Tag Archives: Economics

Buy Your Canned Goods Now!

Associated Press:

Wholesale prices jumped last month by the most in nearly two years due to higher energy costs and the steepest rise in food prices in 36 years. Excluding those volatile categories, inflation was tame.

The Labor Department said Wednesday that the Producer Price Index rose a seasonally adjusted 1.6 percent in February — double the 0.8 percent rise in the previous month. Outside of food and energy costs, the core index ticked up 0.2 percent, less than January’s 0.5 percent rise.

Food prices soared 3.9 percent last month, the biggest gain since November 1974. Most of that increase was due to a sharp rise in vegetable costs, which increased nearly 50 percent. That was the most in almost a year. Meat and dairy products also rose.

Scott Johnson at Powerline:

I believe that food inflation is in the midst of its greatest run-up (by one measurement of a basket of basic foodstuffs) since 1974. The lead story on Drudge reports on the most recent data.

Under the rubric of QE2, the Federal Reserve Bank is engaged in the venture of increasing the money supply with the goal of moderately increasing inflation. I fear that this venture is misguided and destructive. I believe it will result in inflation exceeding the Fed’s goal, if it has not done so already, and that the Fed will apply the brakes well after the damage has been done, as is its style.

What sayeth the Fed?

Ed Morrissey:

Scott cleverly titles his post, “Let them eat iPads.”  I’m not sure I’d draw a line between QE2 and what has happened in food and oil prices, at least not as a primary factor.  The effect of QE2 will be to weaken the dollar, which will hike the cost of imports, to be sure, and that may account for a little of the large price jump.  If it was the main factor — if the dollar had been weakened to that extent — then prices would be up across the board, especially on imports.  At least according to today’s report from the BEA on the trade deficit, that doesn’t appear to be the case.

The real source of this problem is America’s continuing refusal to exploit its own energy sources.  We remain too dependent on imports for energy while deliberately sidelining at least hundreds of thousands of potential high-paying jobs by refusing to extract our own oil and natural gas.  When the unstable countries that produce oil go through political paroxysms, it spooks investors and sends commodity prices soaring on the increased risk to distribution.  Those price increases mean higher transportation costs, which impacts all goods and services that require transport to get to consumers.  It’s a multiplier factor that we have seen a number of times over the last four decades, and which our political class continues to pretend doesn’t exist.

Ron Scherer at Christian Science Monitor:

In the year ahead, expect to see the largest food price increases in the protein group: chicken, beef, and pork, as well as dairy items. One key reason: The price of corn, used as feed by ranchers and farmers, has doubled in the past year. But vegetarians won’t get off easy: Produce and orange juice are rising sharply, as well.

Higher food prices have wide economic ramifications and are being watched closely by the Federal Reserve. From a business standpoint, food producers – from agricultural giants to the corner pizza parlor – must raise prices or watch their profit margins evaporate. Many middle-class households are financially stretched to the limit, so any extra expense for such basics as milk or bread makes their life even tougher. Organizations that help the poor with food, moreover, find they can’t help as many people because their dollar doesn’t go as far.

“The more you have to spend on a loaf of bread and a pound of ground beef, the less you have to spend on everything else,” says Mark Zandi, chief economist at Moody’s Analytics in West Chester, Pa. “It’s like a tax increase, although it’s not quite as bad as rising oil prices, since at least the revenues go to US farmers, truckers, and ag-equipment manufacturers.”

The US Department of Agriculture expects the average price of food in 2011 to be 4 percent higher than last year. Some private forecasters say that, by December, prices could be as much as 6 percent higher than in December 2010.

“If food inflation comes in at 6 percent, it would be the most dramatic increase since 1982,” says William Lapp, a consumer foods economist with his own firm, Advanced Economic Solutions in Omaha, Neb. “We had a 10-year period, from 1972 to 1981, when annual food prices rose sharply – including a two-year period when increases averaged 8.7 percent.”

Mark Huffman at Consumer Affairs:

When you factor in crude foodstuff and feedstuff to food costs to producers, food prices rose at the fastest rate since 1974, when the U.S. economy was in the grips of what was known as “stagflation.” Prices were rising rapidly despite little or no growth in the economy.

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Filed under Economics, Food

Wikileaks 2.0

http://bankofamericasuck.com/

Adrian Chen at Gawker:

A member of the activist collective Anonymous is claiming to be have emails and documents which prove “fraud” was committed by Bank of America employees, and the group says it’ll release them on Monday. The member, who goes by the Twitter handle OperationLeakS, has already posted an internal email from the formerly Bank of America-owned Balboa Insurance Company

The email is between Balboa Insurance vice president Peggy Johnson and other Balboa employees. (Click right to enlarge.) As far as we can tell, it doesn’t show anything suspicious, but was posted by OperationLeaks as a teaser. He also posted emails he claims are from the disgruntled employee who sent him the material. In one, the employee says he can “send you a copy of the certified letter sent to me by an AVP of BofA’s [HR department] telling me I am banned from stepping foot on BofA property or contacting their employee ever again.”

OperationLeaks, which runs the anti-Bank of America site BankofAmericasuck.com, says the employee contacted the group to blow the whistle on Bank of America’s shady business practices. “I seen some of the emails… I can tell you Grade A Fraud in its purest form…” read one tweet. “He Just told me he have GMAC emails showing BoA order to mix loan numbers to not match it’s Documents.. to foreclose on Americans.. Shame.”

An Anonymous insider told us he believes the leak is real. “From what I know and have been told, it’s legit,” he said. “Should be a round of emails, then some files, possible some more emails to follow that.” The documents should be released Monday on Anonleaks.ch, the same site where Anonymous posted thousands of internal emails from hacked security company HBGary last month. That leak exposed a legally-questionable plot to attack Wikileaks and ultimately led to the resignation of HBGary CEO Aaron Barr.

Katya Wachtel at Clusterstock:

Anonymous said late Sunday evening, however, “this is part 1 of the Emails.” So perhaps more incriminating correspondence is to come. And to be honest, these messages could be incredibly damaging, but we’re not mortgage specialists and don’t know if this is or isn’t common in the field. The beauty is, you can see and decide for yourself at bankofamericasuck.com.

But for those who want a simple explanation, here’s a summary of the content.

The Source

The ex-Balboa employee tells Anonymous that what he/she sends will be enough to,

crack [BofA’s] armor, and put a bad light on a $700 mil cash deal they need to pay back the government while ruining their already strained relationship with GMAC, one of their largest clients. Trust me… it’ll piss them off plenty.

The source then sends over a paystub, an unemployment form, a letter from HR upon dismissal and his/her last paystub and an ID badge.

