One year after U.S stocks hit their post-financial-crisis low on March 9, 2009, the benchmark Standard & Poor’s 500 Index has risen more than 68 percent, and it’s up more than 41 percent since Obama took office. Credit spreads have narrowed. Commodity prices have surged. Housing prices have stabilized.
“We’ve had a phenomenal run in asset classes across the board,” said Dan Greenhaus, chief economic strategist for Miller Tabak & Co. in New York. “If he was a Republican, we would hear a never-ending drumbeat of news stories about markets voting in favor of the president.”
If this is what a Democratic President can do, America needs a lot more of it. And don't forget, he's done this with no help whatsoever from Republicans in Congress, who have voted NO on every single economic initiative, hoping Obama's failure would help them return to power. Not happening, dudes.
On Monday gubernatorial candidate Artur Davis unveiled his economic plan -- an Alabama jobs plan, if you will. It includes tax credits for new jobs that pay higher than average wages and jobs in high unemployment areas; lending programs geared to small businesses; expanded availability of venture capital; incentives for existing businesses that expand, upgrade or launch new products; lifelong learning accounts; tax incentives for adult education; child tax credits for working class families; initiatives to expand biotech and aerospace industries in the state; expanding nuclear power generation and transfer; a new rural energy initiative; expanded broadband and public internet access; a new rural infrastructure initiative and a plan to tie federal transportation funds to an actual statewide master transportation plan.
Now, I don't care for the nuclear power expansion and am still skeptical of offshore drilling (Drill, baby, drill! scarred me for life) but there is a lot of good stuff in there -- best practices from other states and ideas that haven't already been around the block a dozen times. This is the kind of plan that really could lift Alabama to the next level.Think North Carolina, Georgia or Virginia ...a place where we don't have to be eternally thankful for Mississippi! Another great benefit of Davis' economic plan is that it's finally shaken some lottery/gambling revenue numbers out of his Democratic rival, Agriculture Commissioner Ron Sparks.
For the better part of a year, we've been asking how much Sparks' Lifestart Lottery would bring in for higher education and the customary answer was, "more than we have now." Ditto the tax on casino gambling. Sparks wouldn't even commit to an approximate tax rate on gambling until November, when he said "I would tax it at the same rate that our neighboring states are taxing gambling."That could be as low as 10 to 15%, given that rates in Mississippi are around 11%. But now Sparks has unveiled the following plan:
The Sparks Plan
Now THIS is a Plan, Artur
“I'm the first and only candidate with a plan who has the money to pay for education during the worst recession of our lifetime. And, I promise you, when elected governor I will get it done for the working families of Alabama,” Sparks said.
- Close tax loopholes and make multinational corporations pay their fair share in taxes.
- Create jobs by expanding economic development incentives and targeting tax credits.
- Create an education lottery to give every high school graduate a colleg (sic) scholarship. Raise $400 million for our kids.
- Create voluntary pre-kindergarten for every four-year-old child.
- Make electronic bingo operators pay a minimum of 25 percent in state taxes, investing new dollars in our schools and in programs for seniors. Raise $400 million per year and give five percent to counties without gaming operations.
- Create a $1 billion highway construction program that will create 30,000 new jobs and impact every county in Alabama, along with $400 million in additional funding from the federal GARVEE program.
Follow me below the fold for some analysis and perspective on Ron Sparks' economic plan.
You can capitalize it now: It's the Great Recession. And it has cost the United States more jobs than any downturn since the Great Depression.
Barack Obama inherited an economic disaster. Times are still incredibly tough, but I don't know how anyone can look at this chart and claim that the American Reinvestment and Recovery Act (Stimulus) did not work. It was enacted a year ago, and since then job losses have declined steadily.
According to the nonpartisan Congressional Budget Office, the Recovery Act is already responsible for as many as 2.4 million jobs through the end of 2009
All good, all moving in the right direction, but we need to see a real jobs bill and job growth this year
Look at the change in the ratio of national debt to Gross National Product (GDP). The debt ratio (think of it as debt to income ratio) dropped under the administrations of FDR/Truman, Truman, Eisenhower (both terms), Kennedy/LBJ, LBJ, Nixon, Carter, and Bill Clinton(both terms). It increased -- WRONG DIRECTION -- during the administrations of Reagan (both terms), George HW Bush and George W. Bush (both terms).
