Five in the morning
1) Obama's jobs plan will target the long-term unemployed, reports Laura Meckler: "President Barack Obama's jobs package, to be unveiled next month, is likely to target the long-term unemployed, some 6.2 million Americans who have been out of work for six months or more, according to people familiar with the matter. The White House is particularly interested in a Georgia program that allows jobless workers receiving unemployment insurance to train for jobs at participating businesses, at no cost to the employer. The president is likely to include a version of this program in his jobs package, two of these people said. Mr. Obama's package also is expected to include a more ambitious plan for infrastructure spending and tax incentives for employers to spur hiring...Under the Georgia Works program, workers continue to collect unemployment benefits, plus a small stipend to cover transportation and other expenses. After eight weeks of training, the company may hire the person, or not. It can amount to a free tryout."
2) The White House and Congressional Democrats are dialing back their goals on transportation, reports Josh Mitchell: "The White House and congressional Democrats are working on a plan to jump-start passage of a stalled highway bill as the administration reworks part of its strategy for responding to high unemployment. President Barack Obama recently shifted from calling for a national infrastructure bank that would finance transportation projects and create jobs to saying Congress should pass a bread-and-butter road-construction bill that would rely mostly on existing programs that could get projects under way faster...Senate Democrats are lining up support from Republican colleagues, the U.S. Chamber of Commerce, other business groups and labor unions to pass a two-year, $109 billion bill that would maintain existing funding levels. The plan is likely to run into opposition elsewhere in Congress, however. House Republicans are pushing a six-year, $230 billion bill."
3) A survey of economists shows a split on the best way to speed up the recovery, reports Michael Crittenden: "Business economists are split on whether more austerity or more stimulus is the best path forward for U.S. fiscal policy, according to a new survey, highlighting the dilemma facing policy makers eager to shore up the nation's economy and long-term fiscal position. The National Association for Business Economics said roughly 49% of the economists surveyed in late July and early August favor a more restrictive fiscal path forward over the next two years, while 37% chose the other direction, supporting more efforts to stimulate the economy through fiscal measures...The split--51% of those surveyed would prefer the status quo or more stimulus--underscores the challenge facing the White House and Congress as they gear up for another bruising round of legislative fights over the future size and scope of the U.S. government."
4) Government spending helped fuel Rick Perry's "Texas miracle", writes Michael Fletcher: "Texas Gov. Rick Perry has leapfrogged to the top tier of Republican presidential candidates largely on the strength of one compelling fact: During more than a decade as governor, his state created more than 1 million jobs, while the nation as a whole lost 1.4 million jobs. Perry says the “Texas miracle” rests on conservative pillars that he would bring to the White House: minimal regulation and government, low taxes and a determination to limit the reach of Uncle Sam. What he does not say is that much of that job growth has come because of government, not in spite of it. With a young and fast-growing population, a large and expanding military presence and an influx of federal stimulus money, the number of government jobs in Texas has grown at more than double the rate of private-sector employment during Perry’s tenure."
5) The evidence for the Rogoff-Reinhardt theory of the crisis is mounting, reports Peter Whoriskey: "For a coterie of economists who have studied decades of downturns, the recovery from the most recent recession is likely to be one of the most difficult and protracted in U.S. history, simply because of the recession’s unusual nature. If it follows the patterns of other similar crises, the recovery of the U.S. economy could take years, according to influential studies by economists Ken Rogoff and Carmen and Vincent Reinhart. Their research, which is well known at both the White House and the Federal Reserve, likens the economic situation in the United States today to past crises in countries around the world. It finds, for example, that in those countries unemployment rates and housing prices did not return to pre-recession levels for a decade or more after the crisis."
Reunion interlude: Iggy and the Stooges play "Search and Destroy" live last year.
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Still to come: A duo of economist's theory of the crisis is looking more plausible by the day; Medicare administrators are considering competitive pricing that could save billions; lobbyists will have to get creative about the supercommittee; the administration is allowing more offshore drilling in the Gulf of Mexico; and the world's shortest escalator.