He/she also describes his/herself:

My name is (Anonymous). For the last 7 years, I worked in the Insurance/Mortgage industry for a company called Balboa Insurance. Many of you do not know who Balboa Insurance Group is, but if you’ve ever had a loan for an automobile, farm equipment, mobile home, or residential or commercial property, we knew you. In fact, we probably charged you money…a lot of money…for insurance you didn’t even need.

Balboa Insurance Group, and it’s largest competitor, the market leader Assurant, is in the business of insurance tracking and Force Placed Insurance…  What this means is that when you sign your name on the dotted line for your loan, the lienholder has certain insurance requirements that must be met for the life of the lien. Your lender (including, amongst others, GMAC… IndyMac… HSBC… Wells Fargo/Wachovia… Bank of America) then outsources the tracking of your loan with them to a company like Balboa Insurance.

The Emails

Next comes the emails that are supposed to be so damaging. The set of emails just released shows conversational exchanges between Balboa employees.

The following codes pertain to the emails, so use as reference:

  1. SOR = System of Record
  2. Rembrandt/Tracksource = Insurance tracking systems
  3. DTN = Document Tracking Number. A number assigned to all incoming/outgoing documents (letters, insurance documents, etc)

The first email asks for a group of GMAC DTN’s to have their “images removed from Tracksource/Rembrandt.” The relevant DTNs are included in the email — there’s between 50-100 of them.

In reply, a Balboa employee says that the DTN’s cannot be removed from the Rembrandt, but that the loan numbers can be removed so “the documents will not show as matched to those loans.” But she adds that she needs upper management approval before she moves forward, since it’s an unusual request.

Then it gets approved. And then, one of the Balboa employees voices their concern. He says,

“I’m just a little concerned about the impact this has on the department and the company. Why are we removing all record of this error? We have told Denise Cahen, and there is always going to be the paper trail when one of these sent documents come back. this to me seems to be a huge red flag for the auditors… when the auditor sees the erroneous letter but no SOR trail or scanned doc on the corrected letter… What am I missing? This just doesn’t seem right to me.

We suspect this is the type of email that Anonymous believes shows BofA fraud:

leak one

Image: Anonymous

Click here to see why these emails prove nothing interesting, and to see what what Bank of America says about the emails >

Chris V. Nicholson at Dealbook at NYT:

A Bank of America spokesman told Reuters on Sunday that the documents had been stolen by a former Balboa employee, and were not tied to foreclosures. “We are confident that his extravagant assertions are untrue,” the spokesman said.

The e-mails dating from November 2010 concern correspondence among Balboa employees in which they discuss taking steps to alter the record about certain documents “that went out in error.” The documents were related to loans by GMAC, a Bank of America client, according to the e-mails.

“The following GMAC DTN’s need to have the images removed from Tracksource/Rembrandt,” an operations team manager at Balboa wrote. DTN refers to document tracking number, and Tracksource/Rembrandt is an insurance tracking system.

The response he receives: “I have spoken to my developer and she stated that we cannot remove the DTNs from Rembrandt, but she can remove the loan numbers, so the documents will not show as matched to those loans.”

According to the e-mails, approval was given to remove the loan numbers from the documents.

A member of Anonymous told DealBook on Monday that the purpose of his Web site was to bring attention to the wrongdoing of banks. “The way the system is, it’s made to cheat the average person,” he said.

He had set up a Web site to post bank data that WikiLeaks has said it would release, and was subsequently contacted this month by the former Balboa employee. It has been speculated that the documents, which have yet to be released, would focus on Bank of America. The spokesman for Anonymous said he had no direct ties to WikiLeaks, which is run by Julian Assange.

Nitasha Tiku at New York Magazine:

WikiLeaks’ founder, Julian Assange, has threatened to leak damning documents on Bank of America since 2009. And Anonymous has backed WikiLeaks’ mission as far as the free flow of information. But these e-mails date from November 2010. Plus, they don’t exactly amount to a smoking gun. Whether or not the e-mails prove real, it’s clear Bank of America should have expanded its negative-domain-name shopping spree beyond BrianMoynihanSucks.com.

Naked Capitalism:

The charge made in this Anonymous release (via BankofAmericaSuck) is that Bank of America, through its wholly-owned subsidiary Balboa Insurance and the help of cooperating servicers, engaged in a mortgage borrower abuse called “force placed insurance”. This is absolutely 100% not kosher. Famed subprime servicer miscreant Fairbanks in 2003 signed a consent decree with the FTC and HUD over abuses that included forced placed insurance. The industry is well aware that this sort of thing is not permissible. (Note Balboa is due to be sold to QBE of Australia; I see that the definitive agreement was entered into on February 3 but do not see a press release saying that the sale has closed)

While the focus of ire may be Bank of America, let me stress that this sort of insurance really amounts to a scheme to fatten servicer margins. If this leak is accurate, the servicers at a minimum cooperated. If they got kickbacks, um, commissions, they are culpable and thus liable.

As we have stated repeatedly, servicers lose tons of money on portfolios with a high level of delinquencies and defaults. The example of Fairbanks, a standalone servicer who subprime portfolio got in trouble in 2002, is that servicers who are losing money start abusing customers and investors to restore profits. Fairbanks charged customers for force placed insurance and as part of its consent decree, paid large fines and fired its CEO (who was also fined).

Regardless, this release lends credence a notion too obvious to borrowers yet the banks and its co-conspirators, meaning the regulators, have long denied, that mortgage servicing and foreclosures are rife with abuses and criminality. Here’s some background courtesy Barry Ritholtz:

When a homeowner fails to keep up their insurance premiums on a mortgaged residence, their loan servicer has the option/obligation to step in to buy a comparable insurance policy on the loan holder’s behalf, to ensure the mortgaged property remains fully insured….

Consider one case found by [American Banker’s Jeff] Horwitz. A homeowner’s $4,000 insurance policy, was paid by the loan servicer, Everbank via escrow. But Everbank purposely let that insurance policy lapse, and then replaced it with a different policy – one that cost more than $33,000. To add insult to injury, the insurer, a subsidiary of Assurant, paid Everbank a $7,100 kickback for giving it such a lucrative policy — and, writes Horwitz, “left the door open to further compensation” down the road.

That $33,000 policy — including the $7,100 kickback – is an enormous amount of money for any loan servicer to make on a single property. The average loan servicer makes just $51 per loan per year.

Here’s where things get interesting: That $33,000 insurance premium is ultimately paid by the investors who bought the loan.

