“Descending From The Mountaintop”: House Republicans Keeping The Faith
After preaching for weeks about the urgency of Washington taking action to create jobs, lawmakers decided to put their mammon where their mouths are. And so on Tuesday evening they descended from the mountaintop and came forth to anoint a jobs bill of biblical proportions:
“H.Con.Res 13 — Reaffirming ‘In God We Trust’ as the official motto of the United States.”
The grace of this legislation, taken up on the House floor, was not immediately revealed to all. “In God We Trust” has been the nation’s official motto for 55 years, engraved on the currency and public buildings. There is no emerging movement to change that. But House Republicans chose to look beyond the absence of immediate threats and instead protect the motto against yet-unimagined threats in the future.
The legislation “provides Congress with the opportunity to renew its support of a principle that was venerated by the founders of this country, and by its presidents, on a bipartisan basis,” supporters claimed in their analysis. “This Congress can now show that it still believes and recognizes those same eternal truths by approving a resolution that will allow today’s Congress, as representatives of the American people, to reaffirm to the public and the world our nation’s national motto, ‘In God We Trust.’ ”
The infidel opposition took a rather different view. “We are focused on jobs measures,” said Brian Fallon, spokesman for Senate Majority Leader Harry Reid. “The House Republicans will hopefully get the message to do the same, God willing.”
In a dissenting analysis of the legislation, a group of House Democrats took a similarly skeptical stance. “Today we face the highest budget deficit in our nation’s history, a national unemployment rate of nearly 9 percent, and an ongoing mortgage foreclosure crisis,” they wrote. “American forces are deployed in combat on several fronts. . . . Yet, instead of addressing any of these critical issues, and instead of working to help American families keep a roof over their heads and food on their tables, we are debating whether or not to affirm and proliferate a motto that was adopted in 1956 and that is not imperiled in any respect.”
Then there’s the matter of whether Republicans violated their own promises by bringing up a ceremonial resolution and taking the God bill to the floor without a hearing. House GOP rules forbid suspending House rules to pass a bill if it “expresses appreciation, commends, congratulates, celebrates, recognizes the accomplishments of, or celebrates the anniversary of, an entity, event, group, individual, institution, team or government program.” (It might be argued that God, though an entity, is exempt from the provision.)
So what, pray tell, are Republicans up to? They can tell their constituents that they are doing the Lord’s work in the devil’s town. Because it is still too early to complain about efforts by the ACLU to snuff out Christmas, the In-God-We-Trust legislation provides a stand-in straw man. There’s certainly some appetite for this: Internet rumors proliferated after President Obama’s inauguration warning that he was seeking to remove “In God We Trust” from U.S. coins.
But it also conveys an impression to independent voters that, at a time of economic crisis, Republicans continue to focus on God, gays and guns.
Of course, there may be innocent explanations for the In God We Trust bill. “God” and “job” are both three-letter words with the same vowel. House Republicans may have been confused by the similarity, much like the dyslexic agnostic who wonders if there is a dog.
Notably, the House majority saw no need to protect the nation’s other motto, the one from the Great Seal of the United States that also appears on currency: e pluribus unum. But give the GOP credit for its tenacity: To continue to pursue social policies even while the nation cries out for economic relief requires the patience of Job — not to be confused with jobs.
In support of the God bill, the legislation’s champions quoted John F. Kennedy: “The rights of man come not from the generosity of the state but from the hand of God.” But they left out a better-known Kennedy passage, from his inaugural address: “let us go forth to lead the land we love, asking His blessing and His help, but knowing that here on earth God’s work must truly be our own.”
By: Dana Milbank, Opinion Writer, The Washington Post, November 1, 2011
Illegal Immigrants Not To Blame For Unemployment
Memo to Alabama: George W. Bush was right.
The former president, making a too-late push for what could have been a game-changing, bipartisan immigration reform law, noted that immigrants now here illegally make an important contribution to the economy. They do the jobs Americans can’t or won’t do.
Opponents disagreed, arguing that the undocumented workers were stealing jobs that should go to Americans—jobs like picking fruit for low wages in the hot sun. That was a questionable claim when the economy was better, but as Alabama farmers are now learning, Bush’s statement is correct even now, when Americans are working for far less pay in jobs for which they are way over-qualified, just to have a job.
In June Alabama passed a draconian immigration law—most of which is still in place, even while courts decide its constitutionality—that has driven many immigrants from the state. The result has not been a wave of grateful unemployed teachers and skilled workers, eager to be underpaid for difficult manual labor. Instead, at the San Francisco Chronicle reports:
The agriculture industry suffered the most immediate impact. Farmers said they will have to downsize or let crops die in the fields. As the season’s harvest winds down, many are worried about next year.
In south Georgia, Connie Horner has heard just about every reason unemployed Americans don’t want to work on her blueberry farm. It’s hot, the hours are long, the pay isn’t enough, and it’s just plain hard.
