a $1.5 billion windmill farm in West Texas using $450 million in U.S. Stimulus funds, which will create 2,330 jobs – 2,000 of them in China. 

The baby – Washington -- doesn’t cry or whine or spit in the consortium’s face. That’s what’s really wrong with this story.

So accustomed to being bought and sold, Washington simply begins processing forms so it can hand over your tax dollars to create jobs in a turbine factory in the city of Shenyang, China at a subsidy of $193,133 each.

It’s like these bureaucrats live in Wonderland. Or an America where the unemployment rate isn’t 10.2 percent. Or where 40,000 American manufacturing facilities didn’t disappear in the past decade. Or where banks didn’t repossess nearly a quarter million American homes in the past three months.

We’ve got a message for Washington: Hell no! We’re not giving tax dollars to China. What’s wrong with these businesses and our government? It is the $787 billion American Recovery and Reinvestment Act of 2009. It’s not the Chinese Recovery and Reinvestment Act.

It’s bad enough that we’ve off-shored our factories and technology and jobs over the past 20 years.  We’re not off-shoring our Stimulus cash too. In fact, we’re tired of serving as the schoolyard wimp of the world. We need our own industrial policy so we can stand up and compete in the world market manufacturing the likes of wind turbines. And we need it now.

China has an industrial policy. And it uses that policy to dominate.  Here is how Keith Bradsher of the New York Times described China’s policy to become a world leader in renewable energy, which of course, would include construction of wind turbine factories:

“Calling renewable energy a strategic industry, China is trying hard to make sure that its companies dominate globally. Just as Japan and South Korea made it hard for Detroit automakers to compete in those countries – giving their own automakers time to amass economies of scale in sheltered domestic markets – China is shielding its clean energy sector while it grows to a point where it can take on the world.”


China protects its chosen industries in many ways. It provides low interest loans, some of which don’t have to be repaid. It may give free land on which to construct buildings. And there are other perks that Bradsher described:

“When the Chinese government took bids this spring for 25 large contracts to supply wind turbines, every contract was won by one of seven domestic companies. All six multinationals that submitted bids were disqualified on various technical grounds, like not providing sufficiently detailed data. . . even as Chinese companies that had never built a turbine were approved. . .”

Later, Bradsher describes European disgust at the Chinese treatment:

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The Big Question: How can lawmakers address rising unemployment?

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:

What policies could Congress or the president promote that would improve America's unemployment numbers?


Rep. Keith Ellison (D-Minn.) said:

"We have to focus our attention on massive job creation, and I think we need to invest in our infrastructure.  I have a bill which would basically provide 625 billion extra dollars to build our infrastructure.  We also need to step back and focus on an industrial policy that will strengthen manufacturing in America."


Paul Kawika Martin, policy and political director of Peace Action, said:

One step in creating more jobs could be dealing with a bloated Pentagon budget. The U.S. spends around half of its discretionary budget on the military and nearly more than every country in the world combined. Recently, economists at the University of Massachusetts concluded that military spending creates fewer jobs than nearly any form of government activity. Their findings showed that a tax cut or investing in education, mass transit or energy efficiency would create far more jobs. Sen. John McCain (R-Ariz.) echoed these sentiments when he said that we cannot look at military spending as a jobs program right before voting to stop the F-22 jet.

Even if you believe that the current level of military spending is appropriate, you would probably agree with current and former military leaders in cutting Pentagon pork — weapons systems that benefit military contractors and congressional campaign coffers not American's security. A former Assistant Secretary of Defense under Reagan and others urge the cutting of several wasteful programs including the DDG-1000 naval destroyer and "missile defense." This would allow the United States to inject billions into higher job producing programs.


Rep. Jeff Flake (R-Ariz.) said:

"Abandon the government takeover of healthcare.  That's got a lot of small businesses in particular very worried about hiring because they realize that if they support additional employees, they may be socked with a huge surtax from the healthcare bill."


Rep. Bobby Scott (D-Va.) said:

"We passed a stimulus package that is working, but working slower than I like.  It's gradually reduced the number of lost jobs, but we're still losing jobs.  We're headed in the right direction and making progress, but not enough.  We need continued support for the stimulus package, which still has a lot of money.  It was designed to pay out over two years.  Economics have indicated that the stimulus package has made a huge difference in the economy."


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

Instead of trying to spend money to increase GDP, the government should instead pay workers to work shorter hours. The mechanism can take the form of a tax credit to employers. The government can give them a tax credit of up to $3,000 to shorten their workers’ hours while leaving their pay unchanged. The reduction in hours can take the form of paid sick days, paid family leave, shorter workweeks or longer vacations. The employer can choose the method that is best for her workers and the workplace.If take home pay is left unchanged as a result of the credit, then demand should be left unchanged. If workers are putting in fewer hours and demand is unchanged, then employers will need to hire more workers.

This logic is as simple as it gets. The process is also quick and cheap. In principle, the government can go this route to save jobs at a cost of a bit more than $20,000 per job, far less than the cost per job saved through the stimulus package. Germany has used this policy to keep its unemployment rate at 7.6 percent, about the same as it was before the recession. Imagine workers in the United States, like workers in Germany, were dealing with the recession by putting in four-day weeks (while getting paid for five) or getting an extra two weeks of paid vacation. This sure beats being unemployed.