And the worst of this is….the insurance is often reinsured by the bank/servicer, which basically means the insurance is completely phony. The servicer will never put in a claim to trigger payment. As Felix Salmon noted,

This is doubly evil: it not only means that investors are paying far too much money for the insurance, but it also means that, as both the servicer and the ultimate insurer of the property, JPMorgan Chase has every incentive not to pursue claims on the houses it services. Investors, of course, would love to recoup any losses from the insurer, but they can’t bring such a claim — only the servicer can do that.

Note there are variants of this scheme where insurance is charged to the borrower (I’ve been told of insurance being foisted on borrowers that amounts to unconsented-to default insurance, again with the bank as insurer; this has been anecdotal with insufficient documentation, but I’ve heard enough independent accounts to make me pretty certain it was real)

David Dayen at Firedoglake:

Just because something has a lot of anecdotal evidence behind it doesn’t necessarily mean the specific case is true. But the forced-place insurance scam has been part of other servicer lawsuits, so it definitely exists. Whether this set of emails shows that taking place is another matter. Apparently this is just the first Anonymous email dump, so there should be more on the way

Derek Thompson at The Atlantic

Parmy Olson at Forbes:

Yet however inconclusive the e-mails may be, the leak may have wider implications as Anonymous gradually proves itself a source of comeuppance for disgruntled employees with damning information about a company or institution. Once the domain of WikiLeaks, the arrest of key whistleblower Bradley Manning suggested the site founded by fellow incarcerate Julian Assange could not always protect its sources. “A lot depends on the impact of this week,” says Gabriella Coleman, a professor at NYU who is researching Anonymous, who added that “Anonymous could go in that [WikiLeaks] direction.”

Anonymous is not an institution like WikiLeaks. It is global, has no leader, no clear hierarchy and no identifiable spokespeople save for pseudo-representatives like Gregg Housh (administrator of whyweprotest.net) and Barrett Brown.

It has some ideals: Anonymous tends to defend free speach and fight internet censorship, as with the DDoS-ing of the web sites of MasterCard, Visa and PayPal after they nixed funding services to WikiLeaks, and the DDoS-ing of Tunisian government Web sites. It is also great at spectacle. The group’s hacking of software security firm HBGary Federal not only gained oodles of press attention, it inadvertently revealed the firm had been proposing a dirty tricks campaign with others against WikiLeaks to Bank of America’s lawyers.

That hack led, rather organically, to the establishment of AnonLeaks.ru, a Web site where the Anonymous hackers posted tens of thousands of HBGary e-mails in a handy web viewer. While it took just five supporters to hack HBGary, hundreds more poured through the e-mails to identify incriminating evidence, leading to more press reports on the incident.

Such is the nature of Anonymous–global, fluid, intelligent, impossible to pin down–that it is could become an increasingly popular go-to for people wishing to vent damaging information about an institution with questionable practices.

The collective already receives dozens of requests each month from the public to attack all manner of unsavoury subjects, from personal targets to the government of Libya, from Westboro Baptist Church to Facebook. It rarely responds to them–as one Anonymous member recently told me, “we’re not hit men.”

Yet for all its facets as both hot-tempered cyber vigilantes and enlighteners of truth, Anonymous is becoming increasingly approachable, as the latest emails between OperationLeakS and the former BoA employee show. Assuming this particular employee doesn’t end up languishing in jail like Manning, more people may now be inclined to follow suit.

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Filed under Economics, New Media, Technology, The Crisis

It Is Ezra Klein Week Here At Around The Sphere

Ezra Klein:

There’s lots of interesting stuff in Ed Glaeser’s new book, “The Triumph of the City.” One of Glaeser’s themes, for instance, is the apparent paradox of cities becoming more expensive and more crowded even as the cost of communicating over great distances has fallen dramatically. New York is a good example of this, but Silicon Valley is a better one

[…]

The overarching theme of Glaeser’s book is that cities make us smarter, more productive and more innovative. To put it plainly, they make us richer. And the evidence in favor of this point is very, very strong. But it would of course be political suicide for President Obama to say that part of winning the future is ending the raft of subsidies we devote to sustaining rural living. And the U.S. Senate is literally set up to ensure that such a policy never becomes politically plausible.

Klein again:

Yesterday afternoon, I got an e-mail from a “usda.gov” address. “Secretary Vilsack read your blog post ‘Why we still need cities’ over the weekend, and he has some thoughts and reflections, particularly about the importance of rural America,” it said. A call was set for a little later in the day. I think it’s safe to say Vilsack didn’t like the post. A lightly edited transcript of our discussion about rural America, subsidies and values follows.

Ezra Klein: Let’s talk about the post.

Tom Vilsack: I took it as a slam on rural America. Rural America is a unique and interesting place that I don’t think a lot of folks fully appreciate and understand. They don’t understand that that while it represents 16 percent of America’s population, 44 percent of the military comes from rural America. It’s the source of our food, fiber and feed, and 88 percent of our renewable water resources. One of every 12 jobs in the American economy is connected in some way to what happens in rural America. It’s one of the few parts of our economy that still has a trade surplus. And sometimes people don’t realize that 90 percent of the persistent poverty counties are located in rural America.

EK: Let me stop you there for a moment. Are 90 percent of the people in persistent poverty in rural America? Or just 90 percent of the counties?

TV: Well, I’m sure that more people live in cities who are below the poverty level. In terms of abject poverty and significant poverty, there’s a lot of it in rural America.

The other thing is that people don’t understand is how difficult farming is. There are really three different kinds of farmers. Of the 2.1 million people who counted as farmers, about 1.3 million of them live in a farmstead in rural America. They don’t really make any money from their operation. Then there are 600,000 people who, if you ask them what they do for a living, they’re farmers. They produce more than $10,000 but less than $250,000 in sales. Those folks are good people, they populate rural communities and support good schools and serve important functions. And those are the folks for whom I’m trying to figure out how to diversify income opportunities, help them spread out into renewable fuel sources. And then the balance of farmers, roughly 200,000 to 300,000, are commercial operations, and they do pretty well, particularly when commodity prices are high. But they have a tremendous amount of capital at risk. And they’re aging at a rapid rate, with 37 percent over 65. Who’s going to replace those folks?

EK: You keep saying that rural Americans are good and decent people, that they work hard and participate in their communities. But no one is questioning that. The issue is that people who live in cities are also good people. People who live in exurbs work hard and mow their lawns. So what does the character of rural America have to do with subsidies for rural America?

TV: It is an argument. There is a value system that’s important to support. If there’s not economic opportunity, we can’t utilize the resources of rural America. I think it’s a complicated discussion and it does start with the fact that these are good, hardworking people who feel underappreciated. When you spend 6 or 7 percent of your paycheck for groceries and people in other countries spend 20 percent, that’s partly because of these farmers.

