Economy

The American Federation of State, County and Municipal Employees (AFSCME) on Wednesday began running a major radio ad campaign thanking key Democratic House members for supporting the $26.1 billion state-aid bill that passed their chamber on Tuesday and was signed into law later that same day. 

President Obama will sign into law on Tuesday the $26 billion state-aid bill that passed the House earlier today. 

The House on Tuesday approved 247-161 a $26 billion state-aid bill that will funnel $10 billion to education funding and $16 billion to Medicaid. 

Speaker Nancy Pelosi (D-Calif.) contends the legislation will save or create 319,000 jobs, which includes positions for teachers, police officers and firefighters. 

Worker productivity unexpectedly fell for the first time in more than a year, a signal that firms might need to hire more employees to expand. 

After five-straight quarters of gains, worker output dropped 0.9 percent from April through June after a revised gain in efficiency of 3.9 percent, up from the initial 2.8 percent increase in the first three months of the year, the Labor Department reported Tuesday. 

Economists argue productivity gains have hurt the economic recovery. If companies start hiring, incomes will increase and consumers will start spending again. Consumer spending accounts for about 70 percent of the economy. 

In the fourth quarter of 2008, productivity fell 0.1 percent — the last time it has fallen. The biggest drop before that was a 1.3 percent decrease in the third quarter of 2008. 

House Financial Services Chairman disputes rumors that House Democrats were irritated at being called back to Washington by Pelosi.

The House is expected later on Tuesday to take up a $26.1 billion state-aid bill that provides $10 billion to education funding and $16 billion to Medicaid.

Preventable medical errors cost the country $19.5 billion in 2008 — or roughly $13,000 for each avoidable case, according to a report published Monday by the Society of Actuaries (SOA).

And that number is likely low, according to consultants at Milliman, who crunched the data. 

"We used a conservative methodology and still found 1.5 million measureable medical errors occurred in 2008," says Jonathan Shreve, an actuary for Milliman who co-authored of the report. "This number includes only the errors that we could identify through claims data, so the total economic impact of medical errors is in fact greater than what we have reported."

More than half of those costs were associated with just five avoidable medical injuries: pressure ulcers; post-op infections; mechanical troubles with devices, implants or grafts; post-laminectomy syndrome; and hemorrhages.

Aside from the direct financial impact, the 2008 errors also resulted in more than 2,500 avoidable deaths and more than 10 million missed work days.  

The report arrives as lawmakers are hoping to rein in the skyrocketing cost of healthcare by reducing waste and linking provider payments more closely to the quality of the care delivered, not just the quantity.

If the SOA study is any indication, there's plenty of savings out there to be had.

—Cross-posted from Healthwatch. 

A report that taps the opinions of human resource professionals predicts layoffs in August will drop to a level not seen since 2007. 

Education Secretary Arne Duncan on Monday warned that children will be hurt if the House fails to pass the $26 billion state-aid package that advanced from the Senate last week. 

"If the bill doesn't pass, basically children get hurt," he told MSNBC's "Morning Joe." "We'll see class size increase dramatically; we'll see after-school programs eliminated; we'll see extracurriculars eliminated." 

FED LIKELY TO DOWNGRADE OUTLOOK — Financial Times on Tuesday's meeting: "Faced with weak economic data and rising fears of a double-dip recession, the Federal Open Market Committee is likely to ensure its policy is not constraining growth and to use its statement to signal greater concern about the economy. It is, however, unlikely to agree big new steps to boost growth." http://bit.ly/dgiU94

WSJ says the Fed meeting is "likely to feature further debate over whether the Fed should renew extraordinary measures to kick-start growth [...] may include resuming purchases of Treasury debt or mortgage-backed bonds, likely, at least to start with, by using money generated from existing holdings of such debt as they mature." http://bit.ly/9bfDRI

Also Tuesday, the House returns to vote on the $26.1 billion jobs bill with state aid.

Unions, who pushed hard for the bill, will "rev up campaign machinery" once President Obama signs it. The Hill's Kevin Bogardus: http://bit.ly/d3EWgY

THE NEW NORMAL: HIGH UNEMPLOYMENT, LOW RETURNS — ICYMI, the Sunday NYT's must-read on pessimism over the economy, a view shared by Clinton and Bush economists: "The 'new normal,' as it has come to be called on Wall Street, academia and CNBC, envisions an economy in which growth is too slow to bring down the unemployment rate, while the government is forced to intervene ever more forcefully in a struggling private sector. Stocks and bonds yield paltry returns, with better opportunities available for investors overseas."

Glenn Hubbard, former Bush adviser, calls for more federal investments in education: “If there is a new normal, it’s more about the labor market than GDP. ... We have to help people face a new world.”

Laura Tyson, former Clinton adviser: “I think we’re going to have slower growth, a higher household savings rate and an elevated unemployment rate for several years.” http://nyti.ms/blEaQp

(Tyson is being floated by the administration as possible successor to Christina Romer as chairwoman of the Council of Economic Advisers. Reuters: http://yhoo.it/cdMsHE)

AND/BUT... Monday's must-read — WSJ: "SOME FIRMS STRUGGLE TO FILL JOBS..."

"Employers and economists" blame it on: 1) extending jobless benefits to 99 weeks; 2) homeowners unable to move; and 3) the job market's shift away from middle-wage jobs that's created "a glut of people who can't qualify for highly skilled jobs but have a hard time adjusting to low-pay, unskilled work." http://bit.ly/aVY1yO

More people filing early for Social Security. WaPo: http://bit.ly/91dt3r

Gibbs tells The Hill the WH economics team is "exhausted," and that friction with Lawrence Summers wasn't the cause for Romer's departure. http://bit.ly/chhA0J

FINREG — Another financial crisis could hit before Wall Street reforms in place. Bloomberg: "Many of the measures ordered by Congress and global regulators, aimed at cushioning the financial system in future crises, are years away from being implemented. The Basel Committee on Banking Supervision plans to give the world’s banks until 2018 to comply with limits on how much they can borrow. Parts of the Volcker rule, a provision of the new Dodd-Frank Act that would force firms to cut stakes in in-house hedge funds and private-equity units, may not go into effect for a dozen years." http://bit.ly/bY0b79 (h/t Silla)

How banks are trying to get around the Volcker Rule. WSJ: http://bit.ly/cEuEyn

DEFICIT V. STIMULUS — Bob Rubin opposes another stimulus, favors finding a plan to deal with deficits in about two years. HuffPo: http://huff.to/a8jHfh

Robert Samuelson warns that deficit reduction through higher taxes may mean less kids: http://bit.ly/d9w20y

Megan McArdle says Paul Krugman's wrong about the Ryan Roadmap. http://bit.ly/9k9laq