Ben Bernanke is going to Jackson Hole, Wyoming to defend his record, reports Jon Hilsenrath: "In 'The Godfather: Part III,' a graying Al Pacino, in professorial sweater and reading glasses, laments his inability to escape underworld life: 'Just when I thought I was out, they pull me back in.' As Federal Reserve Chairman Ben Bernanke prepares to deliver a highly anticipated speech in Jackson Hole, Wyo., on Friday, perhaps he can sympathize...The economy is his dark, inescapable underworld. Jackson Hole is where he finds himself every turbulent August, plotting next steps...At Jackson Hole last August, Mr. Bernanke heralded a second round of bond-buying aimed at propelling the economy known as quantitative easing, or QE2. The Fed's recent declaration that it's prepared to take other measures to promote the recovery clearly opened the door to QE3. But don't expect the Fed chairman to rush through that door on Friday."
Big firms are secretive about where they're creating jobs, reports Jia Lynn Yang: "Some of the country’s best-known multinational corporations closely guard a number they don’t want anyone to know: the breakdown between their jobs here and abroad. So secretive are these companies that they hand the figure over to government statisticians on the condition that officials will release only an aggregate number. The latest data show that multinationals cut 2.9 million jobs in the United States and added 2.4 million overseas between 2000 and 2009. Some of the same companies that do not report their jobs breakdown, including Apple and Pfizer, are pushing lawmakers to cut their tax bills in the name of job creation in the United States. But experts say that without details on which companies are contributing to job growth and which are not, policymakers risk flying blind as they try to jump-start the hiring of American workers."
Taxing capital and regular income the same makes sense, writes James Stewart: "Proponents of lower -- even zero -- capital gains rates have some academic research and statistics to support their claims...The evidence 'is murky, at best,' said Leonard E. Burman, the Daniel Patrick Moynihan professor at the Maxwell School of Syracuse University. Mr. Burman is also a former deputy assistant Treasury secretary for tax policy in the Clinton administration and author of “The Labyrinth of Capital Gains Tax Policy.' 'It’s not the panacea for economic growth that advocates make it out to be,' he said...Whatever benefits lower capital gains rates might generate, they indisputably complicate the tax code and have spawned a multibillion-dollar industry in tax avoidance...But the biggest reason for equalizing capital gains rates may be that it would generate a vast amount of additional revenue for the Treasury."
Patents are stifling competition, not promoting it, writes Steven Pearlstein: "Silly me. I thought the purpose of patents was to spur innovation by giving people who invent something the exclusive use of their innovation for a limited time. There’s still some of that. But out in Silicon Valley, patents have become the competitive weapon of choice, used by high-tech giants to bludgeon rivals and crush upstarts. It turns out that the more patents you have, the more likely it is that you can extort exorbitant royalties from people who might have easily come up with the same idea or the same feature that you did but never thought to patent it. And the more patents you have, the more your competitor wants so he can retaliate with a patent suit of his own, claiming that it was you who stole the ideas from him."
The US has a productivity problem, writes Tyler Cowen: "The overlooked piece of news came this month from the Bureau of Labor Statistics. In the second quarter this year, it reported, nonfarm business labor productivity fell by 0.3 percent, the second quarterly drop in a row. And it turns out that it rose only 0.8 percent from the second quarter of 2010. Over the last year, hourly wages have risen more quickly than productivity. These factors have helped to keep the labor market sluggish and have thwarted a potential recovery...It is increasingly clear that many of our current economic problems predate the financial crisis, even if the crisis accelerated them or brought them into clearer view. A recent study by E. J. Reedy and Robert E. Litan, both researchers at the Kaufmann Foundation, found that sluggish job creation was a long-term trend. For instance, job creation from start-ups has fallen every decade since the 1980s, raising the specter of an America with an innovation shortfall."