Noting that Alabama's unemployment rate rose from 10.5 percent in November to 11 percent in December, James said he's concerned about where the state's economy is headed.
So concerned he's proposing unpaid, one day per week furloughs for state employees. Heck, why not just close state government down on Fridays so we can be the first state in the union with a 4 day work week?
The Greenville businessman and son of former two-term Gov. Fob James said the unpaid one-day-a-week furloughs are necessary because the state is in "a mode of survival."
Yeah, right. Cutting state employees' take home pay by 20% will really get the economy moving again. This might be a good time to point out that state coffers are highly dependent on revenue from sales taxes. Tim is definitely Fob's boy.
"People are struggling. A lot of folks are living week-to-week," he said. "Our budgets are strapped. Bailouts are rampant."
I would just point out that as long as the state of Alabama is getting bailed out, not giving bailouts, they're to our BENEFIT! Quit your whining.
Congressman Artur Davis introduced H.R. 4340, the “Main Street Survival Act” yesterday. This legislation would establish a $1 billion revolving loan fund administered by the Treasury Department and seeded with left over dividends from the TARP program. The funds would be available to small and midsized businesses struggling to obtain credit. Davis issued the following statement:
“As the House adjourns for the year, not nearly enough has been done to protect jobs in the midst of the highest unemployment in 26 years. While I voted today for a bill that will extend unemployment benefits and health insurance for laid off workers, it is not sufficient to expand the safety net—we need to save jobs and we need to acknowledge that the same banks who received vast government assistance are still not lending to small and midsized businesses. If this revolving loan fund had been in place last summer, Meadowcraft in Selma might have survived and New Era Cap Co. in Demopolis might have a lifeline.
“I recognize that some of my colleagues prefer to use leftover TARP money as a rainy day fund for big banks. In my opinion, that would only spur banks to resume the careless lending and investment practices that almost wrecked our economy. Some argue that the funds should be used for deficit reduction, a much more worthy idea. But the reality is that a significant chunk of the TARP dividends should be devoted to the purpose that TARP was meant to serve—the survival of deserving businesses who are in danger of shutting their doors and the protection of jobs.”
Eligibility will be limited to businesses who:
employ less than 1000 workers
current financial condition makes it likely that they will have to make layoffs
can demonstrate an ability to repay the loan.
Funds can be used to finance operations costs, but not to expand operations.
With one possible exception, nobody came close to correctly predicting the surprisingly low job losses for November reported by the Bureau of Labor Statistics today. The non-farm payroll fell just 11,000, the best results in 22 months, and the official "U3" rate fell to 10% from last month’s 10.2%. Experts had predicted the rate would hold steady and that anywhere from 50,000 to 150,000 jobs would be lost. The ‘U6’ unemployment rate, an alternative BLS measure that includes discouraged workers and part-time workers who want full-time jobs, fell 3 points to 17.2 percent.
And look at the depth of job losses in this Great Recession and how slow the employment recovery has been ... if this one lasts as long as the 2001 recession it will be 2 more years before employment recovers.
The following is a guest column submitted by Agriculture and Industries Commissioner -- and Democratic gubernatorial candidate -- Ron Sparks. We invite all Democratic officials and candidates to create an account here and share their thoughts with this progressive community.
Tough Times Demand Real Leadership
By: Ron Sparks
Alabama is facing the greatest financial crisis of modern history with the potential looming on the horizon of firing thousands of teachers and denying care to thousands of nursing home residents.While other candidates for governor, both Democrat and Republican, refuse to address this crisis, I have offered a means of providing additional funding for our state without taxing working families.
Just last week, we learned that Alabama has one of the ten highest unemployment rates in the nation.This news comes on the heels of months of catastrophic financial projections that the Education Trust Fund, Medicaid, and other vital state services are at great risk.
Recently, federal stimulus money helped fill the holes in the state budget. That much-needed money has now been spent and the chickens are coming home to roost.
What’s been missing from the political debate is any effort on the part of my fellow candidates to be honest about our state’s financial condition and plain talk about what we are up against.
