Wonkbook: Jobless claims jump; Social Security cuts; GOP warns businesses not to help Dems
New unemployment benefits claims reached 500,000 -- their highest level since November. That "feels more double dip-ish than tepid growth-ish," tweeted Neil Irwin. The White House is quietly deleting some of its climate change promises from its web site. Senate Republicans are angrily e-mailing businesses supporting a Democratic push to cut taxes on businesses. Laura Meckler has some specifics on the cuts and reforms the deficit commission is contemplating for Social Security. Health-care reform's supporters are changing their messaging to reflect the reality that the bill's popularity has not substantially increased since passage. And Timothy Geithner is one of the few people involved in finance desperate to convince people that he never worked at Goldman Sachs.
Oh, and the lobster truck lives! Welcome to Wonkbook.
New jobless claims have jumped to 500,000, reports Frank Ahrens: "Thursday's news was especially discouraging, not only because new jobless claims are back on the rise but also because they never dropped low enough for lasting job creation to begin. Economists say that the weekly claims number needs to get into the low 400,000s and stay there before employers will start hiring new workers and bringing back laid-off ones. Indeed, the economy needs to add 125,000 jobs each month merely to keep up with population growth. Instead, 'this report indicates that the pace of firings and layoffs has increased,' Barclays Capital wrote in a report."
The White House quietly removed climate change promises from its website: http://politi.co/c8U6Lz
Senate Republicans are playing hardball opposing the extension of a package of business tax credits, reports Chris Frates: "When a group of 22 companies recently wrote a letter in support of Senate Finance Committee Chairman Max Baucus’s plan to pay for the tax credits by closing several business tax loopholes, Senate Minority Leader Mitch McConnell’s office e-mailed several of the companies asking what they were doing. The message McConnell was sending to the companies, said a Republican business lobbyist, was, 'Don’t think you can play' with Democrats to pass the tax credits 'because they’re going after your friends and they’re coming after you next.'
Eugene Robinson says Washington has missed Obama's "genuine winning streak" lately: http://bit.ly/9OUmjh
The debt reduction commission might recommend cutting Social Security benefits, reports Laura Meckler: "In addition to raising the retirement age, which is now set to reach age 67 in 2027, specific cuts under consideration include lowering benefits for wealthier retires and trimming annual cost-of-living increases, perhaps only for wealthier retirees, people familiar with the talks said. On the tax side, the leading idea is to increase the share of earned income that is subject to Social Security taxes, officials said. Under current law, income beyond $106,000 is exempt. Another idea is to increase the tax rate itself, said a Democrat on the commission."
A whole lot of people (wrongly) think Timothy Geithner once worked at Goldman Sachs: http://nyti.ms/aOqZtk
Health-care reform supporters are switching up messaging, reports Ben Smith: "The messaging shift was circulated this afternoon on a conference call and PowerPoint presentation organized by FamiliesUSA -- one of the central groups in the push for the initial legislation. The call was led by a staffer for the Herndon Alliance, which includes leading labor groups and other health care allies...The confidential presentation, available in full here and provided to POLITICO by a source on the call, suggests that Democrats are acknowledging the failure of their predictions that the health care legislation would grow more popular after its passage, as its benefits became clear and rhetoric cooled."
Obama made four recess appointments on Thursday, reports Ed O'Keefe: "Maria del Carmen Aponte, the administration's pick for ambassador to El Salvador...Elisabeth Hagen as the Agriculture Department's undersecretary for food safety, Winslow Sargeant as chief counsel for advocacy at the Small Business Administration and Richard Sorian as assistant secretary for public affairs at the Department of Health and Human Services."
Folk interlude: Bon Iver plays "Skinny Love" on Jools Holland.
Still to come: The CBO looks at the Bush tax cuts; China is investing in electric cars; pay checks are due to fall due to rising health premiums; and world championship-level yo-yoing.
The CBO says extending the Bush tax cuts helps short-term but poses danger in the long-run, reports Brady Dennis: "The CBO's baseline scenario assumes that the Bush-era tax breaks will expire, as current law provides. In that case, next year's deficit would fall to $1.07 trillion, or 7 percent of the country's total economic output, or gross domestic product, according to agency estimates. By 2012, the deficit would shrink to $665 billion, or 4.2 percent of GDP."
Human investors are outpacing "quant" models on Wall Street: http://nyti.ms/cUeNwn
Banks are taking the hit on bad loans they helped push, writes Floyd Norris: "Already the four big commercial banks -- JPMorgan Chase, Bank of America, Wells Fargo and Citigroup -- have taken losses of $9.8 billion on loans they have repurchased or expect to be forced to repurchase. Moshe Orenbuch, an analyst at Credit Suisse, says he thinks that figure will rise to $20 billion or $30 billion before the wave is over. Other analysts think the number could be significantly higher. Even now, long after we learned just how bad the underwriting standards were, it is surprising to see how bad many of these loans were. In the second quarter, Wells Fargo repurchased $530 million of mortgage loans. It concluded those loans were worth, on average, a little less than half their face value."