More Klein here and here

Will Wilkinson at DiA at The Economist:

IN THIS chat with Ezra Klein, Tom Vilsack, the secretary of agriculture, offers a pandering defence of agricultural subsidies so thoroughly bereft of substance I began to fear that Mr Vilsack would be sucked into the vacuum of his mouth and disappear.When Mr Klein first raises the subject of subsidies for sugar and corn, Mr Vilsack admirably says, “I admit and acknowledge that over a period of time, those subsidies need to be phased out.” But not yet! Vilsack immediately thereafter scrambles to defend the injurious practice. Ethanol subsidies help to wean us off foreign fuels and dampen price volatility when there is no peace is the Middle East, Mr Vilsack contends. Anyway, he continues, undoing the economic dislocation created by decades of corporate welfare for the likes of ADM and Cargill will create economic dislocation. Neither of these points is entirely lacking in merit, but they at best argue for phasing out subsidies slowly starting now.

Mr Vilsack should have stopped here, since this is as strong as his case is ever going to be, but instead he goes on to argue that these subsidies sustain rural culture, which is a patriotic culture that honours and encourages vital military service:

[S]mall-town folks in rural America don’t feel appreciated. They feel they do a great service for America. They send their children to the military not just because it’s an opportunity, but because they have a value system from the farm: They have to give something back to the land that sustains them.

Mr Klein follows up sanely:

It sounds to me like the policy you’re suggesting here is to subsidize the military by subsidizing rural America. Why not just increase military pay? Do you believe that if there was a substantial shift in geography over the next 15 years, that we wouldn’t be able to furnish a military?

To which Mr Vilsack says:

I think we would have fewer people. There’s a value system there. Service is important for rural folks. Country is important, patriotism is important. And people grow up with that. I wish I could give you all the examples over the last two years as secretary of agriculture, where I hear people in rural America constantly being criticized, without any expression of appreciation for what they do do.

In the end, Mr Vilsack’s argument comes down to the notion that the people of rural America feel that they have lost social status, and that subsidies amount to a form of just compensation for this injury. I don’t think Mr Vilsack really believes that in the absence of welfare for farmers, the armed services would be hard-pressed to find young men and women willing to make war for the American state. He’s using willingness-to-volunteer as proof of superior patriotism, and superior patriotism is the one claim to status left to those who have no other.

Ryan Avent at Free Exchange at The Economist:

I’ll add a few comments. First, it may be that the economists who understand the economic virtues of city life aren’t doing a sufficiently good job explaining that it’s not the people in cities that contribute the extra economic punch; it’s the cities or, more exactly, the interactions between the people cities facilitate. It’s fine to love the peace of rural life. Just understand that the price of peace is isolation, which reduces productivity.

Second, the idea that economically virtuous actors deserve to be rewarded not simply with economic success but with subsidies is remarkably common in America (and elsewhere) and is not by any means a characteristic limited to rural people. I also find it strange how upset Mr Vilsack is by the fact that he “ha[s] a hard time finding journalists who will speak for them”. Agricultural interests are represented by some of the most effective lobbyists in the country, but their feelings are hurt by the fact that journalists aren’t saying how great they are? This reminds me of the argument that business leaders aren’t investing because they’re put off by the president’s populist rhetoric. When did people become so sensitive? When did hurt feelings become a sufficient justification for untold government subsidies?

Finally, what Mr Klein doesn’t mention is that rural voters are purchasing respect or dignity at the price of livelihoods in much poorer places. If Americans truly cared for the values of an urban life and truly wished to address rural poverty, they’d get rid of agricultural policies that primarily punish farmers in developing economies.

Andrew Sullivan

Arnold Kling:

Ezra Klein sounds like my clone when arguing with the Secretary of Agriculture.

James Joyner:

Essentially, Vilsack justifies subsiding farmers on the basis that rural America is the storehouse of our values, for which he has no evidence. And he’s befuddled when confronted with someone who doesn’t take his homilies as obvious facts.

Nobody argues that America’s farmers aren’t a vital part of our economy or denies that rural areas provide a disproportionate number of our soldiers. But the notion that country folks are somehow better people or even better Americans has no basis in reality.

Jonathan Chait at TNR:

Why is it so common to praise the character of rural America? Part of it is doubtless that rural life represents the past, and we think of the past as a simpler and more honest time. But surely another element is simply that rural America is overwhelmingly white and Protestant. And completely aside from the policy ramifications, the deep-seated veneration of rural America reflects, at bottom, a prejudice few would be willing to openly spell out.

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Filed under Economics, Food, Go Meta, New Media

Updates On The Cheeseheads

Andrew Sullivan rounds up reacts

Christian Schneider at The Corner:

On Wednesday night, Wisconsin Senate Republicans did what most people thought impossible — they passed Governor Scott Walker’s budget-repair bill virtually intact, without having to split out controversial provisions that limited the ability for government employees to collectively bargain.

A letter Democrat Senate Minority Leader Mark Miller sent the governor today, indicating Miller’s unwillingness to further negotiate any details of the bill, was what prompted the GOP’s decision to take the bill to the floor.

“It was like, ‘I’m in the minority, and I’m going to dictate to you what your options are,’” said one GOP source about Miller’s letter. It was just three days ago that Miller had sent Fitzgerald a letter urging more negotiations, despite the fact that Governor Walker had been negotiating with at least two Democrat senators for nearly a week. “With his recent letter, it became clear that all he wanted to do was stall,” said the GOP source.

Another action that provoked the GOP senators to act was Democrat Senator Lena Taylor’s very public decision to have a spring election absentee ballot sent to her in Illinois. The spring election is scheduled for April 5th, which indicated Taylor’s desire to stay out of the state for another month. “That sure didn’t help,” said one GOP source.

The Wisconsin Constitution requires a quorum of three-fifths of the Senate in order to pass a bill that “imposes, continues or renews a tax, or creates a debt or charge, or makes, continues or renews an appropriation of public or trust money, or releases, discharges or commutes a claim or demand of the state.” For weeks, it had been known that Republican senators could separate the fiscal provisions of the bill from the proposed collective-bargaining changes, which were seen as non-fiscal. However, there was speculation that, if a bill was brought to the Senate floor that contained only the collective bargaining changes, it might not have the votes to pass.

On Wednesday night, the bill passed with a number of provisions that could be considered “fiscal,” such as the requirement that many government employees contribute 5.8 percent of their salaries to their pensions and pay 12.6 percent towards their health-insurance premiums.

Conn Carroll at Heritage:

The courage of the Wisconsin Senate conservatives cannot be understated. Before the vote, lawmakers were threatened with death and physical violence. After the vote, thousands of protestersstormed into the capitol building, ignoring announcements from police that the building was closed. Once inside, and at great risk to the public welfare, activists handcuffed some doors to the capitol shut. When security escorted the Senators to another building, a Democrat tipped off the mob, which then surrounded their cars and tried to break their windows as Senators returned home.