Basic laws of economics tell us that we can’t spend what we don’t have.Considering the crisis we are facing and the many needs we have, we have very few choices.We must cut services, raise taxes on the working people of this state, or as I have proposed, identify new revenue streams to flow into our state budgets.
I have been clear that I will never raise taxes on the hard working men and women of Alabama.Our families are already strapped with all they can handle just trying to keep a roof over their heads and food in their children’s mouths.I will not support any plan that that will put teachers out of work and takes supplies and technology out of your child’s classroom.Whether you live in Wilcox County or Mountain Brook, every child deserves the same standard of educational opportunities.
The only option left is to find new money for our state budgets.
The new Winthrop poll of 11 Southern states, including Alabama, finds that the economy is the number one concern here, and people favor government help to create jobs, support state governments and help homeowners. However, they don't see the stimulus plan as wildly successful -- 38% said it had no effect while 35% thought it made things better. I see this as an argument for a second stimulus package, tightly focussed on creating jobs, something that can be justified on economic grounds as well.
A few interesting results from the poll are below the fold.
Two-thirds of those surveyed had suffered some form of wage violation. Some had been paid significantly less than the prevailing minimum wage; many had worked overtime without being paid at the required overtime rate. Others were simply not paid at all for hours worked outside of their regular shifts. Those who were seriously hurt on the job often were given no recourse: Just 8 percent who experienced an injury filed a workers' compensation claim, and workers' compensation insurance paid medical costs for only 6 percent of the injured employees.
The report is Broken Laws, Unprotected Workers: Violations of Employment and Labor Laws in America's Cities -- read more here. About 35% of the workers surveyed were undocumented. This is the real danger to our society from undocumented workers -- employers can treat them like dirt with no repercussions. And once they start treating some employees like dirt, it spills over to treating all employees that way and next thing you know we're all in a breakneck race to indentured servitude.
This is not the kind of Labor Day story you're likely to find in the Alabama newspapers, where just yesterday the Birmingham News characterized the Pullman Strike as a "tiff," but it's just the kind of thought provoking discussion we should to be having here. Heaven knows, Alabama has our share of undocumented workers, and employers are taking unfair advantage of many if not most of them. Nevertheless, stories like this one seldom make the papers in Dixie. I wonder why.
It's a simple idea that can make a difference to American communities: Economic recovery money from American taxpayers should be spent in such a way to create jobs in America whenever possible. Getting local governments on board is part of the Make Our Future Work initiative by the United Steel Workers.
Our first Make Our Future Work resolution calls on local and state governments and leaders to use taxpayer dollars to maximize the creation of American jobs and to restore the economic vitality of our communities.
This may be referred to as "Buy American" or domestic content or domestic sourcing. The bottom line for us is that we want to keep American tax dollars in America to create jobs at home. Help us by taking our "Buy American" resolution to your local and state governments and push them to pass and implement it. Everything you need is below, including our new talking points to help you learn how to spot some businesses who are trying to get out of buying American-made goods with out taxpayer dollars.
They're making amazing progress having this resolution adopted across America, including many Alabama cities and counties. If your locale isn't on the list, use the toolkit (links below) to get the process started.
Without credit, Meadowcraft, Inc. which employs 600 people in Wadley and 800 people in Selma will go under tomorrow, for the last time. They're facing liquidation, closing the plants, probably forever. Two Alabama communities already struggling with high unemployment and poverty rates will be further devastated. Stuart Appelbaum is president of the 100,000-member Retail, Wholesale Department Store Union, UFCW that represents some Meadowcraft employees. He made these remarks at a Rally to Save Meadowcraft Jobs in Roanoke, Alabama this morning.
The other day, when I looked at the list of all the leaders who’ve endorsed this program, it occurred me that some people may be scratching their heads trying to figure out whether this is a Democratic protest, or a Republican protest, or an Independent protest. Well, I think the answer to that is “all of the above.”Because destroying the jobs of Alabama workers isn’t a matter of left and right. It’s a question of right and wrong. That’s why we’re today.
We’re here because we believe it is wrong -- morally wrong -- for Wells Fargo to turn its back on Meadowcraft and the men and women who work there. We’re here because we believe it’s wrong -- morally wrong -- for a bank that received $25 billion tax dollars last year, to take food off the tables of Alabama families this year. And we’re here because we know that it’s wrong to rob the employees and managers of Meadowcraft of the opportunity they deserve to turn their company around!
