For months, a debate has raged over whether the Federal Reserve, the country’s central bank, should do more to help the economy — particularly to gin up more employment. At The Washington Post, Neil Irwin builds on a helpful metaphor from The Nation’s Chris Hayes to explain how these unconventional policies might work, and the dangers involved: If the nation were a farm, Hayes argued, the Fed would be the agency in charge of water and irrigation. Its job is to keep water (money) flowing enough to maximize crops (strong job creation), but not pump in so much water as to cause flooding (inflation). We’re currently in an extreme drought (a deep recession), but the Fed is refusing to pump in more water because it’s afraid that doing so will cause flooding down the road. This drought is so bad that the Fed has already drained its main reservoir completely (cut the federal funds rate to zero). So if it’s going to take new efforts to water the fields, it has to find more water through some unconventional means, such as by airlifting water in by helicopter, or piping it in from a nearby lake. (These are the equivalents of quantitative easing, or buying Treasury bonds and other securities to increase the money supply and drive down long-term interest rates). The problem is, while the Fed has lots of experience and knowledge about how the controls on its normal reservoir work, and how much to open the valves to get the right amount of water onto the fields, these other tools are untested. If they pipe water in, they’re not sure how much will get to the fields–it might be too little to do much good, and it might be so much as to cause flooding. They’re not sure about the impact of helicopter airlifts either; they might be effective at getting more water onto the fields, but there’s a small chance they’ll crash and burn and thereby set the fields on fire. (That’s what would happen if quantitative easing by the Fed caused global investors to believe they would continue printing money to fund budget deficits indefinitely, which could cause a big rise in inflation expectations and a long-term loss of confidence in the U.S. economy). Meanwhile, while the fields are still awfully dry, there has been a little bit of rain in the last few months (the economic recovery is underway, though it is sluggish). And Fed leaders’ weather forecasting suggests that rain levels will continue to gradually return toward normal (their economic forecast is for continued expansion), which would render airlifts of water unnecessary. I am convinced by the argument that the Fed should do more. But I am more convinced that the simplest, best way to ease unemployment — and a way with few unexpected consequences — would be for Congress to do authorize more stimulus spending, either via, say, a huge payroll tax holiday or a new spending program. A massive Treasury mortgage-relief program would work too. Sadly, those options seem politically infeasible, leading to the consideration of measures such as quantitative easing.

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Unconventional Options for Growing the Economy

The unemployed rallied on Wall Street, in lower Manhattan. (Creative Commons) After 99 weeks, or more, of unemployment, traveling to a political rally is a luxury. Across the country, thousands of 99ers, Americans who have exhausted the maximum weeks of unemployment benefits, have written letters or called Congress advocating for legislation extending benefits or creating jobs programs. But the first 99ers rally, held on Wall Street this Thursday, proved a more modest affair. Image by: Matt Mahurin Share Normally, the unemployed suffer from political disenfranchisement, on top of the hardships of joblessness, including loss of income, poorer health outcomes and eroding skills. But a group of activists working online have founded list-servs and websites to connect hundreds of thousands of unemployed workers. And they have teamed up with major labor unions, like the AFL-CIO and the SEIU, to flex their political might. Up until now, their efforts have been virtual; at Thursday’s rally, the unemployed took to the streets for the first time. The rally came at a good time politically. Despite the very long odds of passage, Senate and House Democrats have originated two bills to aid the 99ers in the past 10 days. Sen. Debbie Stabenow (Mich.) introduced a bill moving the maximum number of weeks of federal and state benefits to 119 last week. And this week, Rep. Jim McDermott (Wash.) and Shelley Berkley (Nv.) introduced similar legislation in the House. But just two dozen or so 99ers and a few dozen more unemployed persons met on the steps of Federal Hall, across from the New York Stock Exchange. (Most of the 99ers or figures in the unemployment netroots I spoke with before the event said that they could not afford the gas or plane ticket to get to the rally.) Members of the Transport Workers Union of America Local 100 and the United Federation of Teachers joined them. A few hiccups marred the event. The weather hardly cooperated, with spitting rain and punishing heat and humidity. Additionally, the organizers failed to register for a sound permit, so the New York City Policy officers keeping the peace ordered activists to put away the megaphone about 10 minutes into the event. Organized by the fledgling Unemployed Workers Action Group, the rally called for an expansion of unemployment insurance and jobs programs for the long-term unemployed. There are an estimated 1.5 million 99ers across the country, and their plight results from a recession with not just an unusually high unemployment rate, but an unusually long average duration of unemployment. Indeed, a typical jobless worker — of whom there are 14.6 million — has been out of work for more than 34 weeks, about 8 months, a length unprecedented since the Great Depression. Despite its small size, the 99ers’ rally accomplished an important goal: It got the attention of the press, and advocates for the 99ers see the press as the key to creating pressure for legislation. “Two months ago, nobody knew who the 99ers were,” LaDona King, a 99er and major figure in the 99er netroots told me. “Everybody thought it was some city’s AAA baseball team.” But with growing awareness, they hope, will come political action. To that end, a volunteer at the rally took journalists’ names and numbers, and ensured that any reporter wanting access to a 99er for her story got easy access to several. Late in the event, Ed Schultz — the MSNBC and radio host who has devoted countless programming minutes to the 99ers, and for that reason holds nearly beatific standing among them — stood in a pair of khaki shorts at the back, conducting interviews and shaking hands. (He planned to address the crowd, but could not because of the noise permit issue.) And with the press there, the 99ers at the rally got their chance to speak, and tell their stories. Betty S. Cohen, of Brooklyn, worked as an administrative assistant at an investment bank — not a commercial bank, she notes — for two years before she was laid off in July 2008. “My skills are excellent,” she sighs, “but I can’t get a job anywhere.” She has applied to hundreds of positions via Monster.com and other online search engines, as well as contacting former employers and friends for leads. “I have gotten five calls, and no offers.” she says. “They don’t tell you why.” She has long since exhausted any savings, does not have any living family and is increasingly late on her rent and bills, though she says she was recently approved for Supplemental Nutrition Assistance Program, or SNAP, benefits. “A friend loaned me $20,” she says. “And I told her I didn’t know when I would pay it back. I offered to pay her back in food. I can buy that now, at least.” Marion Glandorf formerly worked for Grenadier Realty Corp. on Roosevelt Island as an executive assistant. She managed contractor relationships for 1,100 apartments, assessed tenant needs and answered scores of calls per day. She came to the rally — she notes she is not a 99er, not yet — wearing a giant sign with her resume on it around her neck. Joining her was Bob Kohler of Suffolk County, New York. He had worked as an IT project manager before the recession, and has focused on writing motivational works about the power of positive thinking and the need to accept hardship. (He said the angry tone of the rally, with speakers shouting at the nearby investment banks, would prove counterproductive.) Kohler did not realize his unemployment insurance would run out shortly after Christmas. It just stopped. “It happened abruptly,” he said, and his wife and he had not adequately prepared. “The American dream?” he says, softly. “It’s decimated.” The rally attempted to capture that sense of decimation, with speakers sharing their stories of hardship — the loss of homes, the loss of respect, the trouble with health, the depression — on the Federal Hall steps, facing the New York Stock Exchange. Some rallied against the banks nearby, but most focused on the need for congressional jobs bills and a Tier V. Dozens of tourists stopped to listen and to clap in support among the protesters and the camera crews. So did a few investment bankers. “Get a fucking job” shouted one young man dressed, stereotypically, in a dark suit, red tie and loafers, his hair sharply parted. He was booed.

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99ers Rally For Unemployment Extension

Workers march to protest for jobs legislation. (Rasdourian/Flickr) Sometime this spring, Republicans turned against unemployment. In Nevada, Sharron Angle (R), the candidate facing incumbent Sen. Harry Reid (D), told local reporters, “You can make more money on unemployment than you can going down and getting one of those jobs that is an honest job.” (Untrue.) Angle also called the unemployed “spoiled.” Image by: Matt Mahurin Share Rand Paul, a candidate for a Kentucky Senate seat, made similar statements, and politicians in Washington followed suit. Sen. Richard Burr (R-N.C.) said on C-SPAN that extending unemployment would discourage “individuals that are out there to actually go out and go through the interviews.” But unlike most comments from politicians, these criticisms did not diffuse into the generic noise of political chatter. They began reverberating in what might be termed the unemployed netroots — a system of highly trafficked, influential blogs and sites connecting the jobless and updating them, often in minute detail, about ins and outs of Congress’ work on unemployment issues. When Jordan, a former programmer living in Nevada, lost his position with a local university, he began sending out resumes, but he also found himself following the eight-month battle for an unemployment extension closely — each failed Senate vote, each new House proposal. (He requested I withhold his last name to avoid impeding his job search.) Online, he started surfing list-servs, posting on message boards and using resources from the unemployed. A few times, he has worked up the courage to call his legislators’ offices. Jordan has searched hard for a job and is now considering moving away from his family for a few months, if it means he can send home a paycheck. “I have voted Republican my entire life,” he says. “I don’t want to vote for Harry Reid. But I don’t want to be told I’m lazy, and I’m dumb, and I’m living high on the hog, collecting [unemployment insurance] because I want to.” There are more than 30 million people left without work at some point during the course of the recession; 14.6 million are currently unemployed. As many as 4 million people have exhausted the maximum weeks of federal and state unemployment benefits. In each case, Jordan is among these millions, and for an uncountable number of people like him, the experience with income insecurity has led to a political awakening. Among the biggest sites in the unemployment netroots is LayoffList, managed by Michael Thornton, a native of Rochester, N.Y.  Thornton stared LayoffList in 2008; five months ago, he began writing articles and posting legislators’ information. He now receives hundreds of emails and has logged more than a million hits. Thornton is finding that, rather than losing interest in politics since the end of the fight for extended benefits, the unemployed are “energized and motivated” and have started looking forward to the fall. “Even Republicans say they aren’t voting Republican anymore,” the soft-spoken former technical writer says. “You have millions of unemployed people out there. If even half of them voted, they could swing a nationwide election.” Paladinette — the online “zealot for the unemployed” also known as LaDona King — has taken the battle over the unemployment extension as more of a call to arms. She routinely publishes phone numbers, fax numbers and email addresses of lawmakers to target, rallying her thousands of online supporters to the cause. King personally calls 25 or 30 legislators’ offices a day. Sometimes, when she posts lawmakers’ numbers or picks out a particularly egregious example of a legislator blocking a vote or putting down the unemployed, her followers flood a Senate or House office with phone calls. The same goes for LayoffList. At one point, Thornton published the name and number of a House staffer working on unemployment legislation. Soon after, the staffer called and begged him to take it down, he says. “They’re all concerned about their re-election,” King says. “We’re making sure the Republicans get blasted for their obstructionist behavior. … We have tons of people calling, faxing, emailing.” “We’re lobbyists in training,” she laughs. “Without all that money!” During the eight month battle to extend unemployment insurance, with the unemployment rate peaking over 10 percent, huge online networks of the unemployed came into fruition. Now, coming into the fall and the midterms, King and other grassroots organizers for the unemployed are hooking up with formal organizing groups to add institutional oomph to the effort. They say they do not want to let the long battle for simple extensions go to waste. Already, a number of unions and other organizations have created dedicated working groups or online organizations for the jobless. Last year, the International Association of Machinists and Aerospace Workers, a labor union, founded the Ur Union of Unemployed, or U-Cubed, for jobless workers. Additionally, the AFL-CIO’s Working America affiliate has launched Unemployment Lifeline, an online site to rally and organize the unemployed. Working America is “the biggest organization for the unemployed,” according to spokesman Robert Fox. By the union’s own count, 500,000 of its 3.2 million members are currently jobless, and the group is going door-to-door, recruiting more members from the ranks of the unemployed. “We spend most of our time demanding the reform of banks, demanding good jobs, and trying to make sure that there’s investment being made in our communities,” says Fox. But come this fall, “We’re going to be engaging our members fully, making sure they’re aware of which candidates to support.” “We have the ability to make sure a lot of unemployed folks know where politicians stand, who is voting against making investments in jobs, who needs to hear from unemployed workers and who needs to hear from them twice,” he says. Likewise, U-Cubed is readying unemployed workers to call out politicians and candidates stumping in their home states during the August recess, planning to visit events in Wichita, Ks., and the west coast. The push from the unemployment netroots has already started. Upon hearing that Sen. Charles Schumer (D-N.Y.) might attempt to move legislation for unemployed workers who have exhausted their benefits this week, Paladinette urged her followers to start calling possible swing votes — Republican Sens. Olympia Snowe (Maine), Susan Collins (Maine), Scott Brown (Mass.) and Charles Grassley (Iowa). And she says she is gearing up to push her followers to attend rallies starting next week. “We don’t want to be like the Tea Partiers,” she says, noting their small-government views, “Just sort of.”

