Morning Economic News

Morning Must Reads: The U.S. Senate to People Driving Over Structurally Deficient Bridges--"Drop Dead"

This morning at 8:30, the U.S. Department of Labor releases national employment data for October. The blogger Bill McBride previews the October report and notes that the consensus forecast is that 90,000 jobs were created in October. In this era of diminished expectations, 90,000 jobs will be greeted with relief, but it would fall well short of the level of job growth needed to bring down the unemployment rate.

The New York Times has an editorial this morning questioning the failure of the U.S. Senate to do more to boost employment growth via increased spending on roads and bridges.

There’s nothing partisan about a road or a bridge or an airport; Democrats and Republicans have voted to spend billions on them for decades and long supported rebuilding plans in their own states. On Thursday, though, when President Obama’s plan to spend $60 billion on infrastructure repairs came up for a vote in the Senate, not a single Republican agreed to break the party’s filibuster.
That’s because the bill would pay for itself with a 0.7 percent surtax on people making more than $1 million. That would affect about 345,000 taxpayers...adding an average of $13,457 to their annual tax bills. Protecting that elite group — and hewing to their rigid anti-tax vows — was more important to Senate Republicans than the thousands of construction jobs the bill would have helped create, or the millions of people who would have used the rebuilt roads, bridges and airports.

Morning Must Reads: Local Governments Under Pressure, Students Under Pressure, State Policy Makers Not So Much

The Federal Open Market Committee (FOMC), the body that establishes monetary policy at the Federal Reserve, announced on Wednesday that it is expecting the economy to grow more slowly than previously thought over the next several years. 

In response to the deteriorating economic situation, the committee decided to do nothing. 

At his press conference explaining the FOMC decision, Federal Reserve Chairman Ben Bernanke urged Congress to do something about jobs.

'I think it would be helpful if we could get assistance from other parts of the government to help create more jobs,' Mr. Bernanke said.

Meanwhile, with unemployment high, federal assistance running out and the state cutting spending, local government finances are deeply in the red. Lackawanna County appears headed for layoffs and tax increases.

A bipartisan advisory panel recommended Wednesday that Lackawanna County increase real estate taxes to balance its 2012 budget, warning a steep hike will be required as county government contends with a financial crisis that will not be resolved quickly or painlessly.

The Philadelphia School District, also deeply in the red, has a plan to save up to $9 million by closing nine schools.

Turning to college kids, student loan debt rose by 5% in 2010. Public colleges, faced with significant cuts in state support, raised tuition nationally by 7.3% this year. 

Morning Must Watch: General Strikes and 'Job Creator' Strikes

Today in Oakland, Calif., a general strike is planned by the city's Occupy Wall Street protest. The strike is in response to the violence used by the city's police on October 25 (you can read about it here and you can listen to the Rick Smith Show cover the action as it was happening) to clear the protestors from an area near City Hall. 

In related news, John Hodgman defends moneyed Americans against the Occupy Wall Street protestors and suggests that it is time for the 1% to go on strike.

Morning Must Reads: Get Your Local Employment Data Here

This morning the Pennsylvania Department of Labor and Industry released data for September on employment and unemployment by metropolitan area in Pennsylvania.

As unemployment rates have been moving up over the last several months in most of the Commonwealth, much of the coverage this morning focuses on the fact that unemployment rates in September finally fell in many areas.

Of course, unemployment remains very high. In addition, as the table below illustrates, employment growth as measured in the survey of establishments (i.e., businesses), while positive for most metropolitan areas over the last year, has been negative in the last five months in 11 of 16 areas (employment declines are in red). (While the survey of households is used to measure unemployment rates, the survey of establishments is considered the more reliable indicator of job or employment growth. Over long periods, the two surveys almost always show the same trends.)

Unless job growth improves significantly over the next several months, September's decline in the unemployment rate will be a brief interruption of the continued increases in unemployment.

Morning Must Reads: We Know What to Do about the Economy, We Just Lack the Political Will

On Sunday, economists Christina and David Romer urged more aggressive action by the Federal Reserve and by Congress to boost short-term growth, noting in particular that we have the tools necessary to lessen the extent of unemployment in the economy but lack the political will do what is needed.

[David Romer said:] 'We need long-term measures to reduce the deficit over time and short-term measures' — like infrastructure spending — 'to help the shortfall in demand.'

While welcoming President Obama's jobs plan (which has yet to pass congressional muster), [David Romer] said it 'falls far short of filling the jobs gap.'

'The American economy is fixable,' he concluded. 'But the real constraint is building the political will and public support.'

In his New York Times column this morning, Paul Krugman notes the reemergence of a double standard in which many conservatives consider military spending critical to job creation while openly denying that other kinds of government spending create jobs in the economy.

Morning Must Reads: Income Inequality on the Rise

The Pittsburgh Post-Gazette runs with a story this morning on the latest data from the Congressional Budget Office on income inequality in America (PDF).  

If you thought it took millions to land in the top 1 percent of earners targeted by demonstrators, you should know the actual threshold is $343,927, according to IRS statistics for the calendar year 2009, the latest available ...

After-tax income for the richest 1 percent of Americans almost tripled from 1979 to 2007, according to a report from the Congressional Budget Office.

At the same time, people in the middle of the scale saw their incomes grow by just under 40 percent and those in the bottom 20 percent saw a gain of about 18 percent.

"The distribution of after-tax household income in the United States was substantially more unequal in 2007 than in 1979," the CBO said.