Senate Democrats, who are still hiding in Illinois, are now claiming that the majority’s committee meeting that broke up the budget-repair bill violated Wisconsin’s Open Meetings Law. But the Open Meeting Compliance Guide clearly states that when there is “good cause,” only two hours’ notice is required. The Senate majority did provide the two hours’ notice. If the Senate Democrats’ 19-day refusal to show up for work wasn’t “good cause” enough, certainly minimizing the opportunity for union mob violence is.

The passion coming from liberal activists is understandable only if one believes in their apocalyptic rhetoric. Democratic Senator Timothy Cullen said the bill will “destroy public unions.” And Senator Chris Larson has said, “collective bargaining is a civil right” that if removed will “kill the middle class.” This is all false. First of all, since unions care more about seniority than good government, public-sector unions kill middle-class jobs; they do not protect them. Second, collective bargaining is not a right. And finally, Walker’s bill will in no way “destroy public unions.” Government unions are still perfectly free to practice their First Amendment rights to freedom of association, and in fact still retain more bargaining power than all unionized federal employees. They only difference is that now they will have to actively recruit members instead of forcing government employees to join them, and they will have to collect their own dues instead of getting the state government to take them directly out of workers’ paychecks. And there are many more benefits as well. Governor Walker writes in today’s Wall Street Journal:

When Gov. Mitch Daniels repealed collective bargaining in Indiana six years ago, it helped government become more efficient and responsive. The average pay for Indiana state employees has actually increased, and high-performing employees are rewarded with pay increases or bonuses when they do something exceptional.

Passing our budget-repair bill will help put similar reforms into place in Wisconsin. This will be good for the Badger State’s hard-working taxpayers. It will also be good for state and local government employees who overwhelmingly want to do their jobs well.

Even in good economic times, the case for government subsidies for radio stations, cowboy poetry, and union dues is very weak. But in a time of fiscal crisis, all of these subsidies are patently absurd. Taxpayers throughout the country should be inspired by Walker’s stand for common sense. We need more leadership like this in every state capitol and here in Washington.

E.D. Kain at Forbes:

And now conservatives have chosen public-sector workers and teachers as their hill to die on. They have followed the most radical voices in the party and the movement, and elected Scott Walker, Rick Scott, and various other Tea Party candidates. Heavily funded by big campaign donors like the Koch brothers and other corporate interests, the Republican party has made a concerted effort across the country to take on unions, public pensions, and social services for the poor.

Enabled by a strong school-reform movement within the Democratic party, emboldened Republicans have waged an all-out assault on teachers, public education, and public unions and masked it all in the language of school choice and accountability. And now, in Wisconsin, they have side-stepped the Democratic process and ended collective bargaining rights for public sector employees, even amidst huge protests and popular condemnation.

Republicans have a long history of union-busting and anti-labor rhetoric, but taking on teachers and cops is a big mistake. This blatant effort to weaken the Democratic party will have precisely the opposite effect.

The healthcare debate gave Republicans a chance to capture the narrative, spin the entire debate into one about fiscal ruin and deficits. Now Scott Walker has given progressives their chance. This is the Democrats chance to recapture that narrative, to turn the discussion back to the dignity of the middle class, to the importance of policies that do not simply push power and capital ever upward. This is the Republican’s Waterloo.

Nate Silver:

The quality of polling on the Wisconsin dispute has not been terrific. But there’s a general consensus — including in some polls sponsored by conservative groups — that the Republican position was unpopular, probably about as unpopular as the Democrats’ position on health care. And the most unpopular part of their position — limiting collective bargaining rights — was the one that Republicans passed last night.

Nor is the bill likely to become any more popular given the circumstances under which it passed. Yes, there’s some hypocrisy in claims by Democrats that the Wisconsin Republicans used trickery to pass the bill — they did, after all, approve it with an elected majority, just as Democrats did on the Affordable Care Act. Nevertheless, polling suggested that Wisconsinites, by a two to one majority, expected a compromise on the bill, which this decidedly was not.

One question is how much this might hurt Republicans at the state level. As David Dayen notes, Democrats will have opportunities to fight back almost immediately, including in an April 5 election that could swing the balance of the Wisconsin Supreme Court, as well as in efforts to recall Republican state senators. Essentially all of Wisconsin outside of the Madison and Milwaukee metropolitan areas is very evenly divided between Democrats and Republicans, so there could be a multiplier on even relatively small shifts in turnout or public opinion.

Andrew Samwick:

I refer to the passage of this bill as the end of the beginning — the opening salvo was to write the bill and find a way to pass it.  The next phase is to see if it can withstand legal challenges and recall efforts to change the legislative balance.  There will be some drama in that phase, but that’s not what really interests me.  The real issue comes in the next phase, assuming the law survives.  There will be two important questions:First, what will the strike that follows the implementation of the law look like?  Narrow or general?  How much support will the public sector unions get from other unions and non-union workers?  Will the disruptions to commerce be enough to get taxpayers and their representatives to fold?  Now that’s drama.

Second, what will happen in specific cases of local public sector employers negotiating with a stronger position?  Governor Walker defends his efforts partly as follows:

Local governments can’t pass budgets on a hope and a prayer. Beyond balancing budgets, our reforms give schools—as well as state and local governments—the tools to reward productive workers and improve their operations. Most crucially, our reforms confront the barriers of collective bargaining that currently block innovation and reform.

Suppose his intentions are borne out — teachers regarded as ineffective are not renewed, teachers regarded as effective are rewarded, or some combination of higher quality and lower cost emerges for people to see.  I am a strong believer that in a well functioning market, workers are protected by their ability to take their talents to another employer (Free to Choose, Chapter 8).  The key question will be whether the markets for public services at the local level function well enough for this to happen.  For an economist, that’s even more dramatic.

mistermix:

If the Wisconsin Republicans’ plan was to jam through the defeat of collective bargaining with a sketchy parliamentary move, they should have done it the minute that Democrats vacated the state. If that had happened, the howls would have been loud but fairly short-lived, since it’s easier to energize people when they’re trying to prevent something from happening, rather than complaining after the fact.

Instead, we have today’s trainwreck. Walker got his number one item, but he paid a huge price. He’s almost certainly a one-term governor. There’s a dissenting Republican in the Senate, and presumably we’ll hear more from him. If there’s a general strike, the union’s side of the case is now clearly outlined in the public mind. If the unions don’t strike, they look like paragons of restraint. And what about the recalls? No matter the outcome, they’ll occupy the press and public attention for the next few months.