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The Unemployed, Organized Online, Look to the Midterms

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After failing to pass an extension of unemployment benefits earlier this week, the House tried again — and succeeded, 270 to 153. The Senate will take up its version of the bill when Congress returns from a week-long break, on July 12. House Ways and Means Committee Chair Sandy Levin (D-Mich.) and Rep. Jim McDermott (D-Wash.) had introduced the bill, H.R. 5618, to extend UI through Nov. 30 and retroactively grant benefits to those who started losing them at the beginning of June. By the time the Senate acts, approximately 2.5 million people will have stopped getting unemployment checks. Levin released this statement on passage: Earlier today, a Republican Member of this House spoke on the plight of millions of unemployed who are losing their unemployment insurance, saying, he came to the floor with a heavy heart. I think the unemployed in America welcome heavy hearts, but if there isn’t a helping hand, a heavy heart doesn’t work.  Those who are still unemployed should not suffer due to the indifference of Republicans in Congress. I want to list very briefly the basic facts for everyone to consider and for all of our country to hear: 1.7 million unemployed workers, unemployed through no fault of their own, looking for work, will have lost their benefits by the end of this week.  By the end of next week, without further action, 2.1 million will have lost their benefits.  By the middle of July, when the Senate can address this issue again, 2.5 million will be without this basic assistance. The average unemployment insurance in this country is about $300 a week, roughly half of the previous wage on average. For a family of four that average check is only 74 percent of the poverty level. These basic facts should refute the notion that those who are unemployed, who would have no benefits, are not looking for work.  Indeed, the reality is very clear.  For every job available there are five unemployed workers. This issue is fundamentally an emergency for our country and our economy. Unemployment benefits have been considered, and passed as emergency spending under both Democratic and Republican Congresses and Administrations. I cannot understand how anyone could come to this floor and say for 1.7 million people and their families this is not an emergency. There is no excuse for voting no.  It has been noted that the Senate is out of session.  We must pass this so it is the first item of business when they return. The only reason this extension has not passed the Senate in recent days is because there could not be found more than two Republicans to vote for this extension. That is a shame and it is shameful. This House needs to lift that shame off of the shoulders of everyone in this institution and pass this bill so that millions of American workers get the benefits they earned and deserve.

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House Passes Unemployment Benefits Extension

Sharron Angle, the Nevada GOP’s candidate for Senate, is arguing that the government should cut unemployment benefits to get the jobless back to work. Angle has a reputation for taking this hard line: In the past, she has said the unemployed are “spoiled” by jobless benefits — which come from a federal insurance system, not a federal welfare program. Speaking with a local journalist, Jon Ralston, Angle said: What has happened is the system of entitlement has caused us to have a spoilage with our ability to go out and get a job. … There are some jobs out there that are available. Because they have to enter at a lower grade and they cannot keep their unemployment, they have to make a choice now. We’re making them make a choice between unemployment benefits and going back to work and working up through the ranks of that job and actually building up a good wage again. … What we need to do is make that unemployment benefit go down, not just completely remove the safety net from them while they go out and go to work. As any unemployed person will tell you, jobless benefits generally aren’t enough to live on — the average unemployment check is just $293 a week. Unemployed persons often cut back drastically, drawing down savings, selling their car or home and tapping into retirement accounts. The underlying issue here is that there aren’t enough jobs for people who need them: There are 15 million unemployed persons in the United States, around five for each available position. Given those metrics, cutting benefits would just take away subsistence-level funds from the already financially stressed. Angle’s opponent, Sen. Harry Reid (D-Nev.), is today pushing for an extension of federal unemployment insurance benefits. More than 1.2 million Americans have lost jobless benefits since the end of May as Congress has failed to re-up the extension.

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Angle: Cut Unemployment Benefits to Get the Jobless Back to Work

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The jobs bill, which includes an extension to unemployment benefits among other provisions, could be passed if Democrats would be willing to pay for it with stimulus money and offset other spending, Sen. Chuck Grassley (R-Iowa) said in an interview with TWI sister site The Iowa Independent . Last week the bill failed to garner the 60 votes necessary in the Senate to overcome a filibuster. “Ninety percent of the bill isn’t controversial,” Grassley said, concluding that the big problem is that he and many other lawmakers don’t want to add to the federal deficit. He chided Democrats for refusing to pay fully for the legislation with offsetting savings, revenue increases or the remaining federal stimulus funds. Even though Democrats repeatedly cut the bill in an effort to win Republican backing, the latest version would have added $55 billion to the nation’s $1.4 trillion deficit over 10 years, according to the Congressional Budget Office. Grassley said he’s heard from his constituents that they are tired of the government running up huge debt, and that the message is starting to get through to Democrats as well. “It wasn’t just Republicans who voted against the bill in the U.S. House,” he said. “There were plenty of Blue Dog Democrats who don’t agree with this type of spending either.” He added that in February, he and Sen. Max Baucus (D-Mont.) put forth a bill that would have extended unemployment benefits and other important items in the jobs bill, but Senate Majority Leader Harry Reid (D-Nev.) killed the measure. “It was paid for,” Grassley said. “We could have passed that in three days instead of wasting three weeks.” Reid said at the time that the Baucus-Grassley bill wouldn’t do enough to show voters that the Senate was serious about addressing the unemployment problem, focusing too much on tax cuts and not enough on job creation. Critics also pointed out that extensions of both unemployment and COBRA benefits would have run only three months in Grassley’s legislation.

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Grassley: Unemployment Extension Will Pass If Dems Can Pay for It

Pulling the Medicare provision out of the stalled jobs bill and voting on it separately, the Senate unanimously agreed this afternoon to delay a 21 percent cut to doctors’ Medicare reimbursement rates until December. Due to the weeks it has taken the Senate to get to voting on the jobs bill — also known as the extenders’ package or H.R. 4213 — a fix would have lapsed and the cut to doctors’ payments would have gone into effect for procedures from June 1 forward. The Centers for Medicare and Medicaid Services have stalled on processing the payments, to give Congress time to get its act together. The House now needs to vote to approve the “ doc-fix ” provision. It is expected to do so first thing next week.

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Senate Delays Medicare Reimbursement Cut Until December

Last week, thousands of Americans who have exhausted their unemployment insurance — the 99ers , named after the maximum number of weeks of state and federal benefits — sent letters and petitions to Washington as part of a futile campaign to convince the Senate to pass a bolstered version of the jobs bill , now stalled and being pared back. There were many common themes in their stories, but one of the more surprising was age. Image by: Matt Mahurin Share One woman from Warren County, New Jersey, wrote : “I am (or was) a legal secretary with several years of experience (30+ years). … I have applied to jobs that are more than one-half less than what I was earning. I search for a job each and every day. … Where do people in my age bracket go? Too young not to work but too old to work?” Such stories of older workers too young for retirement but struggling for months if not years to find jobs have policy experts concerned as the recession drags on and long-term unemployment continues to rise. Experts say that age discrimination is severely compounding the jobs crisis for older workers, although the phenomenon is difficult to quantify or to prove, and remains under-examined by the government. This time, it is not just making it more likely that these workers will be laid off. It is also making it much harder for them to gain new positions. Last week, a hearing called by the U.S. Commission on Civil Rights examined the issue, attempting to determine whether part of the reason older workers have such trouble finding work, on aggregate, is due to employer biases out of their control. The unemployment rate is a comparatively moderate 7.1 percent for workers over the age of 55 — it’s 9.7 percent nationally — as older workers are more likely to retire early or leave the workforce if they lose their jobs. But that hides the troubling reality for those who can’t afford to leave the labor force. The unemployment rate for over-55s is at the highest level since 1948. Since the recession started, both the number of older people seeking work and the rate of unemployment for over-55s have increased more sharply than for all other demographic groups. And older workers comprise a high share of the long-term unemployed. In May, the average duration of unemployment for older job-seekers climbed to 44.2 weeks, 11 more weeks than the national average. Nearly six in ten older job-seekers have been out of work for more than six months. There are structural reasons that the unemployment crisis is hitting older Americans so hard. Older workers are more likely to be underwater homeowners, unable to sell their house and move away. They often have highly specific marketable skills, and seek positions more selectively. They also often have skills rendered obsolete by the recession, in outdated trades. But too often, employers illegally presume that older workers will be harder to train, more likely to leave for other positions, less productive, less technologically able or less willing to move — and do not hire them for those reasons. Laurie McCann, a senior attorney at the AARP Foundation Litigation and expert on age discrimination, explains that the 1967 Age Discrimination in Employment Act requires employers to assess candidates as individuals and not to make assumptions about their abilities or requirements due to their age. “Employers have legitimate concerns about older applicants,” she says. “But the problem is, we find that people aren’t even getting in the door to have an interview or have their resume looked at, because employers assume that older workers aren’t looking for a job at a lower salary or aren’t willing to relocate.” Dianna Johnston, assistant legal counsel to the Equal Employment Opportunity Commission, explains that the statistics fail to capture this side of the picture. Speaking before the Commission on Civil Rights, she said, “Most labor-force statistics don’t really tell us much about the labor force. But one does. … Older workers remain unemployed one to three months longer than [younger workers]. And that is partly attributable to discrimination.” McCann called age discrimination in hiring “the most under-reported form of discrimination” and “prevalent” throughout the recession, as an average of 5 workers compete for every job opening. In an interview, she explained why age discrimination is so hard to quantify: “[It is] the lack of proof. If you’re laid off, you might be in outplacement, and see that everyone who got laid off was older. Or, you might have friends in your office to tell you that a younger person took your job when your employer told you the position was being eliminated. But hiring discrimination is much harder to see, and can be impossible to prove. In most cases, you’re not going to know who was hired. You’re not going to know how they filled the position. There’s just a hunch, or a feeling, that you’re not getting through the door because of your age.” Incidences of age discrimination in firing are much clearer to see, and have risen along with the recession. The Equal Employment Opportunity Commission says age discrimination cases have jumped 17 percent since the start of the recession, and climbed 30 percent between 2007 and 2008. But virtually all of those cases involve layoffs, rather than the lack of job offers. Still, evidence of age bias in hiring is accumulating in academic research and anecdotal reports to the EEOC, Commission on Civil Rights and AARP. In one famed 2005 study , a Texas A&M economist sent out 4,000 job applications for entry-level positions. (The resumes were only women’s.) Older workers were 40 percent less likely to receive a response back. And of the letters sent to Congress last week, a vast majority mentioned age, many coming from older workers who had applied for hundreds of positions, to no avail. “Who will help the over 50 population find work? I have been out of work, laid off from the military/defense industry and apply to anything and everything I am qualified for, but with no luck,” one wrote . “ I am told I am too qualified and when I respond with, ‘I am willing to take this position, take less money, I will give you my experience at that salary,’ I am still turned away.” Unfortunately, policy experts fear that age discrimination in hiring, compounded by the recession, is a problem without a solution. Individuals can bring cases against individual companies, but discrimination is virtually impossible to prove, even if it is easy to see as an aggregate phenomenon. Plus, McCann says, explains, the phenomenon is so prevalent that discrimination simply seems like reality. “As a society, we’re willing to tolerate age discrimination, more so than other kinds of discrimination,” she argues. “People sense that, and it gives older job-seekers a sense of futility. Why even bother applying for jobs, or bringing a discrimination case? I won’t win.”