At a time when 15 million Americans are out of work -- including more than 215,000 Alabamians -- it’s up to business and labor to work together and do whatever it takes to protect good jobs and to create new ones.
As president of the RWDSU I can tell you that we are always ready to do our part to help employers compete and win.And, you know something? I’m convinced that a lot of employers are willing to roll up their sleeves and work with unions, too. But, at the end of the day, it doesn’t matter if we do our part if corporations like Wells Fargo refuse to do theirs.
That’s why our message to Wells Fargo is that it’s not too late -- there’s still time for you to choose to do the right thing. There's still time for you to save Meadowcraft.
Our message to Wells Fargo is that when your earnings are up 47 percent over a year ago there's no excuse for you not to save Meadowcraft!
Brothers and sisters, our message to Wells Fargo is that just as the American taxpayer gave you a second chance last year, it’s your responsibility to give Alabama workers a second chance this year!
Applebaum gets it exactly right. This isn't a partisan issue -- it's a moral issue that pits American workers against corporate profits. In this case, the profits of a corporation who got a $25 billion dollar bailout from the taxpayer and now won't lend that money out to a manufacturer. Meadowcraft isn't looking for a handout, they just need a line of credit.
Everyone tells us the economy is bad and credit is tight, but the economic crisis is personal for thirteen hundred people in Central Alabama. Plantation Patterns, a subsidiary of Meadowcraft, Inc. with plants in Wadley and Selma has been in bankruptcy since March 20 and may permanently close their doors on Friday. In Wadley, the company employs about 500 people making wrought iron furniture in a town with a population of less than 650. There is no other industry in town and Mayor Jim Dabbs says the loss of Meadowcraft jobs would devastate Wadley.
"Other than Meadowcraft, we have a couple of restaurants, gas stations and Southern Union Community College."
Making matters even worse, Meadowcraft owes the city of Wadley around $168,000 in unpaid utility bills. In addition to the Wadley plant, Meadowcraft also employs approximately 800 people at a plant in Selma, Alabama where they make soft goods such as cushions and umbrellas. Over 20% of people in Randolph County (where Wadley is located) live below the poverty level. For Dallas County (home to Selma) the figure is 30%.
Meadowcraft's problem isn't slow sales. Nope. The company has orders for furniture. What they lack is cash. Unfortunately, Jerry Camp, former president, and Larry Maynor, chief financial officer, were dismissed last March in the wake of "accounting irregularities," leaving the company with unpaid bills and a shortage of cash. As in, struggling to meet payroll and unable to pay creditors -- some of whom forced Meadowcraft into involuntary bankruptcy.
Meadowcraft has orders. They have equipment. They have workers. There's no question this is a viable business. The problem is they can't get credit to continue operating until the current management can purchase the business.
And who can't they get credit from? Wells Fargo/Wachovia -- who accepted $25 billion in federal Troubled Asset Relief Program (TARP) money just a few months ago. I don't know how much Meadowcraft needs, but I'll bet Wells Fargo Chairman's 2007 compensation of $22,874,952 would make a healthy dent in it.
I heard about the plight of Wadley from Democratic congressional candidate Josh Segall, who also told me there will be a Rally to Save Meadowcraft Jobs Thursday morning at 9 am in Roanoke. If anyone is in the neighborhood with a camera, please send pictures. Details of the rally are at the end of this post.
For those of you who think we should refuse federal stimulus money or that there should have been no stimulus, I have two words: Great Depression, or possibly Greater Depression. Don't feel you should believe me, but do go read Deficits saved the world by Paul Krugman, a guy who won a Nobel Prize for economics. He begins with a quote from Jan Hatzius of Goldman Sachs:
The private sector financial balance—defined as the difference between private saving and private investment, or equivalently between private income and private spending—has risen from -3.6% of GDP in the 2006Q3 to +5.6% in 2009Q1. This 8.2% of GDP adjustment is already by far the biggest in postwar history and is in fact bigger than the increase seen in the early 1930s.