The Democrats and unions took a sad song and made it better, as far as I can tell. One of the side-effects of our distraction-oriented media and low-information voters is that only one issue can be front-and-center in the public debate. Unions haven’t had much attention recently, so the slippery lies that blame them for all of our many ills have gone unchallenged. In Wisconsin, that’s not going to be the case for the next year or so.

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Cheddar Revolution: Moldy Yet?

Kris Maher and Amy Merrick at WSJ:

Playing a game of political chicken, Democratic senators who fled Wisconsin to stymie restrictions on public-employee unions said Sunday they planned to come back from exile soon, betting that even though their return will allow the bill to pass, the curbs are so unpopular they’ll taint the state’s Republican governor and legislators.

The Republicans rejected the idea that the legislation would hurt the GOP. “If you think this is a bad bill for Republicans, why didn’t you stand up in the chamber and debate us about it three weeks ago?” said Senate Majority Leader Scott Fitzgerald. “People think it’s absolutely ridiculous that these 14 senators have not been in Wisconsin for three weeks.”

The Wisconsin standoff, which drew thousands of demonstrators to occupy the capitol in Madison for days at a time, has come to highlight efforts in other states to address budget problems in part by limiting the powers and benefits accorded public-sector unions.

Sen. Mark Miller said he and his fellow Democrats intend to let the full Senate vote on Gov. Scott Walker’s “budget-repair” bill, which includes the proposed limits on public unions’ collective-bargaining rights. The bill, which had been blocked because the missing Democrats were needed for the Senate to have enough members present to vote on it, is expected to pass the Republican-controlled chamber.

Eric Kleefeld at Talking Points Memo:

A return to Wisconsin at this juncture would appear to give the green light for Walker’s legislation to pass — that is, a win for Walker’s efforts to pass legislation when numerous polls show the state disapproving of Walker, and saying he should compromise. However, at this juncture it is unclear just what is going on.

In response, Miller spokesman Mike Browne released this statement, saying only that they were continuing to negotiate towards an outcome that does not strip the bargaining rights of state workers:

“It is true that negotiations were dealt a setback since last Thursday when Governor Walker responded to a sincere Democratic compromise offer with a press conference. However, Senate Democrats have continued to reach out to the Governor and Republicans through the weekend.

Democrats remain hopeful that Governor Walker and legislative Republicans will, in the near future, listen to the overwhelming majority of Wisconsinites who believe they should come to the negotiating table in good faith to reach an agreement that resolves our fiscal issues without taking away worker rights and without hurting programs that help provide health insurance for working families and prescription drugs for seniors.”

In addition, state Sen. Chris Larson released this statement:

Sen. Miller’s comments are taken out of context in the Wall Street Journal article just released. Dems will return when collective bargaining is off the table. That could be soon based on the growing public opposition to the bill and the recall efforts against Republicans. Unfortunately, the WSJ fished for the quote they wanted, skipping this key step in logic: we won’t come back until worker’s rights are preserved.

State Sen. Jon Erpenbach also told WisPolitics that Democrats are not planning to return. State Sen. Bob Jauch, who has been one of the lead negotiators, also said of Miller’s comments: “I think he’s speaking the truth that at some point – and I don’t know when soon is – at some point we have to say we’ve done all we can.”

Christian Schneider at The Corner:

The Wisconsin politerati is all atwitter today at a WSJ report indicating that senate Democrats might soon end their Illinois exile. In the article, Democratic senate leader Mark Miller says recent polls show Walker’s budget-repair bill to be politically “disastrous” for the governor, which he says will give Democrats more leverage to negotiate portions of the larger budget bill in the weeks to come.

If this is what Miller thinks, it seems like a suspect strategy — a variation on the rarely seen Let’s capitulate to our opponent because the public currently doesn’t like what he’s doing plan. How many congressional Republicans rooted for Obamacare because they thought it would show the public once and for all how unpopular government health care could be? What if Green Bay Packer quarterback Aaron Rodgers said in an interview before the Super Bowl, “Maybe it won’t be so bad if the Steelers win — imagine how sick of Ben Roethlisberger the public will be”? It sounds like Mark Miller, in today’s parlance, has convinced himself that he’s “winning.”

Perhaps Miller’s quote was a trial balloon, meant to gauge the opposition he’ll get from his base, which has spent three weeks screaming itself hoarse on the steps of the state capitol. It would be reasonable to expect some displeasure: If Democrats do return and vote on the bill without any changes — as they had indicated they would never do — cops, firefighters, and teachers are likely to ask, “Why did I just spend three weeks in the capitol pressed up against a hippie?” Indeed, within hours of the story being published, Miller was rebuffed by some members of his own caucus.

On the other hand, it is possible that Scott Walker really has waited them out. (On his last physical, does it say “Blood Type: Tiger”?) In the past three weeks, Democrats and public-sector unions (but I repeat myself) have thrown everything they have at Walker, and he hasn’t budged. (And I do mean everything: They even tried to embarrass him by exposing the fact that in high school he had a mullet and was nicknamed “the Desperado” — unaware that in Wisconsin, this is likely to increase his approval rating.)

It seems a little short-sighted for senate Democrats to believe Walker has damaged himself irreparably. Several polls show Walker’s approval rating to be in the low 40’s, but Walker almost certainly expected to take some kind of public-relations hit when he entered this standoff.

Moe Lane at Redstate:

You see, we tend to forget that politicians are not identical, like potatoes: these fourteen men and women are just that – men and women – and it’s easy to believe that they’re getting tired, sore, and fuming about how they’ve somehow become the surrogate whipping boys for a national debate on public sector unions. Some of them might even be thinking that they didn’t actually sign up for this, that this wasn’t in the job description, and that the people urging them to exile in Illinois might not really give a tinker’s dam about them or their problems. And that this situation that they’re in is getting old. Oh, sure, no doubt a few of the AWOL senators are having a ball… but some of them are not, and the loss of message discipline in the last few days shows that.

And it only takes one AWOL senators to end this nonsense.

Scott Johnson at Powerline

Jason Stein at The Milwaukee Journal Sentinel:

The leader of Senate Democrats hiding out in Illinois is seeking a face-to-face meeting with Gov. Scott Walker and the Senate GOP leader.

Senate Minority Leader Mark Miller (D-Monona) said in a letter sent out Monday that he wants to meet with Republicans “near the Wisconsin-Illinois border to formally resume serious discussions” on Walker’s budget repair bill. Two other Democratic senators met with Senate Majority Leader Scott Fitzgerald (R-Juneau) last week in Kenosha.

Democrats have been holed up south of the state line since last month to block action on Walker’s budget repair bill, which would end most collective bargaining for public employee unions in the state.