For some additional context, a household income of $349,850 or higher will land you in the top 1% of Pennsylvania tax filers, according to 2009 tax data from the state Department of Revenue. 

Fair warning, Sabatini only interviews a researcher from the Tax Foundation for her story and even provides a link to some Tax Foundation analysis. To quote Paul Krugman, "knowledgeable people don’t trust the Tax Foundation."

Jared Bernstein at the Center on Budget and Policy Priorities provides a more concise and focused summary of the latest data.

The share of the nation’s total income accruing to the middle 60 percent of households fell from around half in 1979 to a bit above 40 percent in 2007. Virtually all of this decline (and the decline in the share of income held by the bottom 20 percent of households) is reflected in the increase for the top 1 percent, whose share of the nation’s total income more than doubled.

Morning Must Reads: Budget Cuts, Revenue Shortfalls, Vouchers and Brawling Texans

There has been a flurry of news from Europe this morning as leaders there try once more to demonstrate that they have the will and the financial muscle to aid European member states facing large budget deficits. 

The persistent failure of political leaders in Europe to take bold action has in part contributed to a crisis that seems like the world's slowest moving train wreck. (Sorry, Harrisburg, you are clearly the second slowest.) Of course, political leaders with their heads in the sand is not just a character trait of European political leaders.

This morning's Pennsylvania news is just chock full-o-Nuts!

First, in Philadelphia a brutal round of budget cuts and layoffs will now be shortly followed by another round of budget cuts and layoffs.

Despite shedding thousands of employees and making significant classroom cuts in recent months, the Philadelphia School District — which had earlier announced a $629 million budget gap — must make an additional $39 million in reductions.

Officials propose further slashing individual schools' budgets by $10 million total, cutting professional development, English-language learner instruction, psychologists, instrumental music, athletics, educational technology, and bilingual counseling assistants. Together, those measures would save about $17 million.

And even if acting Superintendent Leroy Nunery II and the School Reform Commission sign off on those cuts, the district still has to find $22 million more.

The chief reason that school districts like Philadelphia are in trouble is that revenue collections keep coming up short as the economy remains well below full employment.

Which takes us to Scranton where the ski resort Snö Mountain, in addition to effectively defaulting on a state loan, owes the Scranton School District almost half a million dollars in property taxes.

Morning Must Reads: Jobs Down, College Tuition Up, School District Taxes Up and Policy Makers Are Focused On What?

On Tuesday, the Keystone Research Center published a summary of the employment situation in Pennsylvania. With the release of September's jobs data, which included a loss of just over 15,000 jobs, a picture is emerging of a job market in Pennsylvania that is shrinking. The continued loss of public-sector jobs and relatively slow growth in private-sector jobs is the main source of weakness in the labor market. The bottom line is that although Pennsylvania ranked in the top 10 of states in terms of job growth early in this recovery, the Commonwealth has moved to the bottom 10 in the last five months.

Much of the public-sector job loss is driven by the fact that tax revenue has yet to fully recover from the recession, the end of federal Recovery Act funding, and state lawmakers' unwillingness to raise state revenues which has deepened state budget cuts.

In related news — stemming from state budget cuts in funding for higher education — The Pittsburgh Post Gazette this morning reviews the latest on tuition costs at colleges and universities in Pennsylvania.

The average cost of tuition and fees at a public four-year college in Pennsylvania grew by 7 percent, from $11,331 last fall to $12,079 this fall, the College Board said. That's an average increase of $748.

Pennsylvania's average cost of $12,079 for four-year public college tuition and fees puts it behind only New Hampshire at $13,507 and Vermont, $13,078.

In K-12 education, local school districts are looking to compensate for state budget cuts through increases in property taxes. 

Morning Must Reads: Mo Gas, Mo Problems

Conflict over gas drilling is not just a Pennsylvania phenomenon. The New York Times has a story this morning on the tensions over shale gas drilling in Colorado.

Back home in Pennsylvania on Monday, the Citizens Marcellus Shale Commission released its report on concerns over gas drilling. (The Pennsylvania Budget and Policy Center was one of the organizers of the Citizens Commission.) Below is the initial take of The Trib in Pittsburgh on the Commission's report release. More important than that initial take is the careful consideration of the new report by lawmakers, the administration, and the public — consistent with the general goal of having future "public" policy regarding the industry shaped by what's in the public good. What a concept!

Morning Must Reads: No Revenue for Public Transportation & Corporations Need Another Tax Loophole for their Jets

On Thursday, we learned that Pennsylvania shed just over 15,000 jobs in September with more than half of those job losses occurring in the public sector.

This morning we learn that thanks in part to the Commonwealth's failure to fund public transportation, a private corporation is very interested in charging a fee to cut service and employment at the Port Authority of Pittsburgh.

Authority officials last month warned of a 'death spiral' of deeper service cuts along with layoffs and fare increases if Gov. Tom Corbett and the Legislature don't provide funding that is reliable and grows with inflation. CEO Steve Bland said the agency faces a projected $64 million deficit for the fiscal year beginning July 1 unless state aid is increased and the authority gains significant concessions from the union representing drivers and mechanics.

'Outsourcing or privatizing the Port Authority is an option we should look at,' said [Pittsburgh Transportation Group President and CEO Jamie] Campolongo, who said the agency is 'on [the] radar' of top officials of Veolia.

In related news, the Pennsylvania legislature is rumored to be considering naming Swiss cheese as the official the cheese of the Pennsylvania state tax code.

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