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‘Too Young Not to Work but Too Old to Work’

This week, with Congress back from the Memorial Day recess, legislators will again push for a $23 billion aid bill to keep public-school teachers in their classrooms. Sen. Tom Harkin’s (D-Iowa) proposal , the Keep Our Educators Working Act, would help prevent the firing of as many as 300,000 educators. The states’ fiscal crises are peaking this year and next, with layoffs necessitated as the $44.5 billion in state aid from the American Recovery and Reinvestment Act has for the most part run out. “This country is about to face a massive wave of layoffs in our schools and institutions of higher learning that could weaken our economic recovery and cause serious damage to our education system,” Harkin said in a statement . “This bill is an investment in our kids, in our economy and in our future. “Recent headlines make the case that two pillars of the American dream — a good job and a good education — are at risk for millions upon millions of our citizens. At this point in our fragile recovery, we need to put Americans back to work educating the next generation, and that’s what this bill does.” The House plans to take a similar measure up this week in a supplemental appropriations bill , mostly filled with war-funding measures. The House actually already approved the measure in December, as part of a jobs package now stalled in the Senate. Senators are expected to return to the measure this week (but not before Tuesday’s primaries) and they are expected to pare it back to win over the votes of centrist Democrats worried about deficits. This is just one worrying instance of the federal government possibly wavering or pulling back on offering benefits to keep state workers employed and other forms of stimulus. Democrats killed a $24 billion state aid package in the House. The extension of COBRA health benefits for the unemployed might be at risk, as might the Doc Fix for Medicare. As Ezra Klein *, Matthew Yglesias and Stephen Gordon explain, keeping up state employment is important as a form of stimulus. And pairing reductions in state spending due to the recession with increases in federal spending for stimulus, there has not been an expansion in government spending over the course of the recession. For more good reading on the wave of coming layoffs for teachers, see Seyward Darby’s new piece in The New Republic on the possible ill effects of last-in, first-out provisions. *Full disclosure: Ezra is my “unmarried domestic partner,” in the romantic phrasing of the Census.

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Teacher Layoffs Already Here, Bill Stopping Them Uncertain

The economy added 431,000 jobs last month, dropping the national unemployment rate from 9.9 percent to 9.7 percent, the Department of Labor Statistics announced this morning. But Republicans, who a month ago were saying that they’d recognize progress when the jobless rate fell, aren’t impressed. Indeed, Republican House Whip Eric Cantor (Va.) just issued a statement blasting the stimulus programs that are propping the numbers up. [M]uch of what the Administration touts as a ‘jobs recovery’ has caused – and will continue to cause — the deficit to soar. Let me be clear – during challenging times, a job is a job. Yet government jobs that are paid for by taxing small business people and borrowing from the Chinese are not signs of a healthy economic recovery. He has a point: 411,000 of those 431,000 new jobs are related to the 2010 Census and therefore temporary. Still, any new job creation is good news relative to the hundreds of thousands of jobs the economy was shedding a year ago. And, of course, the idea behind stimulus spending all along has been that the short-term hit to the deficit will be a tiny cost relative to the consequences of federal inaction.

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Unemployment Rate Drops to 9.7%, GOP Leaders Yawn

In a speech this morning at Atlanta Technical College, Dennis Lockhart, the president of the Federal Reserve Bank of Atlanta, said that the Federal Reserve will raise interest rates even if unemployment has not fallen “considerably.” It is the strongest indication that the Fed will move to raise interest rates when prices show signs of inflation, even if the unemployment rate — still flirting with double digits — remains a serious problem. He first describes the current economic paradigm: a recovery, but a slow one characterized by unemployment in or near the double digits: Most indicators suggest that overall economic activity stopped contracting and began growing again starting around July 2009. So the economy is approaching 12 months of sustained recovery, and yet not much has happened in employment markets to reduce the high level of joblessness. How can that be? During the last three quarters, gross domestic product (GDP) has expanded at an average annualized rate of 3.6 percent. Current estimates point to GDP growth of around 3 percent in the current quarter. These numbers are not off-the-charts strong, but they represent solid aggregate economic performance. He then further characterizes the recovery: In the middle of last year government spending stimulated most of the economic growth. In the fourth quarter of 2009 and the first quarter of this year, inventory adjustments drove a lot of economic activity. Consumer activity over the last few months has exceeded the expectations of many analysts. This activity has occurred even while American households continue to deleverage, that is, pay down their debt. Business investment in equipment and software has been surprisingly strong considering the consensus forecast of modest growth ahead. Both consumer spending and business investment in capital goods may just be evidence of short-term and temporary satisfaction of pent-up demand following deferral of spending during the recession. The end game of this evolution is solid and broad-based final demand. But he cautions that the recovery might remain jobless, or at least not “job rich,” though he believes that productivity gains might have maxed out and at some point companies will start hiring again: We will get another important reading on employment markets tomorrow. Even if that report shows further gains in employment (some forecasters expect 500,000, with 400,000 being U.S. Census jobs), it’s fair to say there will remain a large excess of workers looking for jobs relative to the demand for workers in the economy. Total jobs lost in the recession and immediate aftermath approach 8 million. This gap is likely to close only gradually. And, further, the resulting slow growth of wages and salaries has the potential to limit growth of consumer spending for a while. Then, the other shoe drops: The Fed has held its interest rate policy at close to zero for about a year and a half. This has been done to foster conditions that would end the contraction of the economy and then encourage recovery. Again, I believe a modest recovery has been under way for almost 12 months. As I stated earlier, the Fed has a dual mandate from Congress to keep inflation low and promote maximum employment. I’ve put forward the view that inflation is not currently a major concern. So one might ask, do you believe the base interest rate must remain near zero — at its current level — until unemployment is reduced substantially and most of the employment lost in the recession has been restored? I’m not convinced that will be necessary. I continue to support the current stance of interest rate policy. But the time is approaching when it will be appropriate to consider recalibrating interest rate policy. I do not believe that time has yet arrived. The conditions that require a change of policy are not yet at hand. However, as the economy continues to improve and financial markets find firmer ground, extraordinarily low policy rates will not be needed to promote recovery and will become inconsistent with maintaining price stability. The implication is that the policy rate may have to begin to rise even while unemployment is considerably higher than before the recession. I’m very concerned about unemployment, and certainly employment trends should be a critical consideration in setting policy. But I accept that good policy, even in circumstances of unacceptable levels of unemployment, may incorporate higher interest rates. Now, Lockhart is not advocating hiking the interest rate immediately or warning that even if the unemployment rate sticks around 10 percent the Fed will tackle inflation when it comes. But this is the first time I have seen a Fed governor admit that the Fed will raise interest rates even while unemployment remains “considerably higher” than it was before the recession. (In 2006 and 2007, the unemployment rate hovered around 4.6 percent.) One major argument Lockhart makes for raising interest rates despite high unemployment is that he believes some of the current job loss to be “structural” rather than “cyclical.” The construction industry, for instance, will not replace all of its jobs when the economy turns around, since so many of those jobs were created by the credit and housing bubbles. Even if the Fed kept interest rates near scratch, it would not help to bring those positions back. The question remains the threshold at which the Fed would consider unemployment low enough to consider raising interest rates. At 7.5 percent? Or at four job seekers per job ? Nobody knows for certain. Regardless, unemployment looks to be high for a long time. And a broad swath of dovish economists will urge the Fed to privilege reducing unemployment over tackling inflation whenever it is that the Fed moves to raise the interest rate. (The Fed continues to say that rates will remain low for an “extended period.” When it drops that language, it will be an early sign that it is considering rate hikes.)

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Fed’s Lockhart: Interest Rate Increases Coming, Even If Unemployment Does Not Drop ‘Considerably’

This morning, another round of jobless benefits expired, with Congress away and hope of the approval of a new tier diminishing. And Sara Murray of The Wall Street Journal highlights one of the worst facets of the unemployment crisis: Nearly half of the unemployed — 45.9 percent, or 7 million people — have been out of work for more than six months, the highest proportion since the Labor Department started tracking the statistic in 1948. For every day a person is out of work, not only does he and his family suffer from the effects of lost income, but the chances of his finding work diminish. And, unusually in this recession, long-term employment has not just hit retirement-age or very young workers, but every demographic class. The number of long-term unemployed persons poses a serious policy problem now, though one Congress seems to have answered: It will not extend unemployment benefits any longer than 99 weeks in some states, but will likely continue funding extended unemployment benefits as stimulus. But the issue will also pose a serious policy problem in the future: What will Congress do if, five years from now, with the recovery well underway, there remain millions of people who simply cannot find work? Job retraining programs and hiring incentives present one partial solution, but if Congress continues to tighten the nation’s fiscal belt, such expensive programs might not be politically feasible.

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Long-Term Unemployment at Highest Recorded Rate

This morning, Federal Reserve Chairman Ben Bernanke testified before Congress on the condition of the economy. His comments were generally positive, but he cited serious concerns with the labor market and said it will take a “significant amount of time” before the 8.5 million jobs lost in the recession return. I am particularly concerned about the fact that, in March, 44 percent of the unemployed had been without a job for six months or more. Long periods without work erode individuals’ skills and hurt future employment prospects. Younger workers may be particularly adversely affected if a weak labor market prevents them from finding a first job or from gaining important work experience. After that statement, Bernanke turned to other matters. The Fed, despite the protestations of economists such as Joe Gagnon, has signaled that it will not do more to combat unemployment. That leaves the action to Congress, where thankfully there are a number of proposals to combat high rates and long spells of joblessness, and their side-effects. A good plan is Rep. George Miller’s (D-Calif.); his Local Jobs for America Act would provide $75 billion over two years to states to boost hiring. (Several members of the House pushed for the bill today.) Another is the continued extension of unemployment benefits as a stopgap measure. Speaking against a temporary one-month bill on the Senate floor this morning, Sen. George LeMieux (R-Fla.) argued that the benefits are non-emergency and therefore should be pay-go:  “Has it been unforeseen that we were going to have to extend unemployment compensation?…Of course it is not. We knew that we were going to have to do this, but there is an unwillingness in this Congress to pay for things.” Economist Mark Zandi countered by saying that not passing benefits would be “counterproductive” and that benefits should be paid for later in the economic upswing.