That’s an interesting way to think about what has happened — and it also suggests a startling conclusion: namely, government deficits, mainly the result of automatic stabilizers rather than discretionary policy, are the only thing that has saved us from a second Great Depression.
It's a short piece, written so that even non-economists can follow along, and well worth the time to read. There's even a picture.
... in order to work, capitalism requires that those who lose, lose. Fundamentally the last 9 years didn't happen, in economic terms. The banks, on aggregate, made no money. The economy, on aggregate, added no jobs (they've all been wiped out and by the end of this most of the gains of the 90's will be gone too.) When you screw up that badly, the discipline of markets requires that you lose everything.
...
If you're big enough to set prices, you're too big to live, or at least to live free.
Yeah, if you're so big your failure will throw the economy into a Great Depression, you know someone will bail you out when push comes to shove. I'm going to suggest a new term today:
Corporatist: Capitalist when the markets are good; socialist when the markets are bad. Or "I keep all the profits, the taxpayers eat all the losses."
This is a bad situation. None of us like the government bailouts or enlarging the national debt (esp. not on the heels of the George W. Bush Memorial Spending Spree) but the alternative is even worse. So, the government is, and has been, spending to keep a bad situation from tipping over into meltdown. But we don't want to end up in this situation again. Let's fix it.
Smarter regulation is the solution - No, scratch that. We've had smart people making regulations all along, too often those smart regulations have been tailored to benefit the very entities they are supposed to be regulating, with little regard for the public good.
Smart regulation on behalf of the public good is the solution.
Our senior Senator, Richard Shelby, attempting to rewrite history:
Hat tip to SusanG who says Obama must have hopped in a time machine to accomplish this astounding feat. I suspect our senior Sen. Shelby just had a senior moment -- or maybe his talking points slipped.
Definitely the Alabama Senator we have, not the one we wish we had.
I have been watching this website/blog for some time, if only for the ability to hear both sides of the arguement on any issue to become a reasoned and informed voice. President Obama has done things that the persons on this blog have celebrated and that I sometimes agree with and sometimes don't. Well, The President has announced to the world that the US Government is out of money. In an interview with C-SPAN host Steve Scully. The following question and answer were given
SCULLY: You know the numbers, $1.7 trillion debt, a national deficit of $11 trillion. At what point do we run out of money?
OBAMA: Well, we are out of money now. We are operating in deep deficits, not caused by any decisions we've made on health care so far. This is a consequence of the crisis that we've seen and in fact our failure to make some good decisions on health care over the last several decades.
The President was also asked if he was at all intrested in being on the Supreme Court.
SCULLY: William Howard Taft served on the court after his presidency, would you have any interest in being on the Supreme Court?
OBAMA: You know, I am not sure that I could get through Senate confirmation...
The President of the United States doesn't think he would make it through the confirmation process to be a Supreme Court Justice, but he is perfectly qualified to be President of the United States?
I am sorry, I have not bashed the President in any way in order to give himself an opporunity to prove that he was worthy of the job and could lead us out of an economic mess the likes of which none of us have seen . I have twin boys that will be 3 on Veterans Day in November. I need my President to lead and make good decisions with my tax dollars. Not announce to China, the largest holder of our debt, that we are out of money.
The link for the text of where I got this is
http://www.drudgereport.com/flashocs.htm
The text is this..that link sometimes does not last long
In a sobering holiday interview with C-SPAN, President Obama boldly told Americans: "We are out of money."
C-SPAN host Steve Scully broke from a meek Washington press corps with probing questions for the new president.
SCULLY: You know the numbers, $1.7 trillion debt, a national deficit of $11 trillion. At what point do we run out of money?
OBAMA: Well, we are out of money now. We are operating in deep deficits, not caused by any decisions we've made on health care so far. This is a consequence of the crisis that we've seen and in fact our failure to make some good decisions on health care over the last several decades.
So we've got a short-term problem, which is we had to spend a lot of money to salvage our financial system, we had to deal with the auto companies, a huge recession which drains tax revenue at the same time it's putting more pressure on governments to provide unemployment insurance or make sure that food stamps are available for people who have been laid off.
So we have a short-term problem and we also have a long-term problem. The short-term problem is dwarfed by the long-term problem. And the long-term problem is Medicaid and Medicare. If we don't reduce long-term health care inflation substantially, we can't get control of the deficit.