“I assure you that Democratic state senators, despite our differences and the vigorous debate we have had, remain ready and willing to find a reasonable compromise,” Miller said in the letter.

Neither Miller nor Walker spokesman Cullen Werwie could be reached immediately for further comment. Fitzgerald spokesman Andrew Welhouse had no immediate comment.

The Wall Street Journal spurred hopes of compromise Sunday with a story citing Miller and saying the Democrats would be back “soon.” But that same night Democrats knocked that down, saying that they hoped to return soon but that there was still no development to make that happen.

Miller spokesman Mike Browne said Monday morning  that he knew of no plans for Democrats to return later in the day. The senators were scheduled to meet later in the morning or early afternoon, he said.

One of the Democratic senators, Tim Cullen of Janesville, said in a phone interview Sunday that there were no developments toward a possible compromise with Republicans and no talks scheduled for this week.

Two other Democratic senators — Jon Erpenbach of Middleton and Chris Larson of Milwaukee — said Sunday their group had no plans to come back to the Capitol until Republicans addressed more of their concerns with the budget-repair bill.

“I can tell you for a fact that nothing has changed down here,” Erpenbach said.

On Monday morning, a small, dedicated group began to chant in protest of Walker’s budget-repair bill in the Capitol rotunda.

Outside the Capitol, there is little or no sign of the mass protests that have engulfed the Capitol square in recent weeks.

On the streets surrounding the Capitol, the number of satellite trucks has dwindled to two. And the only sign of an organized-labor presence is the sight of two Teamsters semi-trailers.

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Is It Good News? Is It Really, After All This Time, Good News?

Chart via Calculated Risk

Calculated Risk:

From the BLS:

Nonfarm payroll employment increased by 192,000 in February, and the unemployment rate was little changed at 8.9 percent, the U.S. Bureau of Labor Statistics reported today.

The change in total nonfarm payroll employment for December was revised from +121,000 to +152,000, and the change for January was revised from +36,000 to +63,000.

The following graph shows the employment population ratio, the participation rate, and the unemployment rate.

Daniel Indiviglio at The Atlantic:

It should be noted that today’s report revised upwards the number of jobs for both December and January to 152,000 from 121,000 and to 63,000 from 36,000, respectively. Obviously, it’s good news that there were actually 58,000 more jobs created during these two months combined than we thought.

Those 192,000 net new jobs in February according to BLS’s Establishment survey aren’t far off the 250,000 estimated by its Household survey. There was a major discrepancy last month: these surveys estimated 36,000 and 589,000 jobs created, respectively. It’s nice to see these two surveys’ statistics a little closer together in February, as it provides better credibility to the numbers we’re seeing.

Private sector jobs did much better than government jobs in February. Firms added 222,000, while state and local jobs declined by 30,000. Federal jobs were unchanged.

Felix Salmon:

The general reaction to this morning’s jobs report is “meh”, as you might expect, given the release, where the phrases “changed little”, “about unchanged”, “little or no change”, “unchanged”, and “essentially unchanged” all appear in the first five paragraphs. But that’s largely a function of the fact that the release attacks the unemployment figures first; when it comes to payrolls, they rose by a statistically significant amount — 192,000 jobs, and the trend, while modest, is clearly in the right direction:

Since a recent low in February 2010, total payroll employment has grown by 1.3 million, or an average of 106,000 per month.

The really good news in this report is that it’s looking increasingly as though the sharp drop in the unemployment rate over December and January, when it fell from 9.8% to 9.0% in two months, is less of an aberration than it might seem. The 8.9% rate, while undeniably unacceptably high, is the first time we’ve seen an 8 handle on this figure in almost two years. And remember that in October 2009, the number was 10.1%.

Given that unemployment by its nature falls more slowly than it rises, a decrease of 1.2 percentage points in 16 months has to be taken as an indication that something is, finally, going right. (Other unemployment rates, like the much-discussed U6, are also down sharply: it’s now 15.9%, from 17.0% in November.)

Even the worst news of the report, in table A-12, is something of a statistical aberration: while the mean duration of unemployment hit an atrocious new high of 37.1 weeks, that’s mainly because the upper bound for for unemployment duration was changed this year to 5 years from 2 years. The median duration fell, to 21.2 weeks. There’s still an American underclass of about 2.5 million long-term unemployed, but it does seem to be shrinking a little.

Tom Diemer at Politics Daily:

The news wasn’t good enough for the Republican National Committee. RNC Chairman Reince Priebus said even with the better jobs numbers, “we have yet to see the leadership we need coming out of the White House to restore sustainable economic growth. . . . Frankly, if the answer doesn’t involve more spending, this administration is simply out of solutions.”

But Senate Majority Leader Harry Reid (D-Nev.) saw a better day ahead and warned that cutting the federal budget too deeply this year could cost jobs in a fragile economy. “Republicans should work with us to quickly pass a long-term budget that reduces the deficit while protecting jobs, and [giving] business certainty,” he said. Similarly, AFL-CIO President Richard Trumka said the improving economy “remains threatened by irresponsible budget cutting in Congress and in states and cities.”

Ezra Klein:

The most important thing for not only the economy, but also the long-term deficit, is that we get unemployment down, and fast. When businesses begin hiring again, that’ll mean more revenue rushing into state and federal coffers, it’ll mean gains in the stock market, it’ll mean lower social spending through programs like Medicaid and unemployment insurance. Sharp spending cuts may save us some money, but that doesn’t mean they’re a good deal, at least right now. What we need at the moment is more jobs reports like this one — businesses need to be convinced that this is a recovery, not merely a good month. Anything that might get in the way should wait until we’ve had a few of them in a row.

Doug Mataconis:

There are caveats, of course. There are still millions of people sitting outside the labor force after the recession, and returning them to full employment is going to be a difficult, if not impossible, task to achieve The rising price of oil, brought on by the myriad crises in the Middle East, could put a damper on any economic recovery we’re experiencing right now. And, of course, this could all be a one month anomaly. Nonetheless, this is good news and let’s hope it continues.

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That Zany Zandi

Lori Montgomery at WaPo:

A Republican plan to sharply cut federal spending this year would destroy 700,000 jobs through 2012, according to an independent economic analysis set for release Monday.

The report, by Moody’s Analytics chief economist Mark Zandi, offers fresh ammunition to Democrats seeking block the Republican plan, which would terminate dozens of programs and slash federal appropriations by $61 billion over the next seven months.

Zandi, an architect of the 2009 stimulus package who has advised both political parties, predicts that the GOP package would reduce economic growth by 0.5 percentage points this year, and by 0.2 percentage points in 2012, resulting in 700,000 fewer jobs by the end of next year.