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Bernanke: ‘Significant Amount of Time’ Before Jobs Return

The Department of Labor this morning released its much-anticipated employment numbers for March, indicating that the economy created 162,000 new jobs last month, but the nation’s unemployment rate remained 9.7 percent. Some economists see the figures as the first clear sign that the economy is on the rebound. “Unlike previous months in which payroll gains were limited to the health and education sectors and to temporary help agencies, the latest report suggests that job gains are now more broadly distributed across the private economy,” Gary Burtless, formerly with the Labor Department and now at the Brookings Institution, said in a statement today. “In March there were small gains in manufacturing, construction, and many service-producing industries.” Democrats, though, are being cautious not to overhype the figures. Certainly the creation of 162,000 jobs is an improvement on the 700,000-per-month job losses that were the trend a year ago. But there are signs in today’s report that a long road remains for the millions of Americans struggling to find work. Indeed, the number of long-term unemployed — those out of work for more than 27 weeks — jumped by 414,000 in March, to 6.5 million. That means that more than 44 percent of all jobless Americans have been out of work for more than half a year — a statistic that’s alarming to advocates for the unemployed. “The long slog of looking for work and surviving on jobless benefits is going to continue for millions of Americans,” Christine Owens, executive director of the National Employment Law Project, said in a statement today. ”It’s Congress’ job now to take effective and aggressive steps to create jobs and extend unemployment through the end of the year, so that the economy can get back on its feet.” The deadline to file for the next tier of unemployment benefits arrives next Monday, during a week when Congress is on recess. NELP estimates that the deadline will cause as many as 212,000 unemployed workers will lose their benefits in that week alone.

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Economy Creates 162,000 New Jobs; Unemployment Rate Remains the Same

With unemployment still hovering near double digits, the Christian Science Monitor this week highlights a forgotten angle in the government’s efforts to help laid-off folks weather the storm: Getting part-time work could leave them in worse shape than if they’d remained jobless. “Many people who have been out of work for a year are picking up work as temps or part-timers,” the Monitor writes, “unaware that state agencies will recalculate their unemployment benefits after a year – and use their most recent work history and pay level to do it.” “What is going on for these workers is that because their most recent wages are much lower than the wages they earned in their prior fulltime job, they are facing substantial cuts in their weekly unemployment benefits,” says George Wentworth, a consultant at the National Employment Law Project (NELP) in New York. The Monitor spotlights the case of a Massachusetts worker who was receiving $540 in federal help each month, only to see that figure drop to $103. The reason? She took a temporary job that slipped her from federal to state benefits, causing the state to recalculate her benefits based on the last job she had. Not that Congress isn’t aware of the issue. A Senate bill passed earlier in the month would extend the filing deadline for emergency federal UI benefits through Dec. 31, but would also alter the underlying law so as not to penalize workers who take up part-time jobs in their search for longer-term employment. That provision, though, is not contained in a separate House-passed bill, which the Senate is expected to take up April 12.

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An Unfortunate Disincentive for the Unemployed to Take Part-Time Jobs

While the Congressional Black Caucus (among others) pushed unsuccessfully for a major investment in job training to be included in the stimulus package , new data on the long-term prospects for a labor market recovery highlight the ongoing need for the president and Congress to put job training back on the economic recovery agenda. Matthew Scott of Daily Finance has the sobering statistics: Unemployment is expected to remain above 9% for at least the next two years, according to Christopher Woock, research associate for The Conference Board, and other economists. That’s because many of the estimated 4 million jobs lost in the construction and manufacturing industries during the recession may never come back. That’s what happened after the 2001 recession in sectors such as data processing, computer and electronics manufacturing, and textile manufacturing. Even in strong sectors, the projected 3-4 percent annual economic growth won’t be enough to entice employers back to pre-recession hiring levels. So what are out-of-work construction workers or auto workers going to do if their jobs don’t come back? Many of them are going to need to be trained to work in an industry that isn’t floundering. “If we have substantial structural change,” says Woock, “then that’s going to require a significant reallocation of workers across various industries and that is going to make for a very slow and drawn out labor market recovery.”In other words, as industries shift and jobs vanish forever, some workers may be forced to retrain to find work in a different industry. And yet, the latest version of the jobs bill offers tax credits to employers to hire workers — but it doesn’t give credits to workers enrolled in retraining programs, let alone help state and local governments or non-profits fund the establishment or expansion of such programs. Yet the sectors that economists expect to grow over the next few years require skilled labor more often than not. Barry Bluestone, dean of the School of Public Policy and Urban Affairs at Northeastern University, predicts that within the next eight years, 2.4 million job vacancies could appear in the U.S. in the education, health care, government and nonprofit sectors.Jagadeesh Gokhale, an economist at the Cato Institute, says demand from aging baby boomers will drive job growth in health care and other related service industries. The transition from an automotive assembly line to the health care industry might not be an obvious choice, but for people unwilling to give up on working, it could be exactly the transition they need — and they may well need help from the government to make it happen.

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Unemployment Predictions Highlight the Need for Investment in Job Training

Orissa mining scam runs to Rs 3 lakh crore: Congress Economic Times The Orissa government has also failed to check violation of Mines and Minerals Development Regulation Act by some mine owners who extracted minerals beyond … and more

In times of economic downturn, young people often bemoan their job prospects: The ranks of the unemployed swell with people slightly older, more experienced and increasingly willing to work for less money as their time spent unemployed drags on. But for all the difficultly recent graduates have finding jobs in this economy, older unemployed workers have it far worse, as a new AARP study shows . An analysis of unemployment data from January 2000 to December 2009 shows that the number of unemployed Americans 55 and older increased by more than 331 percent last decade. Importantly, the analysis uses data from the Bureau of Labor Statistics, which does not count people as unemployed if they are retired or if they have ceased to look for work. That means that the more than 2 million Americans over the age of 55 who are unemployed are not retirees –  they are people actively looking for work but unable to find any. The statistics for unemployment duration are even worse for older Americans. Average duration of unemployment for workers age 55+ increased from 18.7 weeks in January, 2000 to 34.7 weeks in December, 2009—a jump of 85.6%. Over the same time period, workers age 65+ saw their situation go from bad (24.8 weeks of unemployment) to worse (32.9 weeks), an increase of 32.7%. That means that older workers spend on average three years seeking new employment before they either find any or give up trying. The U.S. government classifies anyone spending longer than 6 months unemployed as “long-term unemployed” because it is at six months that regular unemployment benefits end . The current series of federal extensions to unemployment allow up to 53 weeks (slightly more than a year) of further unemployment benefits. But the statistics show that even before the Bush recession, unemployed Americans over the age of 55 would spend a year beyond receiving benefits seeking new work before finding it and giving up; in the current economic climate, they will max out their benefits in 18 months and spend almost an additional 18 months with no unemployment looking for a job before they’re successful or decide to throw in the towel. Presumably, these are facts that Senator Jon Kyl either didn’t have or didn’t care about before he declared that unemployment benefits keep people from seeking work. Plenty of Americans keep trying to find work once their benefits are exhausted, even some at Kyl’s advanced age of 68. Of course, unlike Kyl, many of those people his age who need to find work won’t be collecting a cushy Senate pension worth around $60,000 a year (for a senator like Kyl with more than 20 years in Congress).

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If You’re Young and Unemployed, You’re Luckier Thank You Think

Orissa Congress charges Patnaik Government for multi-crore mining scam cover-up Oneindia … the State Government has not taken steps to check illegal mining, illegal transportation and storage of minerals, claimed Das adding that government … and more

Sen. Jim Bunning’s (R-Ky.) decision to block an unfunded 30-day extension of unemployment insurance, COBRA benefits, and Medicare doctor payments has been largely a one-man endeavor. No longer. This morning, Sen. John Cornyn (R-Texas) took the chamber floor in defense of Bunning, who has rejected the Democrats’ $10 billion proposal because it’s not paid for. “All that the senator from Kentucky has asked for is that we do what every American family has to do,” Cornyn said, “and what every small business has to do, and that is [to] be honest in our accounting of the public’s money.” He added: We know that there’s broad bipartisan support for the legislation. … All the senator from Kentucky has asked for is that it be paid for — that we not add $10 billion more to the federal deficit. They aren’t entirely wrong. The national debt has become a national disgrace (and a menacing one). But it’s also difficult to take seriously any claims of fiscal rectitude coming from Bunning or Cornyn, both of whom voted in 2003 for the GOP’s Medicare prescription drug benefit , which is projected to cost $550 billion through 2016 — and not a cent of it offset. Suddenly $10 billion in deficit spending doesn’t seem like the problem anymore.

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To Bunning’s Rescue

Despite yesterday’s bipartisan Senate vote on a $15 billion jobs bill, Republicans on Capitol Hill have been pretty much united in their condemnation of additional deficit spending as a remedy to the nation’s entrenched jobs crisis . “The time has come,” Rep. Spencer Bachus (R-Ala.) said this week, “to stop pretending we can spend our way out of the recession.” Enter David M. Walker, the former U.S. comptroller general and now head of the Peter G. Peterson Foundation, which advocates for balanced budgets. Walker — teaming up with Lawrence Mishel, president of the liberal Economic Policy Institute — said this week that a temporary bump in federal spending is the solution to longer-term deficit troubles, rather than part of the problem. “A focus on jobs now is consistent with addressing our deficit problems ahead,” Walker and Mishel wrote in Politico. The difficulty is that many politicians and news organizations often cast deficit debates as a dichotomy: You either care about them or you don’t. But this is rarely accurate. The fact that the two of us, who have philosophical differences on the proper role of government, find much to agree on about deficits is a testament to the importance of dropping this useless dichotomy and finally talking about deficits in a reasonable way. The reasonable way is first to make the distinction between temporary, emergency spending designed to pull the country out of recession and auto-pilot entitlement spending that’s the true root of the nation’s long-term budget troubles. The unlikely duo of Walker and Mishel is calling for programs that (1) target job creation specifically, (2) would build jobs quickly, and (3) wouldn’t rely on federal funds in the long run. Infrastructure funding, a hiring tax credit for businesses and an extension of unemployment benefits, they write, all meet these criteria. The “targeted, timely and temporary” diagnosis is hardly a new one, but its reiteration now — a year after passage of the Democrats’ $787 billion stimulus bill — is good evidence that lawmakers didn’t focus enough on those parameters the first time around ( as many economists have indicated ). Will lawmakers learn the lessons of the last year? Not probable in an election year when voter anger, more than economic necessity, seems likely to dictate what Congress can do.

