economy – Page 24 – Hank Kalet

Homelessness on the rise

We are hearing a lot about the impact that the recession is having and will have on middle-class homeowners and workers, but there is an entire class of people who we’re not hearing about — the homeless.

I mentioned them in a post the other day, focusing on some anecdotal evidence that we are seeing an increase in the number of people on the streets (which does not include a whole subset of people who may live on relatives’ couches or move from place to place to keep themselves sheltered).

Here is more evidence: A story from MSNBC on the closing of a Seattle homeless shelter run by CityTeam Ministries, based in San Jose, Calif., described the confluence of factors that is contributing to an awful trend.

The CityTeam closure is a piece in the expanding problem of homelessness across the nation: Shelters and related services for the homeless are facing funding shortfalls as the downturn takes its toll on state budgets and corporate donations. And while individual donors in many cases are keeping up gifts — or even digging a little deeper for charities that help with urgent needs like food and shelter — the service providers say they are faced with a rapidly growing demand from people losing jobs and homes in the economic crisis.

It makes serving a particularly vulnerable population difficult.

“A downturn in (overall) funding in this case is accompanied by a surge in demand, so a homeless shelter, food pantry, or job-training program is going to feel it first,” says Chuck Bean, executive director of Nonprofit Roundtable of Greater Washington, in the District of Columbia. “Even if they have 100 percent of their budget compared to last year, they now see a 50 percent surge in demand. Then (they) get into the tough decisions: Do you thin the soup, or shorten the line?”

Consider the facts:

Shelters across the country report that more people are seeking emergency shelter and more are being turned away. In a report published in December, 330 school districts identified the same number or more homeless students in the first few months of the school year than they identified in the entire previous year. Meantime, demand is sharply up at soup kitchens, an indication of deepening hardship and potential homelessness.

“Everything we are seeing is indicating an increase,” says Laurel Weir,
policy director at the National Law Center on Homelessness and Poverty. “And
homelessness tends to lag the economy. So we’re probably seeing the tip of the
iceberg here.”

And it is likely to get worse, because the recession is tied to the collapse of the housing market and the foreclosure crisis.

In the foreclosure crisis, the people being displaced from homes won’t likely be on the street immediately, explains Michael Stoops, director of National Coalition for the Homeless.

“The people who have lost homes or tenants in homes that were foreclosed … have downsized, and if that doesn’t work they will move in with family and friends,” says Stoops. “After a while, they will move into their RV in a state campground. The next step is a car. And the worst nightmare for a working, middle-class person or even a wealthy person who has never experienced homelessness is knocking on a shelter door.”

That’s why the most important aspect of any stimulus is not tax cuts or even infrastructure work (as important as that is), but spending money on things like food stamps, unemployment benefits, health care and other elements of the social safety net. We need to keep people from drowning in the bad economy by tossing them life-preservers — and then we can get on with the difficult work of repairing the leaks.

Dispatches: Economy needs Keynesian solution

Dispatches is up on the site — based on an interview with Rush Holt on the economy.

Bad medicine

You know things are rough for New Jersey when pharmacuetical companies are announcing mergers and layoffs — as Pfizer and Wyeth did yesterday.

According to NJ.com:

The giant pharmaceutical company, wrestling with a dearth of new drugs and expecting a major revenue hit next year when its cholesterol-fighter Lipitor faces generic competition, attempted to strengthen its business by acquiring Wyeth, which will give it more than a single blockbuster drug to help ride out the coming storm.

The one-time rivals laid out plans yesterday for a $68 billion deal that will provide Pfizer with a range of products, including lucrative biological medicines such as the arthritis treatment Enbrel, vaccines and over-the-counter remedies like Advil and Robitussin. Industry analysts said by acquiring Wyeth, Pfizer stands to increase its revenue by 50 percent, at least in the short
term.

The companies — which will retain the Pfizer name once the deal is approved — would not discuss potential layoffs, but NJ.com

The acquisition of Morris County-based Wyeth, which appears to defy the credit crisis that has constrained corporate financing, will only heighten the wave of job losses occurring across the pharmaceutical industry.