More Americans say they're happy with their pay level than ever: http://nyti.ms/bbDKE3
Paul Krugman questions deficit reduction as a means of appeasing the "bond Gods": "On Thursday, the rate on 10-year U.S. bonds was only 2.58 percent. So how do austerians deal with the reality of interest rates that are plunging, not soaring? The latest fashion is to declare that there’s a bubble in the bond market: investors aren’t really concerned about economic weakness; they’re just getting carried away. It’s hard to convey the sheer audacity of this argument: first we were told that we must ignore economic fundamentals and instead obey the dictates of financial markets; now we’re being told to ignore what those markets are actually saying because they’re confused."
Daniel Indiviglio investigates how expensive mortgages would be without government backing: http://bit.ly/bMq4Ip
Steve Pearlstein argues out-of-control banker pay is the product of too little competition: "This story, first reported by Bloomberg News and confirmed by several government and Wall Street sources, goes a long way in explaining why so many people on Wall Street get paid so much more than everyone else. A handful of established firms control access to global financial markets and use this power to extract monopoly-like profits and funnel them to their executives and employees. The reason for the lack of price competition is pretty simple: The banks know that if they start offering big discounts, all their rivals will be forced to do the same."
Megan McArdle thinks it's time to stop talking about stimulus and start talking about easing the transition into a slower economy: http://bit.ly/9cRYqv
Dexterity interlude: The 2010 World Yo-Yo Championships.
A 22-mile plume of oil remains in the Gulf, report David Fahrenthold and Kimberly Kindy: "What was certain, at least at that time, was that it wasn't disappearing. Scientists tested the levels of dissolved oxygen to find out whether they were unusually low, which would indicate that microbes were at work. But they weren't. The researchers declined to speculate about how their findings should alter the government's official 'budget' of what became of BP's oil. Their inquiry, they said, was limited to finding the plume -- and, for now, they couldn't say what percent of the spilled oil it contained."
China is investing big in electric and hybrid cars, reports David Barboza: "The government said a group of 16 big state-owned companies had already agreed to form an alliance to do research and development, and create standards for electric and hybrid vehicles. The plan aims to put more than a million electric and hybrid vehicles on the road over the next few years in what is already the world’s biggest and fastest growing auto market."
The panel investigating the oil spill is calling witnesses: http://bit.ly/by4w36
BP's final well plugging won't come until September, reports Kristen Hays: "Concern over how to safely proceed after pouring cement in the Macondo well from the top, as well as weather delays, pushed the last step past the U.S. Labor Day holiday on September 6 from mid-August, retired Coast Guard Admiral Thad Allen said at a briefing in Washington. 'As we get to the end, we are very close to putting this well away," Allen said. 'I think none of us wants to make a mistake at this point.' Allen authorized BP on Thursday to craft a plan to retrieve the failed blowout preventer atop the Macondo well about a mile beneath the ocean surface and replace it with another before drilling resumes on the relief well."
Federal tax credits incentivize energy-efficient A/C systems: http://bit.ly/b29RTw
USAID is linking the Pakistani earthquaker to climate change, writes Josh Rogin:
"'We should expect to have more large-scale weather events as we see more systematic warming of our planet,' said Rajiv Shah, the head of the U.S. Agency for International Development, pointing to what he described as a clear trend of increasing natural calamities tied to climate change. USAID has already responded to 64 natural disasters this year. Pakistani Foreign Minister Shah Mehmood Qureshi said that the unprecedented size of the flood was due at least in part to warming factors, such as the melting of glaciers in the Himalayas."
Practical joke interlude: Justin Long gets texts for a middle schooler named Eduardo.
Higher health care premiums are shrinking paychecks, reports Jeffrey Young: "The companies surveyed expect their costs of health-care benefits to rise an average of 8.9 percent next year. The legislation Obama signed in March will contribute an estimated 1 percentage point to the higher expense, Helen Darling, the business group's president, said at a press conference in Washington today. Employee-paid portions may see small increases, she said."
Congress previously considered changes to birthright citizenship in the 90s: http://politi.co/atymit
Paul Tough argues for funding even unproven education models: "A certain skepticism with regard to innovation is always wise, especially in public education, where highly touted new programs often turn out to be disappointments. The problem is that for low-income and minority Americans, the status quo is a deepening calamity. The New York state test results released last month showed that the gap in reading scores between black and white elementary- and middle-school students grew from 22 percentage points in 2009 to 30 points in 2010, while the math gap grew from 17 points to 30 points."
Alberto Gonzales defends birthright citizenship: http://bit.ly/dzhZ5F
John Podesta defends Obama on school reform: "Educators have complained that the tests mandated by the No Child Left Behind Act are too rigid and don't provide an adequate assessment of what children need to learn to succeed. Most reformers agree. That's why the Obama administration set aside $350 million in its Race to the Top grant program to help states develop next-generation assessments that better evaluate what students should know. The new exams aim to inform instruction as well as better measure the skills students need to succeed in college and the modern workplace. Continually improving the way we measure success is not obsessive -- it's smart."
Closing credits: Wonkbook compiled with the help of Dylan Matthews, Mike Shepard, and Sakina Rangwala. Photo credit: Rasdourian/CC/Flickr
August 20, 2010; 6:28 AM ET
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