Brad DeLong:

One question: in what sense was Mark Zandi an “architect of the 2009 stimulus plan”? I don’t get that at all.


UPDATE: Queried, Lori Montgomery emails:

he was on the team of economists who were advising pelosi during that period, and his research helped shape the package. don’t you remember all those photo ops?

Hmmm… By that standard, the Recovery Act had at least 200 “architects,” including me…

Atrios:

It doesn’t matter how many “reports” from “economists” get released making the obvious point that cutting spending=cutting jobs, the Real Americans in the Tea Party and those who understand them and speak for them, the Villagers, know that cutting spending is the right thing to do. Because arglebargle!

Jonathan Cohn at TNR:

I can’t vouch for these numbers and Zandi, who used to advise John McCain, is now the Democrats’ favorite economist to cite. But that’s largely because Democrats are making an argument that mainstream economists like Zandi happen to support: In the midst of such a weak economic recovery, less government spending is almost certainly going to mean fewer jobs.

Patricia Murphy at Politics Daily:

On Monday, House Majority Leader Eric Cantor dismissed the Moody’s report entirely: “I would note that Mr. Zandi was a chief proponent of the Obama/Reid/Pelosi stimulus bill that we know has failed to deliver on the promise of making sure unemployment did not rise above 8 percent.”

But speaking with senators on Capitol Hill Tuesday, Bernanke took issue with the reports and their predictions of dire consequences if the Republican proposal were to pass the Senate.

“A $60 billion cut obviously would be contractionary to some extent, but our analysis does not get a number quite that high,” Bernanke said of the job losses predicted by Moody’s and the economic damage predicted by Goldman Sachs. “I have to say we get smaller impact than that.” Instead, Bernanke said that the cuts would likely slow economic growth by “several tenths” of a percent and that the lost jobs would be “much less than 700,000.”

Although Republicans may feel vindicated by Bernanke’s remarks, he did add that the proposed GOP cuts would not grow the economy in the short term.

“It would of course have the effect of reducing growth on the margins certainly,” he said. “It would have a negative impact, but 2 percent? I’d like to see their analysis. It seems like a somewhat big number relative to the size of the cut.”

John B. Taylor at Economics One:

As I have written before, the old-style Keynesian approach used by Zandi has many of the same flaws that are found in the Goldman Sachs approach: excessively large multipliers, inaccurate predictions of the effect of the 2009 stimulus, failure to recognize that reducing uncertainty about the debt can have positive effects, especially if it is done in a credible way by reducing spending growth now, not postponing it to a date uncertain in the future. After stating that “too much cutting too soon would be counterproductive,” Zandi claims that this is what the “House Republicans want” and what their budget does. But it’s simply not credible to say that a budget that has government spending increasing at 6.7 percent per year cuts spending too much too soon.

In sum, there is no convincing evidence that H.R. 1 will reduce economic growth or total employment. To the contrary, there is more reason to expect that it will increase economic growth and employment as the federal government begins to put its fiscal house in order and encourage job-producing private sector investment.

David Weigel at Slate:

Zandi, Phillips, and other economists who think the government has been creating or saving jobs with supply-side spending are not taken seriously on the right. They have economic models that rate how much “bang for the buck” (they prefer this cliché) is delivered from various types of spending—unemployment checks, food stamps, tax cuts. They have the CBO’s numbers, which posit that 1.4 million to 3.5 million people have jobs that wouldn’t have existed without the stimulus package that became law two years ago this month. Republicans just don’t buy them.

“These analyses by the Keynesians are missing a key part of the story,” Rep. John Campbell, R-Calif., explained Monday. “One hundred percent of the money they’re talking about is borrowed. Republicans, right now, are talking about cutting spending on the margins, and 100 percent of what we don’t cut will be borrowed. The capital that they’re putting to work is capital that’s not improving something in the private sector, and all of these studies fail to take into account the interest we’re paying on the deficit.”

Campbell, an Ayn Rand disciple, has been saying this for a while. Republicans have started aping him only recently. Two years ago, as they opposed the stimulus bill, House Republicans reverse-engineered the White House’s economic models—models bearing a kissing-cousin resemblance to Zandi’s—and promised 6.2 million jobs for half the price of the Democrats’ proposal. The number was based on calculating how many jobs would be killed by tax hikes and inverting it.

This didn’t make much sense, and Republicans didn’t really believe it, but they were out of power. Their bill didn’t pass, so no one noticed. The Democrats’ stimulus did pass, and because unemployment went up, voters don’t think it worked. This gives Republicans a free hand to say anything they like about doomsaying predictions of cuts in government spending leading to cuts in employment. (Rep. Paul Ryan, R-Wis., who helped develop the GOP’s Potemkin stimulus, noted that the Democrats planned on spending $275,000 per job if their models worked; the current cost estimate per job is $228,055, as reported derisively by the conservative CNSNews.com.)

They may be dismissive, but Republicans aren’t Pollyannas about this stuff. Boehner’s comment to a Pacifica Radio reporter—if the spending cuts killed government jobs, he said, “so be it” —was not the party’s message. It’s not actually how they’ve been approaching their cuts.

A GOP aide with knowledge of the process that led to $61 billion in proposed cuts described it like this. The ideas for cuts came from plenty of places—a lot of them came from freshmen—but they were vetted by veteran staff on the Appropriations Committee. Those people tried to direct the cuts away from the salary side of the agencies they were attacking. They tried to target discretionary spending that was not part of salaries. For example, Republicans cut $1.3 billion of discretionary funding to community health centers; the Affordable Care Act, which is still there, stubbornly unrepealed, included mandatory funding for those health centers that the GOP didn’t touch.

The goal, even if GOP leaders won’t sing about it, was to shrink spending but leave employment as unmolested as possible. The agencies have discretion over how they use their shrunken budgets; they don’t have to cut back jobs.

The Republicans who’ll open up about possible job losses might have the more convincing case. Campbell talks about the losses as Joseph Schumpeter talked about creative destruction—temporary losses offset by sustainable gains.

“If we do not get the deficit down, if we don’t change trajectory, will lose more jobs than we lose from cuts,” Campbell said. “When a debt crisis hits, if we’ve still got 47 percent of our debt held by foreigners, we’ll have much greater job loss than that. Our first objective to is try and prevent a fiscal collapse, a la Greece. And it will take a longer time for the private sector to replace public-sector jobs that are cut, but when they do, they’ll last longer.”

Republicans have been talking like this for months, and they haven’t been hurt by it. The choice between stimulus spending and creative destruction is a choice between something voters don’t think worked and something voters don’t think we’ve tried. As long as voters don’t pay attention to how the U.K.’s austerity program is working, the GOP will be just fine.

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