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The Republicans’ Jobs Dilemma

That’s the question being asked around the country today in response to the $85 billion proposal presented Thursday by Sens. Max Baucus (D-Mont.) and Charles Grassley (R-Iowa), the leaders of the Finance Committee. Although immediately rejected by Democratic leadership, the draft bill provides a sense of what conservatives are willing to accept if the package is to be bipartisan (which it must be in order to win the 60 votes that are the new norm for passing bills in the Senate.) Trouble is, as The New York Times points out today , “about half of the proposal had nothing to do with new jobs.” The single largest chunk, about $31 billion, went to renew expiring tax breaks that are generally useful but unrelated to jobs. Another $10 billion would renew an expiring Medicare payment formula so doctors wouldn’t face a pay cut. Politically, those things make sense. No one wants to take the blame for a tax hike in an election year, and they certainly don’t want to be seen sitting idle while doctors suffer a 21 percent cut in Medicare payments. But those things will get done anyway. The question remains: why stick them in a bill that’s supposed to create jobs? What effect could they have on the nation’s grave unemployment situation except to crowd out real job-creating measures? Robert Greenstein, executive director of the liberal Center on Budget and Policy Priorities, issued a statement yesterday warning what could happen if Congress doesn’t step in with more targeted, bang-for-your buck spending. He’s particularly worried that there’s not nearly enough money directed to help states survive their worst budget troubles in recent history. “If Congress does not act — and act quickly — to provide more fiscal relief, states will have to take steps to close their budget gaps that could cost the economy up to 900,000 jobs,” Greenstein said. They will likely cut education, leading to teacher lay-offs; cut Medicaid, throwing more working-class people into the ranks of the uninsured, and cut aid to local governments, leading to cutbacks in local services like police and fire protection.  All of these actions will mean less money for families and small businesses to spend in their communities, further depressing economic growth. The good news is that Senate lawmakers will have some time to rework the bill. The recent snowstorm that slammed Washington left Democratic leaders with no choice but to postpone any votes on the legislation this week. And next week lawmakers are out of town for President’s Day recess, meaning the first votes on the bill won’t take place anytime before Feb. 22.

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Why Not Write a Jobs Bill That Would Create Jobs?

Sens. Max Baucus (D-Mont.) and Charles Grassley (R-Iowa) (WDCpix) There is unemployment, and then there is long-term unemployment. As Congress grapples this month with ways to tackle the nation’s jobless crisis, many economists are hoping lawmakers recognize the distinction. Not only is there often a stigma associated with being out of work for long stretches, but the long-term unemployed are also more likely to have lost a competitive step in their field, requiring focused retraining programs more nuanced than simply throwing federal dollars to existing industries . Many other workers will discover that the task they’ve spent a lifetime doing is no longer relevant on the other side of the recession. Image by: Matt Mahurin Share “The longer you remain unemployed, the tougher it is to get a job,” said Gus Faucher, director of macroeconomics at Moody’s Economy.com. “You’re skills atrophy. Employers — rightly or wrongly — take that as a signal that you’re damaged goods.” The combination of factors presents a dilemma, not only for jobless folks in search of work, but also for the Washington lawmakers trying to stoke the coals of hiring. That long-term unemployment is at the highest level since recording began in 1948 only adds to the urgency of getting the policy right. “It’s a hard question for policymakers,” said Chad Stone, chief economist at the liberal Center on Budget and Policy Priorities. “There aren’t a lot of things they can do quickly.” Not that they aren’t trying. The House in December passed a $154 billion jobs bill , including billions of dollars in highway infrastructure, public transit and emergency help for struggling states. Few observers, however, gave that proposal much chance of passing the Senate, where Republicans have been pushing for a smaller bill with a greater emphasis on tax cuts. Indeed, on Thursday Sens. Max Baucus (D-Mont.) and Charles Grassley (R-Iowa), the leaders of the powerful Finance Committee, introduced a jobs bill of their own. The $85 billion draft proposal is centered around a series of business tax breaks designed to spur hiring and individual tax relief designed to encourage spending. Senate Majority Leader Harry Reid (D-Nev.) was quick to dismiss the proposal, arguing that it was too heavy on Republican sweeteners and too light on actual job-creation provisions. “The message is so watered down,” he said . The final product, though, is certain to look more like the Baucus-Grassley draft than the bill passed by the House. Some economists are warning, however, that tax provisions like those in the Senate bill pretend that the jobless pool is a level playing field, ignoring the stigma and skills questions associated with the long-term unemployed — and therefore favoring those who lost jobs more recently. ”Someone who’s been unemployed only 6 or 8 weeks often looks like a much stronger job candidate than someone who hasn’t been employed for the last 66 or 68 weeks,” said economist Gary Burtless, formerly with the Labor Department and now at the Brookings Institution. Desmond Lachman, economist at the conservative American Enterprise Institute, agreed, arguing that policymakers should be drafting their legislative fix in recognition that the nation’s jobless crisis is historically long-term. ”There is a distinction to be made,” Lachman said. “Policy needs to concentrate on retraining the long-term unemployed. Those who are short-term unemployed can rejoin the labor force more easily. They would benefit from policies that got the economy moving again and that subsidized employment through tax credits [among other things].” The $787 billion economic stimulus, enacted last winter, included billions of dollars for new job training. Economists are largely in agreement, however, that the package wasn’t large enough to address the recession. Another pickle: deciding which jobs merit retraining is never easy. It leaves lawmakers with the task of trying to distinguish which occupations were shed as a result of the recession, and which were lost due to deeper structural shifts governing the ever-changing economy in the age of increasing globalization. In short, some experts warn, not all retraining is created equal. “There’s a mismatch between the skills these people have and the skills we need moving forward,” Faucher said. “Retraining won’t do any good if the demand isn’t there.” The comments are timely. Even as the nation’s jobless rate fell to 9.7 percent last month — down from 10 percent in December — that headline-grabbing figure disguised a deeper problem: Namely, the number of American workers who’ve been unemployed longer than 27 weeks hit another all-time high of 6.3 million in January — up 183,000 since December and 5 million since the start of the recession in December 2007.  And that doesn’t count the roughly 2.5 million folks who want to work but have stopped looking. The National Employment Law Project, an advocacy group, lent a bit of context to those numbers, pointing out recently that the average stretch of unemployment has topped 30 weeks — a full nine weeks longer than the most recent severe jobs crisis in 1983. Another dismal milestone: more than 41 percent of jobless Americans have been without a job for longer than six months, NELP noted, up from 26 percent in 1983. Since the start of the recession in December 2007, the economy has shed roughly 8.4 million jobs. It’s a trend that threatens the economy in a number of ways. Not only do the long-term unemployed consume less, but they’re also more likely to foreclose on their homes — a situation that only cripples recovery efforts by depressing the housing market even further. The White House seems to be well aware of the hurdles ahead. On Thursday, the administration issued its annual economic outlook, warning that long-term unemployment — and the skills lost as workers sit idle — can lead to a reduction in productivity and earning power, even long after the economy rebounds. The White House estimated that the economy will begin creating jobs this spring, though not in significant enough numbers to keep up with the labor pool, which grows by 100,000-150,000 workers each month. Indeed, Moody’s Economy.com is predicting the nation’s unemployment rate will jump back up near 11 percent later this year. For his part, Brookings’ Burtless suggested that the depth of the crisis demands a public jobs program on the level of the Franklin Roosevelt’s Works Progress Administration — which employed 3.3 million people in 1936 — or the Comprehensive Employment and Training Act under Jimmy Carter, which grew to 725,000 public jobs in 1978. The political reality, however, is that today’s Congress is much too conservative to endorse such large, government-backed programs, even despite the stagnant jobs picture the country faces.

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Congress Warned Not to Forget Long-Term Unemployed

Related to the warnings from some economists that the official unemployment rate will likely jump again this year, a Labor Department official today conveyed this message to lawmakers: Don’t worry about it. Testifying before the Joint Economic Committee, Keith Hall, commissioner of the Bureau of Labor Statistics, told the panel that, yes, historically, as labor markets improve, the resulting increase in the labor pool has caused the jobless rate “to bump up temporarily” — a trend that will likely happen this year as well. “We’ve got a particularly high potential for that because so many people are unemployed and we’ve lost so many people out of the labor force,” he said. But, he added, that spike, because it’s caused by the economy gaining strength, is ultimately misleading. “If we start to see real improvement,” he said, “we shouldn’t get too concerned if the unemployment rate hits a bit of a speed bump and goes up for a couple of months.” Unless, from Congress’s perspective, those couple of months arrive around November.

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Labor Official: Don’t Worry About Likely Looming Spike in Jobless Rate

Some perspective on the Labor Department’s latest unemployment figures , from the National Employment Law Project: With January’s unemployment figures, the average duration of unemployment has hit another record high of 30.2 weeks, with a historic 41.2% of the unemployed remaining out of work for six months or longer. 11.5 million Americans are collecting some form of unemployment insurance. During the most recent previous peak in long term unemployment in 1983, a comparatively low 26% of unemployed workers were out of work for six or more months, and the average duration of unemployment peaked at 21 weeks. “With the jobs hole this deep, Congress and the Administration must bravely stare into the headwinds of budget concerns and continue to fortify the safety net throughout this year,” Christine Owens, NELP’s executive director, said in a statement. ”Any faltering of their support will bring disaster for families, communities and the economy.” Economists are pretty much in agreement that the government, as spender of last resort, must step in with more spending to fill the void left by the drop in consumer spending that’s undermined the jobs market. The short-term borrowing, they say , is much less threatening to the economy than continuation of double-digit unemployment that would surely result without that spending. Whether lawmakers on Capitol Hill have the appetite for it is another question altogether . Early indications are that they don’t.

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More on the Long-Term Unemployment Crisis

This email came to reporters’ inboxes from the office of the director of national intelligence, Dennis Blair, objecting to this Politico story about Blair’s testimony to the House intelligence committee today. From spokesman Arthur House: The article published by Politico today regarding testimony of the Director of National Intelligence before the House Permanent Select Committee on Intelligence is inaccurate and irresponsible. The DNI did not criticize the Administration in any way – the assertion that he did is simply wrong. The DNI stated that the combination of reality and politics regarding the December 25 attempted terrorist attack is surprising and that the Intelligence Community is trying to bring intelligence and law enforcement to bear on those who threaten our country. To suggest that his statement is a “blast” at the White House distorts words clearly spoken and seeks to create a conflict where none exits. The current version of Politico’s piece appears to have excised the relevant description. An addendum reads: “Blair’s office objected to an earlier version of this story which said that he had criticized the White House for leaks about the case.”