Obama needs to go big, writes EJ Dionne: "Going big means immediate action to boost the economy, even though this will increase the short-term deficit. His proposals to continue the payroll tax cut, extend unemployment insurance and enact patent reform are good, but they are not enough. The federal government needs to come to the aid of state and local governments again; the budget cuts they are being forced to make are precisely what the economy does not need now...Obama should not be shy about urging eventual tax increases, particularly on the wealthy...Any plausible plan should include at least $2 trillion to $2.5 trillion in new revenue over a decade...A carbon tax, partly offset by tax cuts or rebates for middle-income and poorer taxpayers, could provide additional revenue. And we need to do still more to contain health-care costs without hurting those who can’t afford insurance and without voucherizing Medicare."
We need less regulation, not more spending, to create jobs, writes Eric Cantor: "The Obama administration’s anti-business, hyper-regulatory, pro-tax agenda has fueled economic uncertainty and sent the message from the administration that 'we want to make it harder to create jobs.' There is no other conclusion for policies such as the new Environmental Protection Agency regulations...This fall the Republican Party will pursue a legislative agenda that boosts economic growth through reducing the regulatory and tax burden. We will make sure that Washington policies are less restrictive to businesses small and large. Our goals include repealing the '3 percent withholding rule,' which serves as an effective tax increase on those who do business with the government, and overturning the EPA’s proposed regulations that inhibit jobs in areas as varied as cement and farm dust."
The Texas miracle is real, writes Ross Douthat: "Perry can credibly claim that his state delivers on conservative governance’s two most important promises: a private sector that creates jobs at a remarkable clip, and a public sector that seems to get more for the taxpayers’ money than many more profligate state governments. The question is whether Perry himself deserves any of the credit. Here his critics become much more persuasive. When Perry became governor, taxes were already low, regulations were light, and test scores were on their way up. He didn’t create the zoning rules that keep Texas real estate affordable, or the strict lending requirements that minimized the state’s housing bubble. Over all, the Texas model looks like something he inherited rather than a system he built."
Adorable animals with good hygiene interlude: Hedgehog bath time.
Medicare could save billions through competitive pricing, reports Sam Baker: "Medicare is dramatically expanding a program that it says will save billion of dollars and serve as a model for other cost-cutting efforts. The Centers for Medicare and Medicaid Services (CMS) on Friday announced the second round of a program that uses competitive bidding to set prices for certain medical products. Medicare now uses competitive bidding in nine cities and will expand to 91 areas, according to the Friday announcement. In its first six months, the nine-city competitive bidding program has saved roughly $130 million, CMS officials said. The agency expects to save $28 billion over the next 10 years, roughly a third of which would be savings to patients...The competitive bidding program is limited to durable medical equipment -- such products as wheelchairs, oxygen supplies and hospital beds."
Clarence and Virginia Thomas are working together to kill health care reform, reports Jeffrey Toobin: "In several of the most important areas of constitutional law, Thomas has emerged as an intellectual leader of the Supreme Court. Since the arrival of Chief Justice John G. Roberts, Jr., in 2005, and Justice Samuel A. Alito, Jr., in 2006, the Court has moved to the right when it comes to the free-speech rights of corporations, the rights of gun owners, and, potentially, the powers of the federal government; in each of these areas, the majority has followed where Thomas has been leading for a decade or more. Rarely has a Supreme Court Justice enjoyed such broad or significant vindication...Ginni Thomas’s political activities prompted seventy-four Democrats in the House to write Justice Thomas in February and demand that he recuse himself from any litigation on health-care reform because of an 'appearance of a conflict of interest.'"
Lobbyists are getting creative about persuading the supercommittee, reports Dave Levinthal: "Lobby shops and their clients are fast realizing that a full frontal assault on Congress’s budget-slashing supercommittee may not be a fruitful strategy -- particularly as some committee members and senior congressional staffers suggest that K Street won’t be terribly welcome at their negotiating table. K Street's worry is that it won't be business as usual in Washington, where lobbyists famously enjoy open access to lawmakers. Such a scenario may force lobbyists to use indirect techniques to impress clients’ messages upon supercommittee members and their yet-to-be-solidified staffers. 'They’re going to have a little bit of a firewall -- that’s exactly what’s going to happen,' said Dave Wenhold of Miller/Wenhold Capitol Strategies and a former American League of Lobbyists president."