“You can’t find legal workers,” Horner said. “Basically, they last a day or two, literally.”
There are a number of lessons here. One is that there are surely elected officials and people in the business community who are using the recession to roll back all kinds of hard-fought rights for workers, cutting pay, eliminating job security, and drastically reducing or zeroing out benefits. Another is that while Americans don’t want to do farm work for low wages, they also don’t want to pay higher prices for food harvested by workers paid a decent salary. That’s not an argument for abusing undocumented workers, but it’s also not an argument for scaring foreigners out of the state so locals can have their bad jobs.
What’s remarkable is that some of the same people who scream about illegal immigrants taking American jobs here in the United States are quieter when it comes to foreigners abroad taking what could be American jobs here. Outsourcing of manufacturing jobs increases corporate profits, but adds to the unemployment rate domestically. Those are jobs American will do. If that anti-immigrant worker crowd is genuinely concerned about retaining U.S. jobs, they should focus on bringing back the outsourced jobs—not evacuating the foreign workers.
By: Susan Milligan, U. S. News and World Report, October 24, 2011
State Loan Program That Rick Perry Touted Had To Be Bailed Out
Gov. Rick Perry has anchored his presidential campaign to his claims of creating jobs.
With no business record of his own, Perry must contrast his ability to create jobs with public money against the records of two front-runners, Mitt Romney and Herman Cain, who tout credentials as private employers.
His GOP opponents already have sniped at his gubernatorial record, saying Perry inflates his job-creation numbers and takes credit for a business climate he inherited. Perry’s efforts to create jobs and spur agribusinesses as the state’s agriculture commissioner during the 1990s might provide even more fodder for the opposition.
Over his eight years as Texas’ farmer-in-chief, Perry oversaw a loan guarantee program with so many defaults that the state had to stop guaranteeing bank loans to startups in agribusiness and eventually bailed out the program with taxpayer money.
The state auditor panned Perry’s claims of creating jobs and criticized Perry and his fellow board members at the Texas Agricultural Finance Authority for not following their own lending guidelines.
In some instances, the auditor said, Perry and the authority guaranteed loans to applicants with a negative net worth or too much debt. Citing growing debts, the auditor finally suggested that state officials consider dismantling the program.
Even as the first alarms were sounded, Perry defended the program, saying no taxpayer money was at risk, blaming others and claiming he had fixed it.
It only got worse.
By 2002, Perry’s successor, Agriculture Commissioner Susan Combs, a Republican, stopped making loans as the percentage of bad loans neared 30 percent.
By 2009, her successor, Agriculture Commissioner Todd Staples, also a Republican, asked the Legislature to pay off the loan guarantees with a $14.7 million appropriation. The finance authority could no longer afford the $541,000 to cover the annual interest on the bad debts, almost all of which dated back to Perry’s tenure.
“It’s bad,” Staples told the American-Statesman at the time. “Unfortunately, taxpayers are on the hook for something that happened as long ago as 1987.”
In effect, Perry, as governor, signed his own government bailout when he approved the 2009 appropriations bill.
The Perry campaign did not respond to questions about whether Perry, as president, would use public money in economic development programs and what lessons he learned from his experience guaranteeing risky business loans with public money.
Mired in partisan politics
When the Legislature created the Texas Agricultural Finance Authority in 1987, the intent was to boost the state’s agricultural economy by selling state-backed bonds to guarantee bank loans to entrepreneurs who could not get commercial loans. The goal was to create small businesses and jobs by processing — rather than simply growing — Texas agricultural products.
The program immediately got mired in partisan politics, with Agriculture Commissioner Jim Hightower, a Democrat, on one side, and the Republican members of the finance authority appointed by Gov. Bill Clements on the other.
The impasse ensured that no loans were made during Hightower’s term.
In 1990, Perry campaigned on a promise to create jobs and expand the rural economy by making loans to agribusiness startups that would process the state’s agricultural products.
Clements’ appointees to the finance authority board gave Perry, a board member, sole authority to guarantee loans before newly elected Gov. Ann Richards, a Democrat, could replace them.
Under the program, the state would guarantee 90 percent of a lender’s loan — up to a maximum of $5 million — to an applicant.
Entrepreneurs lined up for money to spin cotton into yarn, process meats, develop cotton insulation, market canna bulbs to wholesale nurseries and sell pinto beans as a ready-to-eat frozen meal, to name a few.
‘This has not cost Texans money’
Perry had made four loan guarantees for $5.8 million by the time the attorney general ruled that he had to share that authority with his fellow board members. Even then, Perry and his staff drove the decisions.
Mary Webb, a Richards appointee who joined the finance authority as chairwoman in 1992, said the part-time board members had to rely on Perry’s staff at the agriculture department when screening loan applications.
“They did the legwork,” she said. “We looked at the deals to see if they fit with the legislation: Would they create jobs and help the agriculture community?”