Even before the acquisition was announced, Pfizer had disclosed plans to slash 10 percent of its global work force, including 800 researchers, by 2011. As part of the
transaction, Pfizer expects to reduce the global work force of the combined company by 15 percent, including the previously announced cuts. Analysts say the number of jobs lost could amount to 20,000 worldwide

Wyeth has two facilities in New Jersey, including one on Ridge Road in South Brunswick. There is no word how these facilities will be affected — but the smiles on the CEOs’ faces (above, during yesterday’s press conference) makes it clear that the companies’ employees should be very afraid.

GOP pushes false stimulus narrative

The stimulus narrative has now been set. Consider the opening exchange from Sunday’s McLaughlin Group (the TV was on as I was cleaning out the dogs’ pen on Sunday morning, otherwise I would have missed this — McLaughlin is an awful show lacking in any kind of substance). it focused on the stimulus and on a supposed report from the Congressional Budget Office that John McLaughlin said found that “the majority of funds from the president’s federal injection for public projects, with their many jobs, will not be spent by the end of 2010 — two years, roughly, from now.”

For all federal projects — that includes highways, bridges, schools, et cetera — the total money earmarked is $355 billion; of that $355 billion, $136 billion, 32 percent, spent by the end of 2010 — 32 percent, about one-third of the total.

McLaughlin then put a badly worded and biased question — “Do you agree that the problem with capitalizing the economy through federal money poured into infrastructure rebuilding, the problem is that the process, under the best of circumstances, takes between one and two years; it does nothing for the next 12 months?” — to his largely conservative panel, generating the expected responses:

From Pat Buchanan:

John, that’s just one of the problems with it. No doubt that is a problem. It’s down the road. So it looks more and more like this is just a big permanent expansion of the federal government. Secondly, the thing is beginning to be larded up with pork. The National Endowment for the Arts is coming in for $50 million. Third, the Republican tax cuts are diminishing in size. This is going to be the mother of all pig-outs. It’s losing, quite frankly, that cachet of an immediate, dramatic injection into the economy. And that’s why the markets, under Barack Obama, since his election, the equity markets and things have been tanking. What they are saying is one of two things. Either he ain’t going to get it through — but he is — or this is not going to work or it is not relevant to the economic crisis and the financial crisis this country faces.

Monica Crowly, a “synicated radio commentator,” followed suit:

Well, look, I mean, when we talk about one or two years down the road, look, when the Democrats came in and Obama won the presidency, they talked about having an economic stimulus package on his desk day one. Now they’re talking about mid-February, toward the end of February. They can’t get it together. Why? Because this economic stimulus bill is an epic mess. There are 152 different appropriations in there — nurse training, Medicare, Head Start, weather-proofing your house…. because what we need right now is an immediate economic stimulus that is going to have immediate short-term gains in the exact areas we need it. We do not need pork in there for weather- proofing your house. Okay, we need it targeted. And if it’s targeted with tax cuts, a temporary halt on payroll taxes, relief for businesses, in ways that are not going to blow up this $1.2 trillion deficit as it is — I mean, what we’re talking about now is not economic stimulus. This is a $1 trillion load of pork
running down Pennsylvania Avenue like a herd.

And then there was Mort Zuckerman, of U.S. News & World Report, who offered what he called an alternative to the Obama approach, even though his alternative is included in the Obama plan:

I think it is the wrong — it is a well-intentioned but ill- focused program. Certainly it’s going to go — this recession is going to go on for a long time. And if he has a program that moves as slowly as this, he’s finally going to be blamed for it and he’s not going to be able to lay it off against President Bush. There is another alternative to this kind of capital investment, which is to work through the state and local governments, who have pre-approved programs that can get started right away. It takes it out of the hands of the federal government, and therefore out of whatever their political benefits would be. But that seems to me to be by far the better way to do it and the faster way to do it. It is critical, critical, that we get this jobs program going as soon as possible. This economy is still going downhill at an accelerating rate. And if he doesn’t have a federal program that moves fast enough, he is going to and should be blamed for it.

Only Eleanor Clift, of Newsweek, countered the conservative script:

We are in uncharted territory, and that phrase has been expressed on this show many times. There is a collective feeling among economists from the left and right that a massive spending package is required. And you cannot have the economy digest everything in the first year. Frankly, if the bulk of this is spent in two years and we get out of this in two years, we’ll be ahead of the game.

The problems with this discussion are many. First, the so-called report was nothing of the sort. As the Huffington Post reported on Friday — that would be two days before McLaughlin aired — “there is no such report.”