The Social Security disability program is still under strain, reports Stephen Ohlemacher: "Laid-off workers and aging baby boomers are flooding Social Security’s disability program with benefit claims, pushing the financially strapped system toward the brink of insolvency. Applications are up nearly 50 percent over a decade ago as people with disabilities lose their jobs -- in an economy that has shed nearly 7 million jobs -- and can’t find new ones. The stampede for benefits is adding to a growing backlog of applicants -- many wait two years or more before their cases are resolved -- and worsening the financial problems of a program that’s been running in the red for years. New congressional estimates say the trust fund that supports Social Security disability will run out of money by 2017, leaving the program unable to pay full benefits, unless Congress acts."
The Verizon strike is over, reports Brady Dennis: "Tens of thousands of Verizon Communications employees will return to work late Monday after a two-week strike that sparked a public spat between unions and the company, and led to numerous complaints from customers. Union leaders announced Saturday that 45,000 striking workers would end a walkout that began Aug. 7, even though there has been no agreement on the terms for a new contract. The Communications Workers of America and the International Brotherhood of Electrical Workers ended the strike, the leaders said, after Verizon agreed to undertake meaningful negotiations on key issues such as health-care costs, job-security provisions, pension contributions and sick pay. The company also agreed to leave in place the terms of the expired contract until a new one is in place."
We need to save the Statistical Abstract of the United States, writes Robert Samuelson: "If you want to know something about America, there are few better places to start than the 'Statistical Abstract of the United States.' Published annually by the Census Bureau, the Stat Abstract assembles about 1,400 tables describing our national condition...The Stat Abstract is headed for the chopping block. The 2012 edition, scheduled for publication later this year, will be the last, unless someone saves it...It can be argued that much of what’s in the Stat Abstract is online somewhere. True -- but irrelevant. Many government and private databases are hard to access and search, even if you know what you want...Without the Stat Abstract, statistics will become more hidden, and our collective knowledge will suffer."
Questionable engineering interlude: The world's shortest escalator.
The administration is selling offshore drilling leases in the Gulf again, reports Steven Mufson: "The Interior Department announced Friday that it would hold the first oil and gas lease sale for the Gulf of Mexico since the Deepwater Horizon explosion and spill last year. The lease sale to be held Dec. 14 will include all unleased areas in the western gulf, covering 20.6 million acres off the Texas shore in water from 16 feet to more than 10,975 feet deep. The Obama administration said it would raise the minimum bid for deepwater leases to $100 an acre from the current $37.50 an acre. The current minimum has not changed since 1999, when oil prices ranged from less than $9 a barrel to $24. The lease sale is part of a gradual return by the Obama administration to policies it was pursuing before BP’s Macondo well blew out and spilled nearly 5 million barrels of oil in the Gulf of Mexico."
Regulators are moving on stricter nuclear rules, reports Ryan Tracy: "The Nuclear Regulatory Commission moved closer Friday to implementing changes spurred by Japan's Fukushima crisis, directing staffers to determine an appropriate course of action within weeks. The order resolved a disagreement between the five commission members about how to handle the recommendations of a task force that analyzed U.S. nuclear safety in light of a triple meltdown at Japan's Fukushima Daiichi plant earlier this year. It put off a decision, though, on the task force's most sweeping recommendation. The commission ordered its staff to decide by Sept. 9 whether the nuclear agency should require immediate action from U.S. nuclear operators. The staff will review 11 safety recommendations from the task force that range from increased backup-power capacity to renovations to reactor venting systems."
Closing credits: Wonkbook is compiled and produced with help from Dylan Matthews and Jessica Sabbah.