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Dennis Blair vs. Politico

There’s probably a perfectly good reason why the latest job notice from the Nuclear Energy Institute, circulating on the Internet today, tells applicants to send their resumes to the communications director for Rep. Buck McKeon (R-Calif.). But I can’t think of one at the moment. I made calls to both NEI and McKeon’s office ; no response yet . Update: An NEI spokesman responds: I haven’t the foggiest. The job notice is out there, and we have a couple of recruiters working on it, but not Buck McKeon’s communications director. Our HR department thinks one of our recruiter’s e-mails mistakenly got Lindsey Mask’s contact info included – perhaps she received an e-mail and forwarded it on to someone else and her auto signature got inserted. Here’s the job notice: Staff Writer Nuclear Energy Institute www.nei.org Washington, DC (Farragut West metro) OVERVIEW: As the need for alternative energy sources increases, the Nuclear Energy Institute ( www.nei.org ) is at the forefront of communicating the benefits of building clean-air nuclear power plants and promoting the safety of existing plants to Capitol Hill staff, policy makers, media outlets and NEI members. As one of six writers in a 20+ staff communication services department, you will have the opportunity to contribute your writing skills in a variety of forms including newsletter articles, fact sheets, policy briefs, web updates, reports, issue briefs, presentations, brochures and other collateral material. Bring several years experience in journalism from a newspaper, public relations or magazine setting. While a background in nuclear energy or scientific writing is not required, the ability to grasp complex issues is. Accordingly, a homework assignment will be administered prior to interviewing demonstrating your research and writing ability on new subject matters. RESPONSIBILITIES: ·         Serve as a contributing writer for NEI’s daily compilation of industry news, Nuclear Energy Overview, and for Nuclear Energy Insight, as assigned. ·         Maintain overall responsibility for tracking issue developments and key events related to NEI’s essential activities. ·         Coordinate activities with other department staff to maintain timely Web postings for news items. ·         Retain strategic focus on beats in coordination with NEI issue managers. ·         Write, edit and position NEI fact sheets and policy briefs to serve NEI’s strategic needs in keeping with its annual plan. ·         Develop copy and content as needed for NEI’s public and member Web sites, reports, issue briefs, presentations, brochures and other collateral materials as assigned. ·         Assist senior NEI management in developing speeches and presentations as needed. QUALIFICATIONS: Minimum three (3) to five (5) years journalism experience in news writing, public relations or magazine writing. Two (2) to three (3) years experience in producing and writing for electronic media highly desired. Knowledge of HTML preferred. Ability to write compelling copy on complex, often technical, subjects under tight deadlines, translating technical concepts into everyday language. Ability to express ideas effectively through a wide variety of communications materials, with a concentration on Web-based platforms. EDUCATION: Bachelor’s degree in journalism (preferred), public relations or English. SALARY: $65K Send resume to: Lindsey Mask Communications Director Howard P. “Buck” McKeon (CA-25) 2184 Rayburn House Office Bldg
. 202-225-1956 Lindsey.Mask@mail.house.gov

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The Perfect Marriage of Congress and Industry? (Updated)

Speaking of Attorney General Eric Holder’s reminder to Sen. Mitch McConnell (R-Ky.) that the criminal justice system “is an extremely effective tool for gathering information,” I just got off the phone with Jack Cloonan, a 27-year veteran of FBI counterterrorism who retired in 2002. Cloonan has interrogated several members of al-Qaeda, including Jamal Ahmed al-Fadl, a onetime bin Laden associate -turned-state witness, and if the FBI had been allowed to proceed with Jose Padilla’s interrogation, Cloonan would have been assigned to interrogate him as well. While Cloonan considers himself “apolitical,” he’s more than a little dissatisfied that conservative politicians who lack any experience  in interrogations are inveighing against the FBI’s handling of Umar Farouk Abdulmutallab. “What would you expect from Mitch McConnell?” Cloonan said. “They just don’t know what they’re talking about. They really don’t.” For one thing, despite endless repetition on the right, reading a suspect his Miranda rights does not compel him to cease cooperation with interrogators. “People keep talking about Mirandizing as if it’s a preventive measure, getting someone to shut up, but most critics have never been in position have to Mirandize one,” Cloonan said. “It’s to keep pristine information you’ve already gotten and to have a prosecutable case. It’s not the end of an interview.” Nor does the presence of a lawyer mean a suspect has to be quiet. “The attorney’s gonna say the case against you is significant” and press Abdulmutallab to cooperate — as, he said, has doubtlessly happened by the fact that the would-be Christmas bomber’s family has been brought into his continued discussions with the FBI. “A lot of people make big a deal out of Mirandizing Abdulmutallab, thinking he’ll clam up and will never talk,” Cloonan said. “What’s gonna work, over the next several weeks, is a bit of gamesmanship. Here’s what we’re looking for — from both the FBI and the attorney — and the U.S. Attorney in Detroit will say this is what he’s got to do. They’ll put together a proffer agreement outlining what his obligations are.” If it comes out that Abdulmutallab “exaggerated or lied about any of it, then it’s void.” Cloonan ultimately thinks that’s the way the Abdulmutallab case will end: with some form of proffer deal, even one that ends with the 23-year old pleading guilty and serving life in prison. While U.S. intelligence officials are unlikely to get a wide array of information about active plots from al-Qaeda in the Arabian Peninsula from Abdulmutallab — “the notion that Abdulmutallab might be an infinite fount of knowledge presupposes they brought him into inner workings [and] they wouldn’t do it,” he said — the most likely outcome will be to get a better sense of how the terrorist group recruits and trains its operatives. Cloonan even noted that in the days after Abdulmutallab’s initial FBI interview, the Yemeni security forces and CIA drones struck at AQAP. “They’re gonna get all kinds of information from this guy.”

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Ex-FBI Interrogator: McConnell and Co. ‘Don’t Know What They’re Talking About’ on Abdulmutallab

Two data points that are almost certainly connected. First : Umar Farouk Abdulmutallab, the Nigerian man accused of trying to blow up a jetliner bound for Detroit on Dec. 25, started talking to investigators after two of his family members arrived in the United States and helped earn his cooperation, a senior administration official said Tuesday evening. And second : America’s top intelligence official told lawmakers on Tuesday that Al Qaeda and its affiliates had made it a high priority to attempt a large-scale attack on American soil within the next six months. The assessment by Dennis C. Blair, the director of national intelligence, was much starker than his view last year, when he emphasized the considerable progress in the campaign to debilitate Al Qaeda and said that the global economic meltdown, rather than the prospect of a major terrorist attack, was the “primary near-term security concern of the United States.” No threat determination like that is ever the result of one line of intelligence. But it’s impossible to believe Abdulmutallab’s resumed cooperation — the subject of heavy administration pushback to its critics, as Josh Marshall observes , after two weeks of attack following Blair’s disastrous congressional testimony — did not inform the assessment. The Times: Another federal official said Mr. Abdulmutallab had provided information about people he met in Yemen, where he is believed to have receiving training and explosives from Al Qaeda in the Arabian Peninsula, a branch of the terrorist network. “He’s retracing his activities over there,” said the official, who would discuss the case only on the condition of anonymity. “You run to ground what he tells you, validate it and follow up. You build a relationship. It’s a pretty standard process.” And that cooperation would not have come without Abdulmutallab’s family trying to get him the best deal they can from federal prosecutors. Welcome to a law-enforcement-informed approach to terrorism.

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This Threat Warning, Brought to You by the U.S. Law Enforcement Community

In the face of widespread suspicion that health care reform is stalled indefinitely, House Speaker Nancy Pelosi (D-Calif.) told reporters this afternoon that Democrats will succeed in passing the party’s top domestic priority, adding that “we are very close to doing that in a comprehensive way.” How? Well, it won’t happen by the House simply taking up the Senate bill. “Our members will not support the Senate bill,” Pelosi said. “Take that as a fact.” Instead, she wants both the House and Senate to pass an amending bill through the budget reconciliation process, which requires only 51 votes in the Senate. “Don’t even ask us to consider passing the Senate bill,” she warned, until after that amending proposal clears both chambers. In the meantime, Pelosi said, the House will strip out several provisions of the larger reform proposal — provisions that aren’t permitted to move via reconciliation — in hopes of passing them as stand-alone bills. Next week, for example, House leaders will consider a proposal to repeal the anti-trust exemption enjoyed by health insurers for over 60 years. “Just because we reach a bump in the road doesn’t meant that we turn back,” Pelosi said. “We will get the job done.”

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Pelosi: ‘We Are Very Close’ to Passing Health Care Reform

Hoping to nullify the Supreme Court’s recent decision freeing corporations to spend infinitely on federal elections, Reps. Donna Edwards (D-Md.) and John Conyers (D-Mich.) today introduced a proposed constitutional amendment “permitting Congress and the States to regulate the expenditure of funds by corporations engaging in political speech.” “The ruling reached by the Roberts’ Court [sic] overturned decades of legal precedent by allowing corporations unfettered spending in our political campaigns,” Edwards said in a statement. “Another law will not rectify this disastrous decision.  A Constitutional Amendment is necessary to undo what this Court has done.” It’s not only House leaders eyeing that option. Testifying before the Senate Rules Committee this morning, Sen. John Kerry (D-Mass.) also promoted that idea. “We need a constitutional amendment to make it clear once and for all that corporations do not have the same free speech rights as individuals,” Kerry said . For campaign finance reform supporters, it’s exactly the right move. “The court’s overreach is so shocking, and the certain consequences so damaging, that we must have a constitutional corrective,” Robert Weissman, president of Public Citizen, said in a statement. ”The First Amendment was never intended to protect the likes of ExxonMobil, Pfizer or Goldman Sachs, nor should it.”

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A Bicameral Call for a Constitutional Amendment to Nullify Citizens United