So, one option is just to do nothing. We say, well, it's too expensive for us to make some short-term investments in health care. We can't afford it. We've got this big deficit. Let's just keep the health care system that we've got now.
Along that trajectory, we will see health care cost as an overall share of our federal spending grow and grow and grow and grow until essentially it consumes everything...
SCULLY: When you see GM though as “Government Motors,” you're reaction?
OBAMA: Well, you know – look we are trying to help an auto industry that is going through a combination of bad decision making over many years and an unprecedented crisis or at least a crisis we haven't seen since the 1930's. And you know the economy is going to bounce back and we want to get out of the business of helping auto companies as quickly as we can. I have got more enough to do without that. In the same way that I want to get out of the business of helping banks, but we have to make some strategic decisions about strategic industries...
SCULLY: States like California in desperate financial situation, will you be forced to bail out the states?
OBAMA: No. I think that what you're seeing in states is that anytime you got a severe recession like this, as I said before, their demands on services are higher. So, they are sending more money out. At the same time, they're bringing less tax revenue in. And that's a painful adjustment, what we're going end up seeing is lot of states making very difficult choices there...
SCULLY: William Howard Taft served on the court after his presidency, would you have any interest in being on the Supreme Court?
OBAMA: You know, I am not sure that I could get through Senate confirmation...
So there’s a lot of conversation out there about car dealerships being told they won’t be selling cars for Chrysler and GM any more.
The idea, we are told, is to save the auto manufacturers money by reducing the number of dealerships with whom they do business.
I don’t really know that much about the car business; and I really didn’t understand where these cost savings would come from, but I was able to have a conversation with the one person I do know who actually could offer some useful insight.
Follow along, Gentle Reader, and you’ll get a bit of an education at a time when we all need to know a bit more about these companies we suddenly seem to own…and about the closure of thousands of local businesses that will make the news about our bad job market worse.
The House on Thursday overwhelmingly approved a bill to tighten regulation of the mortgage industry, as part of an effort by Congress to eliminate the aggressive marketing tactics and predatory lending practices that contributed to the housing collapse and the steep economic downturn.
The House vote was 300 to 114, with 60 Republicans joining the Democratic majority in support of the measure, while just three Democrats joined 111 Republicans in opposition.
How did the Alabama delegation vote on HR 1728? Mike Rogers (R, AL-03), Parker Griffith (D, AL-05) and Artur Davis (D, AL-07) voted in favor. All the others, including Democrat Bobby Bright, did that PARTY OF NO thing they're becoming famous for.
Davis said the bill, “... if it had already been law, would have prevented some of the reckless, predatory mortgage practices that contributed to our current recession. The successful passage of this legislation will help restore trust and confidence in our mortgage industry. I hope the Senate will do the right thing and pass this bill.”
Parker Griffith said “This legislation responds to the subprime mortgage crisis by instituting much needed reforms that prevent bad loans from being issued in the first place. It ensures that the mortgage industry follows the rules, holds creditors accountable and implements stronger consumer protections. I am committed to working everyday on measures like this that help rebuild our economy, protect American homeowners, and change the way Washington works.”
Listen to Rep. Barney Frank taking Republicans to task on this subject. I believe the "good friend from Alabama" he refers to is Spencer Bachus (R, AL-06).
After the mortgage meltdown we've gone through it should be obvious to everyone that lending reform is absolutely required.
"On balance we support it, and we think it's important to have some commonsense rules for mortgage lending," said Julia Gordon, senior policy counsel at consumer advocacy group Center for Responsible Lending. "There are many protections in the bill that are crucial to strong responsible lending. Now that we have had the biggest mortgage crisis since the Depression, it's the time for Congress to move."
Major provisions in the legislation would ensure that consumers have a reasonable ability to repay mortgages; prohibit compensation for steering consumers into overly pricey or risky loans; and require new federal rules to direct creditors to retain an interest in the credit risk of certain loans.
It's a simple idea that can make a difference to American communities: Economic recovery money from American taxpayers should be spent in such a way to create jobs in America whenever possible. Getting local governments on board is part of the 
Everyone tells us the economy is bad and credit is tight, but the economic crisis is personal for 