Seventeen states already have a “work-share” program in place that allows employers to use unemployment insurance money to cover a reduction in work hours, without a corresponding reduction in pay. More than 100,000 layoffs have been prevented as result of this program. Senator Jack Reed (D-RI) has a bill that would increase funding for work-share programs and remove some of the bureaucracy. The bill also provides start-up money for the states that don’t have programs. The Reed bill would be a big step towards following the Germany model, taking advantage of a program that is already in place. It could quickly make a big dent in the unemployment rate, by preserving many of the jobs that are now being lost.

In this respect, it is important to clear up a common confusion about the economy. The monthly job growth number is a net figure. Approximately 4 million people leave their jobs every month, half involuntarily. We have job growth if we either create more than 4 million jobs or reduce the number of jobs lost below 4 million.If a work share program reduced involuntary job loss by 20 percent, or 400,000 per month, it would have the same effect as adding 400,000 new jobs. Over a full year, this would generate nearly 5 million new jobs. This would be a quick and effective way to reduce unemployment.


Glenn Reynolds of Instapundit said:

The biggest problem so far has been "regime uncertainty," as businesses forego investment and hiring because they're not sure what's happening with ever-shifting stimulus, healthcare, and carbon-tax talk. In addition, a growing sense that financial success depends more on connections than on business acumen is shifting investment into the political sphere. That's good news for lobbyists, but not so much for the economy as a whole.

Furthermore, politicized efforts to ensure that the stimulus didn't benefit white males too much mean that the money didn't go to the sectors, like construction and manufacturing, that have been shedding jobs the fastest. All in all, exactly what one would expect of a politicized economic plan from an inexperienced administration.

Simple, predictable regulations, low taxes and freedom from political pressures on capital allocation produce economic growth. Corrupt, bureaucratized, constantly-shifting regulatory regimes do not. As we've moved toward the latter, we've seen less employment. Moving back toward the former would probably fix things.

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Extending Help to the Unemployed

Another week passes and still no up or down Senate vote to extend unemployment insurance. This is no time to play politics. This is no time for “dithering."

According to the National Employment Law Project, every day 7,000 additional workers are running out of unemployment benefits. That means that since the House passed its bill to extend unemployment insurance on September 22, approximately 266,000 workers have been left high and dry while the Senate continues to delay a vote on this crucial legislation—and 7,000 workers yesterday, 7,000 workers today, and 7,000 workers every day that the Senate puts off this vote are being pushed closer and closer to this brink.

The Senate bill, called the Unemployment Compensation Extension Act of 2009, H.R. 3548, would extend jobless benefits to all states for 14 weeks, with an additional six weeks for states with more than 8.5 percent unemployment, and all without adding one penny to the deficit.

Unemployment insurance is the first line of defense for jobless families in troubled times, bringing economic stability to entire communities. The current job market’s woes, however, have tested the program as never before. In fact, according to Department of Labor Statistics there is only one job for every six unemployed workers.

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Bringing tech jobs to rural and small town America (Rep. Tom Perriello)

If a company can hire a phone operator in India, why can’t they hire one in Martinsville, VA? For too long, we’ve had perverse incentives for companies to ship their jobs overseas instead of rewarding them for investing in American workers. This has left areas such as my district, Central and Southern Virginia, with a huge loss in manufacturing jobs and unemployment numbers that are unacceptably high. With this in mind, I have introduced H.R. 3627, the Rural and Small Town Telework Tax Credit Act of 2009. The bill aims to stimulate the growth of tech jobs in rural areas and small towns by providing a tax credit to cover the cost of teleworking equipment and expenses for businesses that hire employees in rural and small town America.

My district is a predominantly rural one that has been stung badly by the recent economic strife, as well as by a decade of bad trade policies that caused jobs to be shipped overseas. This tax credit incentivizes companies to bring jobs back to non-urban regions, and to renew and reward innovation by American entrepreneurs who create American jobs. Not only will this legislation spur job growth, the jobs created will be ones that belong in a 21st century economy. Teleworking is more and more common in today’s global marketplace, and numerous companies have telework centers answering calls from consumers and businesses that use their products. With the unprecedented investment in rural broadband networking in the stimulus package, the resources are increasingly available for teleworking jobs to be created in rural areas and small towns.

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Wall Street has a gambling problem (Sen. Maria Cantwell)

Taxpayers have put more than $24 trillion on the line to resuscitate Wall Street after the economic meltdown of last year. With the help of this massive taxpayer support, the nation's largest banks are posting record profits. That, by itself, is not bad. After all, our economy runs on profit, and the whole point of the government aid was to get the banks out of intensive care. The problem is that many of these banks have resumed their old habit of using other people's money to gamble with the same risky unregulated derivatives that led us into this crisis.

In the midst of the worst economic crisis since the Great Depression and with job losses and home foreclosures mounting, it's no wonder the rest of us are asking how this can be allowed to continue.

Look no further than the powerful lobbying arm of the financial services sector, which has spent at least $220 million this year lobbying Congress to stave off new rules to prevent another collapse. That is over $500,000 in lobbying for every member of Congress, which might help explain why, to date, nothing has been fixed in our porous financial regulatory system. Americans want to know when Congress will put an end to the Wall Street's secret off-book gambling schemes and restore our capitalist system by requiring real transparency and true competition.

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