Rep. Dennis Kucinich (D-Ohio) and Treasury Secretary Timothy Geithner (WDCpix) To hear Treasury Secretary Tim Geithner tell the tale, the federal officials negotiating the taxpayer bailout of American Insurance Group had no choice but to provide full payment to the company’s trading partners, including Goldman Sachs. “There was no way, financial, legal, or otherwise, we could have imposed haircuts, selectively default on any of those institutions, without the risk of downgrade and default,” Geithner told lawmakers on the House Oversight and Government Reform Committee last week. Image by: Matt Mahurin Share Don’t tell that to Rep. Dennis Kucinich. The Ohio Democrat — who heads the committee’s domestic policy subpanel — says that federal officials had plenty of leverage to push Goldman for a lesser payout, but simply chose not to use it. Indeed, an investigation by his office, Kucinich says, found that Goldman was already preparing to take less than 100 cents on the dollar for the complex, AIG-backed securities it held at the time. He’s charging that Geithner — who headed the New York Federal Reserve when it funneled billions of dollars through AIG to other firms — simply put Goldman’s interests above those of taxpayers. “There was only one way for Goldman Sachs to get all of the billions they claimed from AIG, and that was if the New York Fed voluntarily agreed to give it to them,” Kucinich, the populist former mayor of Cleveland, said in a little-noticed exchange with Geithner last week. “If the Fed had fought for taxpayers, Goldman would have had to take some losses and the cost to the people could have been minimized.” Some legal experts agreed. “This ‘legally obligated’ stuff is a lot of nonsense,” said an expert on the Wall Street bailout who wasn’t authorized to speak on the record. “They [Fed officials] are only as legally obligated as they want to be.” That Goldman is such a powerful player in Washington politics (then-Treasury Secretary Henry Paulson once headed of the firm) could only have contributed to the decision to pay on par, the expert noted. “The idea of imposing a haircut [on Goldman] just kind of wasn’t in the bloodstream of the people involved.” The controversy stems from the $27 billion the Fed paid in late 2008 to settle roughly $62 billion in insurance contracts that AIG held with a number of large firms. As the mortgage market tanked, AIG had paid out billions to those companies — collateral based on the falling value of the securities. But the banks were all scrambling to cash out on the balance because they were allowed to make more collateral calls as AIG’s credit rating was being downgraded — and because the value of those mortgage bundles was still sinking fast. Effectively, the Fed scrapped the insurance contracts and bought the securities outright. “We paid the fair market value at that time for the assets,” Geithner said last week. Critics of that arrangement have long wondered why the Fed agreed to pay the full amount, rather than negotiate a better deal for the taxpayers footing the bill. More recently, the scandal has surrounded news that the Fed, at the time, tried to hide those full payments from the public. The gist of Kucinich’s beef, which focuses just on Goldman’s contract, is more nuanced: Because of a months-long disagreement with AIG over the value of the underlying securities, Goldman took out supplemental insurance policies on $2.5 billion it feared it would lose if AIG failed — much like seniors take out supplemental health policies to cover services that Medicare doesn’t. Goldman executives have said repeatedly that, aided by those policies, the firm was fully protected in the event that AIG went under. “If AIG had defaulted on its obligations, our shareholders would have been protected against loss because we were fully hedged,” Goldman spokesman Michael DuVally said in an email Friday. “But, because AIG could meet its obligations, it avoided default.” Left unmentioned, Kucinich says, is that Goldman’s supplementary policies were invalid in the case of a government takeover of AIG — which was the only way the insurance giant was ultimately able to meet its obligations. Translation: After the government stepped in to rescue AIG, Goldman was in a position to lose $2.5 billion, leaving the Fed with a good deal of leverage to negotiate lower payments on behalf of taxpayers. “The New York Fed had a lot of leverage — a lot of leverage — to negotiate a reduction which would have saved taxpayers billions,” Kucinich told Geithner. He wasn’t the only lawmaker making a stink about the deal. Rep. Stephen Lynch (D-Mass.) blasted Geithner over the Goldman payments, arguing that Fed officials had “every opportunity” to negotiate a better arrangement for taxpayers. “The commitment to Goldman Sachs trumped the responsibility that our officials had to the American people,” Lynch said. Geithner, for his part, fought back against all the critics. The Treasury secretary argued that — because current law doesn’t allow regulators to unwind troubled investment houses the way they can unwind failing commercial banks — officials were left will little choice but to prop up AIG and make good on all of its financial obligations. “We faced a very simple choice: Let AIG default or prevent it,” Geithner said. Allowing the former, he maintained, would have led to an economic collapse much worse than the one that occurred. “Thousands of more factories would have closed their doors,” he testified. “Millions more Americans would have lost their jobs. The value of Americans’ houses and savings would have fallen even further than they did at that time. People would have rushed to take their money out of banks. It would have brought about utter collapse.” A March 2009 report from the special inspector general of the Troubled Asset Relief Program indicates that AIG’s trading parties were well justified to fight for full payment on behalf of their shareholders. “[F]rom the counterparties perspective, offering a concession would mean giving away value and voluntarily taking a loss, in contravention of their fiduciary duty to their shareholders,” the report states. “They were contractually entitled to the par value of the [securities].” But some critics of the Goldman payments have argued that, shareholders or none, the giants of Wall Street should have shown more willingness to absorb the consequences of a financial meltdown caused largely by them. “Workers around the country are being asked to take pay cuts and accept shorter work weeks so that colleagues won’t be laid off,” former New York governor Eliot Spitzer wrote last year. “Why can’t Wall Street royalty shoulder some of the burden?” Instead, champagne-sipping Goldman employees are celebrating their bonuses this month. Kucinich, representing a part of the country decimated by foreclosures in recent years, preferred to focus his criticisms not on the firms, but on the federal officials charged with protecting the public. “The government gave Goldman Sachs more than Goldman Sachs had any right to expect while at the same time giving no financial relief whatever to millions of Americans facing a foreclosure crisis,” he told Geithner. “If that doesn’t illustrate what the New York Fed thought it was working for — or who it was working for — I don’t know what does.”

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Questions Linger About Full Payments to Goldman Sachs

Via The Hill , Rep. Steve Buyer will announce today that he won’t seek reelection this year. The nine-term Indiana Republican has been in hot water recently over allegations that his charity, the Frontier Foundation, has acted simply as a vehicle for siphoning campaign contributions from corporate leaders. Earlier this week, Citizens for Responsibility and Ethics in Congress filed ethics complaints against both Buyer and the Frontier Foundation. Local news is reporting that he wants to spend more time with his family.

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GOP Rep. Buyer Calls It Quits

No real surprise this week when Sen. Lindsey Graham (R-S.C.) walked back his earlier support for a climate change bill, arguing that the  proposals currently under consideration are “not business-friendly enough.” Yesterday, some environmentalists offered a reminder that the House bill has already been diluted enormously , offering some of the nation’s biggest polluters billions of dollars in concessions Erich Pica, president of Friends of the Earth, issued a statement calling the House bill “one of the biggest pieces of corporate welfare ever to be considered by Congress, with $170 billion in giveaways to polluting industries.” Big oil, dirty coal, corporate agribusiness — they all got a piece of the pie. The notion that the bill was onerous on business is laughable. Some of the worst polluters helped write the blueprint the bill was based on. Now these greedy corporations are angling for more, and Senator Graham is out to help them. This is special interest politics at its worst, and it is truly appalling. No wonder so many people are turned off by the ways of Washington. And with corporations recently freed by the Supreme Court to spend endlessly on federal elections, you can pretty much kiss any meaningful climate change legislation goodbye.

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Environmentalists Remind Graham: the Climate Bill is Already Industry-Friendly

Those reports about an $80 billion Senate jobs package? “Wrong,” a Senate Democratic aide told TWI. The staffer indicated this afternoon that Democrats are weighing a number of proposals to tackle the unemployment crisis but remain undecided about which route they’ll go. The $80 billion package, the aide said, was just one option that happened to leak to the press. “Everything that was in that document has changed,” the aide said. “It is not at all where we are now.” One detail from those reports, though, is probably accurate. The Democrats will likely push an extension of unemployment and COBRA benefits separately, the aide said.

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Dem Aide: Reports of $80 Billion Jobs Bill Are Wrong

The National Republican Congressional Committee  is up on the air in South Carolina with an ad not-so-secretly aimed at getting Rep. John Spratt (D-S.C.) to reconsider his career options. But the striking thing about the ad is its claim that “Spratt’s the architect of legislation Democrats may use to ram through a government takeover of health care.” What does that mean? The NRCC spells it out in the press release that was sent to reporters. They’re knocking Spratt “for his authorship of a budget plan that would allow Pelosi and Congressional Democrats to ram government-run healthcare through Congress using an arcane procedure known as reconciliation.” They explain: The budget that Spratt designed allows Democrats to strong-arm the government takeover of healthcare through the Senate with only 51 votes necessary to advance the bill, instead of the 60 votes required in the upper chamber. So whether or not Democrats use the tools available to them and pass the health care bill, they’re going to get hammered on it. This has been obvious for weeks.

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Running Against Reconciliation

Since last week’s Supreme Court decision freeing corporations to spend unlimited sums to influence elections, there’s been a great deal of debate about what Congress, short of amending the Constitution, could do to prevent the nation’s big businesses from buying even more influence in Washington than they’ve already got. Today, Yale law professors Bruce Ackerman and Ian Ayres offer a solution. Writing in The Washington Post, the campaign finance reformers propose a new statute to keep the financing restrictions in place for any companies doing business with the federal government (i.e., most of the country’s biggest corporations). Using the drug lobby as an illustration, they explain: Federal contractors already are not allowed to “directly or indirectly . . . make any contribution of money or other things of value” to “any political party, committee, or candidate.” This provision arguably bars Big Pharma from launching a media campaign in favor of a candidate who supports its special deals, thereby “indirectly providing” the candidate something “of value.” But it doesn’t cover the case in which contractors threaten to spend millions to oppose senators and representatives who refuse their excessive demands. There is a need, then, for a new statutory initiative: The same anti-corruption rationale may prohibit contractors from spending millions in favor of candidates requires a statutory prohibition on a negative advertising blitz. It wouldn’t be difficult to imagine, for example, the drug industry going after Sen. Bill Nelson (D-Fla.), who’s been pushing a proposal to empower states to negotiate pharmaceutical prices for their lowest-income seniors. (The prohibition on those negotiations has been a cash cow for the drug companies.) Ackerman and Ayres predict that their proposal would withstand the scrutiny of even the conservative-leaning Supreme Court. The Roberts court is skeptical — to put it mildly — of campaign finance restrictions. But it is still highly unlikely that the justices would strike down a law targeting federal contractors. All nine recognize that Congress may restrict free speech when there is a significant risk of corruption. That risk is obvious when corporate speakers are simultaneously doing business with the government. Of course, with just 10 months to go before November’s midterms, Congress would have to act quickly — not something it’s exactly known for.

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A Legislative Fix to Citizens United

Mike Lillis speculated earlier on whether the far-reaching implications of Citizens United v. the Federal Election Commission could open the door for foreign companies to intervene in American elections. Former FEC Chairman Bradley Smith tells me that, indeed, the decision seems to let foreign corporations spend whatever they like, as long as they find a loophole that protect them from the ban on election spending by foreign citizens. “To the extent that there may be some foreign corporations that don’t fall under the category of foreign nationals, that might be something Congress can deal with,” said Smith. “I think the court would probably uphold the constitutionality of that. I can’t say for certain that they would.”

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Former FEC Chairman: ‘Citizens United’ Could Open Door for Foreign Corporations

Here’s the statement just released by Sen. Russ Feingold (D-Wis.), explaining why he intends to oppose Federal Reserve Chairman Ben Bernanke’s bid for a second term: A chief responsibility of the Chairman of the Federal Reserve is to ensure a sound financial system. Under the watch of Ben Bernanke, the Federal Reserve permitted grossly irresponsible financial activities that led to the worst financial crisis since the Great Depression. Under Chairman Bernanke’s watch predatory mortgage lending flourished, and ‘too big to fail’ financial giants were permitted to engage in activities that put our nation’s economy at risk. And as it responds to the crisis it helped to usher in, the Federal Reserve under Chairman Bernanke’s leadership continues to resist appropriate efforts to review that response, how taxpayers’ money was being used, and whether it acted appropriately. When the full Senate considers his nomination, I will vote against another term for Chairman Bernanke. Bernanke’s current term expires at the end of January, but with the Fed under fire for its handling of Wall Street’s financial collapse — particularly its opposition to disclosing where all of those taxpayer dollars went — more and more Democrats appear ready to line up in opposition to another term.

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Feingold to Oppose Bernanke

Perhaps the strangest element of Capitol Hill’s months-long health reform debate has been that Democrats — proposing to cover tens of millions of uninsured Americans while banning the worst abuses of the insurance industry — have been branded a public enemy, while Republicans — hell bent on killing the reforms — have somehow been cast as populist heroes. Continuing that theme, Rep. Dave Camp (R-Mich.), senior Republican on the powerful Ways and Means Committee, told reporters today that GOP leaders have no interest in getting health coverage for everyone, Merrill Goozner reports . His idea of reform? Allowing insurance companies to sell across state lines; limiting medical malpractice awards (”enough to pay for reform,” he said); creating high-deductible, high-co-pay plans for the uninsured (”we’re not trying to get to universal coverage”); and setting up special pools to make insurance more affordable for small business. If that sounds familiar, it should because it is essentially the same plan that was offered by Sen. John McCain and rejected by voters just 14 months ago. Surprising? Not in a town where tax cuts for the wealthiest Americans are also celebrated as a victory for the middle class.