“We did not issue any report, any analysis or any study,” a CBO aide told the Huffington Post. Rather, the nonpartisan CBO ran a small portion of an earlier version of the stimulus plan through a computer program that uses a standard formula to determine a score — how quickly money will be spent. The score only dealt with the part of the stimulus headed for the Appropriations Committee and left out the parts bound for the Ways and Means or Energy and Commerce Committee.

Because it dealt with just a part of the stimulus, it estimated the spending rate for only about $300 billion of the $825 billion plan. Significant changes have been made to the part of the bill the CBO looked at.

The HuffPost story came after a piece in Thursday’s edition of The Washington Post, which also raised questions about the expanding narrative:

Peter Orszag, the director of the White House Office of Management and Budget, said Wednesday that if House or Senate versions of the bill do not spend the money as quickly, the White House will work with lawmakers to achieve the 75 percent goal. Congress is working on a stimulus bill of at least $825 billion.

In an interview with the Associated Press, Orszag responded to a Congressional Budget Office assessment that money targeted for infrastructure under a House proposal would take years to be spent. He said the issues identified by CBO could be easily corrected.

“There are relatively straightforward changes to increase the spend-out on that part of the bill,” Orszag said.

CBO concluded that only $26 billion out of $358 billion in infrastructure and other appropriated spending would be delivered into the economy by the Sept. 30 end of the budget year. The CBO’s analysis applied only to 40 percent of the overall stimulus bill. Still, Republicans cited the study in pushing for more tax cuts and less spending.

And, still, conservative commentators — like Pat Buchanan on MSNBS this morning — are pushing their misleading narrative.

So much for that liberal media we still hear too much about.

Stimulus should build for the future

As Barack Obama said during his speech yesterday, government spending has to work or the money shouldn’t be spent. And while we need a massive economic stimulus both to prevent economic freefall and to begin the hardwork of rebuilding our economy, we shouldn’t assume that all spending is good spending.

That’s why some in the environmental community are ready to do battle over plans currently being crafted.

According to The Washington Independent,

a growing chorus of environmental groups says it falls short of those goals, providing too much funding for new roads and too little for public transportation and other green initiatives.

Under the current proposal, new construction could consume three times as much funding as public transportation. The environmental groups hope more public transit money will be added when lawmakers make changes to the proposal in committee, an amendment process which began Wednesday afternoon.

“At a time of erratic energy prices, Congress should use this opportunity to move
America away from highways and toward railways and mass transit,” said Karen Wayland, legislative director for the Natural Resources Defense Council, an environmental advocacy group. “The transportation component of the stimulus package underfunds mass transit in deference to highways and bridges.”

They say there is

plenty of room to improve the Democrats’ blueprint. At the forefront of their criticism, the proposal includes $30 billion for highway construction but dedicates only $10 billion to public transit and rail — a discrepancy prioritizing new roads at the expense of public transportation.

Brent Blackwelder, president of Friends of the Earth, says the spending on new roads will only act to increase pollution and fuel consumption — two problems the Democrats’ proposal was designed to alleviate.

“It is particularly disappointing to see that, unlike highway funds, public transportation and passenger rail funds have been cut below the levels suggested by the House Transportation Committee, limiting job creation in these areas,” Blackwelder said in a statement. “Public transportation investments create 19 percent more jobs per dollar spent than investments in new highways.”

Daniel Becker, head of the Safe Climate Campaign, said the proposal is a significant step in the direction of cutting pollution and increasing energy efficiency, but there are notable holes that could use plugging. “There’s a lot of new asphalt-laying [in the bill],” Becker said, “and that will undercut a lot of the green efforts.”

Marchant Wentworth, legislative representative for clean energy with the Union of Concerned Scientists, agreed that the $10 billion for public transit is insufficient to accomplish the Democrats’ goals. “You could triple that and still have needs out there for relieving congestion,” he said.

I’m not saying that a good chunk of the road money is not needed — some of it definitely is. But road money would be best spent on repairs and upgrades to existing infrastructure, rather than carving out new thoroughfares that will just lead to sprawl and more congestion down the road. If some of the money were shifted from asphalt to mass transit, that would go a long way toward greening the stimulus.

And if the tax cuts were to be scrapped, that money could then go toward other green projects — or “to provide further relief to Americans in distress — enhanced unemployment benefits, expanded Medicaid and more.”