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GOP Congressman: ‘We’re Not Trying to Get Universal Coverage’

Scott Brown, the Republican newly elected to replace the late Sen. Edward Kennedy (D-Mass.), has been surprisingly forthcoming about his vote in favor of the health reforms adopted by Massachusetts a few years back — reforms that include the same individual coverage mandate that many Republicans on Capitol Hill have declared unconstitutional. And while many Republicans are spinning Brown’s victory as an indictment of the Democrats’ health reform push, The Washington Post’s Alec MacGillis today  points out the inaccuracy of that argument. Brown, he writes, “rode to victory on a message more nuanced than flat-out resistance to universal health coverage: Massachusetts residents, he said, already had insurance and should not have to pay for it elsewhere.” “We have insurance here in Massachusetts,” he said in a campaign debate. “I’m not going to be subsidizing for the next three, five years, pick a number, subsidizing what other states have failed to do.” What Brown failed to mention is the inconvenient fact that the Massachusetts reform plan (1) focused on coverage, not cost containment (not exactly an approach championed by the fiscally conservative), and (2) relies heavily on federal subsidies to fund an expansion of the state’s Medicaid and CHIP programs, among others. In October, the New England Journal of Medicine, using state data, reported that the federal government dedicated $688 million to Massachusetts health care in 2006, before the reforms took effect. In 2007, after the reforms were in place, that number jumped to $816 million. In 2008, it was $888 million. Last year, it was projected to approach $1.3 billion. So while Brown says he’s not going to subsidize what other states failed to do, other states are busy subsidizing what Massachusetts has done. He should at least acknowledge that fact as he continues to oppose the Democrats’ proposals.

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The Irony of Scott Brown’s Opposition to Health Care Reform

There’s a big international conference in London beginning next Thursday to harmonize allied civilian efforts in Afghanistan. One thing to expect out of it: new “Afghan-led integration measures” to bring insurgents into line with the government, according to British Foreign Secretary David Miliband. Miliband is before the Senate Foreign Relations Committee right now, outlining a few expectations for what the conference will produce. Some of it is vague: “coherence and clarity of the plan for Afghanistan” among the 70-odd foreign ministers expected to attend is the “biggest deliverable of all,” Miliband said. But Miliband set a specific expectation by saying a new mechanisms for persuading Afghan insurgents to come in from the cold were crucial for success, adding that he referred to “structures I hope that President Karzai will announce next Thursday.” It’ll be interesting to see what Karzai might outline. There is a longstanding political consensus on the need for integrating insurgents and reconciling with those fighters who have no ties to al-Qaeda. But the mechanisms in place to date have yielded only sporadic results. Another thing to expect from the conference: a new civilian counterpart to Gen. Stanley McChrystal.

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Karzai to Announce New Insurgent-Reconciliation Structure

Barely two hours after Togo West and Vernon Clark finished briefing the Senate Armed Services Committee on the results of their review of systemic Army challenges to identifying extremist threats within the service, here’s a statement about further action from Army Secretary John McHugh: “I have directed Gen. Carter Ham to conduct an accountability review to identify whether any personnel were responsible for failures or deficiencies in applying Army programs, policies, and procedures to the alleged assailant. Further, he will provide a recommendation as to whether disciplinary or adverse action is warranted by each finding, and if so, the nature of such disciplinary or adverse action and the basis for such recommendation. “In addition, I have requested that Gen. Ham provide me with any general observations he may have developed as a senior leader in our Army, and as a member of the Independent Panel, that he believes may be of help to the Army in charting a way ahead. “We are an Army that is grounded on disciplined and established standards. Leaders at every level are responsible for ensuring that our policies and regulations are followed and that appropriate action is taken if they are not. “We must use this incident as an opportunity to reinforce the basics of leader involvement with soldiers. It is this fabric that binds us together in war, and we must ensure that it is continuously strengthened.”

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Army Secretary McHugh on Fort Hood Review

House Speaker Nancy Pelosi’s (D-Calif.) press conference at the Capitol this morning is churning dramatic headlines about how health reform is dead. But she really doesn’t say that. In fact, she says just the opposite. “We have to get a bill passed — we know that,” she said . “That’s a predicate that we all subscribe to.” She added: “I don’t see the votes for it at this time. … In every meeting that we have had, there would be nothing to give me any thought that that bill could pass right now the way that it is.” [Emphasis mine.] And that may be true. But remember that the same could have been said at almost any point during both the House and Senate debates last year. It required all kinds of concessions and back-room deals to get Democrats on board, which is exactly how these things work. Don’t think for a second that similar negotiations aren’t happening right now to get reluctant House Democrats behind the Senate bill, which remains the quickest way for party leaders to pass their top domestic priority and move on to the economy , which needs some addressing if they want to fare better in November than they did this week in Massachusetts. The health care bill, under this scenario, couldn’t be altered. But there’s nothing to prevent the persuasive sweeteners from showing up in some other must-pass bill further on down the line.

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Pelosi: House Can’t Pass Senate Health Bill ‘At This Time’

As Dave just mentioned , the Supreme Court this morning freed corporations to make unlimited donations to candidates for the White House or Congress. The decision hinges largely on two theories: (1) That a corporation, legally, is a person as it pertains to free-speech rights, and (2) that money is a form of free speech. The first is the more controversial, in that a corporation doesn’t have a pulse, doesn’t vote, doesn’t die and never goes to jail for wrongdoing. But nevermind all that. Most conservatives love this line of thinking. Senate Minority Leader Mitch McConnell (R-Ky.), for example, just issue a statement hailing the “monumental decision.” “By previously denying this right, the government was picking winners and losers,” McConnell said. “Our democracy depends upon free speech, not just for some but for all.” He was referring to Humana, Citigroup and UST Inc . Others, though, aren’t so sure. Writing the dissent, Justice John Paul Stevens warned that the ruling “threatens to undermine the integrity of elected institutions around the nation.” And campaign finance watchdogs immediately cautioned that the ruling will only enhance the already enormous influence that corporations have over the legislative process. “This decision allows Wall Street to tap its vast corporate profits to drown out the voice of the public in our democracy,” Bob Edgar, president of Common Cause, said in a statement. Consumer advocates are hoping Congress will take up a little-mentioned campaign finance reform proposal — the Fair Elections Now Act — that aims to level the election-year playing field by allowing candidates to tap public public funds if they disavow large contributions from individuals, and all contributions from lobbyists. The hope is that the public funds would attract candidates who otherwise might not have the resources to run for public office. And by limiting contributions to small sums from individuals, it would prevent candidates from relying too heavily on any one donor or interest group. Popular candidates would still raise more money than others, — the goal is not to give everyone equal funding, just  the opportunity for equal funding. The real aim, supporters say, is to prevent a minority of wealthy donors from holding excessive sway, perhaps at the expense of everyone else. They shouldn’t hold their breath. Campaign finance reform is never popular among lawmakers who have been elected under current financing rules, and even less so in an election year when everyone is scrambling for the very donations that the bill would ban.

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If You Thought Big Business Ran This Town Before …

Shira Toeplitz reports on the ego boost that Scott Brown’s victory in Massachusetts has given to Republican candidates and strategists. So far it’s been enough to nudge businessman Richard Hanna into a rematch with Rep. Michael Arcuri (D-N.Y.); from there, it’s giving a second wind to recruiters who are trying to see whether they can put more Senate races on the map, and boosted the fortunes of Republicans like Rep. Greg Walden (R-Ore.). I had a call and a text message from two significant donors of mine, who I never hear from other than when I’m calling them for money, say: ‘Wow, this is huge. Keep up the good work. Let me know how we can help. This pales before the effect that Brown’s win is having on congressional Democrats’ plans for their agenda. One dog that hasn’t barked: No vulnerable Democrats have bailed out of re-election this week.

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The Republican Surge, of Sorts

Dennis Blair, the director of national intelligence, may think the interrogation of Umar Farouk Abdulmutallab went haywire when the would-be bomber was Mirandized instead of being subject to the High-Value Detainee Interrogation Group. But FBI Director Robert Mueller had a different take about the value of intelligence collected within the criminal justice system. In a hearing today before the Senate Judiciary Committee, Sen. Russ Feingold (D-Wis.), who’s also on the intelligence committee, had the following colloquy with Mueller: FEINGOLD: OK, thank you. Director Mueller, we’ve heard criticism this morning for the decision to try Abdulmutallab in federal court. And I’m, of course, a little mystified by this reaction, given the similarity of this case to the attempt by Richard Reid, who was prosecuted in federal court by the prior administration, now serving a life sentence. Some have argued the decision has compromised our ability to obtain useful intelligence. But as I understand it and as Senator Feinstein touched on, there are quite a few examples of people who have been charged with terrorism-related crimes in federal court and cooperated with the U.S. government. Do you see any reason to treat this case differently from the Richard Reid case? And has it been your experience that alleged terrorists charged with crimes in federal court often cooperate with the government and provide useful intelligence? MUELLER: Well, in direct answer to the question, we’ve had a number of cases in which through the process — the criminal justice process of the United States, individuals have decided to cooperate and provided tremendous intelligence. That is not to say that there may not be other ways of obtaining that intelligence. But, yes, in answer to your question, the criminal justice system has been a — a fount of intelligence in the years since September 11th.

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FBI Director Mueller Thinks You Can Get Good Intel From the Criminal Justice System

Building off Matt’s excellent post about today’s outbreak of GOP enthusiasm for torture and lawlessness, check out this just-released paper from Ken Gude at the Center for American Progress separating myths from facts about the military commissions, civilian courts, and interrogations with lawyers present. For instance, here’s Gude arguing against former Attorney General Michael Mukasey: The evidence from recent terrorism investigations proves Judge Mukasey right that access to lawyers does not interfere with interrogating suspected terrorists. Nothing prohibits interrogations to continue after a suspect is given access to an attorney. In fact, terrorist suspects have given what U.S. officials call “ an intelligence goldmine ” after meeting with attorneys. Brent Vinas, an American convert to Islam captured in Pakistan in 2008 and turned over to the FBI, has proven to be one of the U.S. government’s most valuable sources of information about Al Qaeda. From the moment Vinas was in American custody he had all the access to attorneys and other rights afforded criminal suspects, and he still produced what one intelligence official called a “ treasure trove ” of information about Al Qaeda. In more than 100 interviews with counterterrorism officials, Vinas provided information that led to a Predator drone strike that killed a suspected militant, and his information has allowed counterterrorism officials “to peer deep inside the inner workings of Al Qaeda.” David Headly—also known as Daood Gilani—was arrested in Chicago and charged in connection with the 2008 Mumbai attack that left more than 150 people dead. Headly pleaded not guilty, but he is cooperating with prosecutors and helped U.S. officials uncover a plan by Lashkar-e-Taibi to unleash a similar attack in Copenhagen, Denmark, targeting the newspaper that printed cartoons of the prophet Mohammed. Meeting with his attorney has not prevented him from providing intelligence information that disrupted at least one terrorist plot. After all, detainees give up information in plea deals. A related point made in a recent post of mine : reading a detainee his Miranda rights doesn’t stop interrogations. It just means information used from those interrogations can’t be used in court.

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CAP: You Can Give a Detainee a Lawyer and Get Good Intel