By the time Webb left the board in 1995, she said she knew a couple of loans were in trouble. She said she learned only later the scope of the problems with other loans.
The first loan guarantees were financed by selling $25 million in bonds.
Twice, in 1993 and 1995, Perry campaigned for voters to approve more bonding authority.
Perry claimed the first two years of the program had created 4,100 jobs and pumped $390 million into the economy by guaranteeing loans to 47 companies. He predicted more than 40,000 jobs could be created with the additional bonding authority.
He didn’t mention troubled loans as he touted the program’s virtues at a 1993 Capitol press conference: “We think that this Texas Ag Finance Authority is, without a doubt, one of the finest programs that the Texas Legislature, that the citizens of Texas have ever gone forward with.”
At another stop, Perry said, “We can truly say it has not cost the taxpayers of Texas any money.”
Voters turned him down in 1993, but Perry finally won an extra $200 million in bonding authority two years later.
“This is one of the few government programs that truly has worked,” Perry said. “This has not cost Texans money.”
In January 1997, State Auditor Lawrence Alwin first alerted state officials, saying Perry and the board had violated their own lending guidelines.
He said 10 of the 48 companies had defaulted, and six more were in trouble. The first bad loans were written off as uncollectible in 1995, according to records.
Alwin also debunked a $40,000 report by a state-paid consultant claiming the program had created or retained more than 5,000 jobs at a cost of $412 per job as well as contributing $600 million to the economy.
The consultant’s data, which Perry submitted to the Legislature, were “unverifiable, incomplete, untimely, and inconsistent” and based on unrealistic assumptions about job creation, Alwin concluded.
A year later, Alwin warned that the situation had gotten worse. The program was $5.7 million in the red because of bad loans.
The issue hit the newspapers.
Perry and his lieutenants defended the program.
Deputy Agriculture Commissioner Larry Soward told The Dallas Morning News that the audit reflected a number of bad loans made early in the program to farmers and ranchers trying their first business ventures.
“The business acumen of the people behind them might not have been as strong as possible,” Soward said.
But he insisted the program would rebound: “The fact that there is a negative balance does not mean the program is in trouble.”
Perry echoed a similar refrain in a guest column in the Amarillo Daily News.
“By their very nature, TAFA loans are considered higher risk. Because of this, some defaults were inevitable and a negative balance was expected in the early years of the program,” he wrote.
He blamed the problems on “some unfortunate decisions made by the previous TAFA board early in the program.”
Perry promised the problem was fixed. “Today, TAFA is on solid footing with a positive balance projected by 2010,” he wrote.
He reminded readers that the loans were funded by debt — commercial paper: “No taxpayer money has ever been used to make TAFA loans.”
In 1998, Perry was elected lieutenant governor, and Combs succeeded him as agriculture commissioner.
She talked of expanding the loan guarantee program to other borrowers beyond food and fiber processors. But she asked Alwin to do a follow-up audit.
His warning was prescient. He said a program that guaranteed loans to people who typically couldn’t qualify for commercial loans would have a hard time finding enough good loans to generate the income to offset the losses from the bad ones.
In 2002, Combs and the agricultural finance authority bowed to that reality, suspending any new loans.
Twenty-nine of 102 guaranteed loans defaulted, almost all of them during Perry’s tenure, according to the records provided this month by the agriculture department.
While the majority of the loans were in good standing, the majority of the original $25 million — $14.7 million — was bad debt. Just as the auditor warned, the income from the good loans could not generate enough cash to make the program self-sustaining.
“We hit a brick wall,” Staples said in 2009.
By: Laylan Copelin, American-Statesman Staff, Statesman.com, October 22, 2011
Job Creation: Small Isn’t Always Beautiful
I challenge you to find a stump speech by a politician running for any office from dog catcher to president that doesn’t invoke the importance of small businesses.
That’s not necessarily a bad thing. It’s a hat tip to American entrepreneurialism, evoking images like that of Steve Jobs planting a seed in his garage that grew into an amazing Apple orchard. Besides, don’t most people work for small businesses, and aren’t such businesses the engine of job growth?
Actually, no. In what may be the most misunderstood fact about the job market, although most companies are small — according to 2008 census data, 61 percent are small businesses with fewer than four workers — more than two-thirds of the American work force is employed by companies with more than 100 workers. You can tweak the definitions, but even if you define “small” as fewer than 500 people (as the federal government does, basically), you still find that half the work force is employed by large businesses.
It’s even more stunning when it comes to payrolls: 57 percent of total compensation is paid out by companies of 500 or more employees, with most of that coming from the largest, those with at least 10,000 employees. And new research by the Treasury Department finds that small businesses — defined as those with income between $10,000 and $10 million, or about 99 percent of all businesses — account for just 17 percent of business income, and only 23 percent of them pay any wages at all.
But don’t small businesses at least fuel job growth? Sort of. It’s not small businesses that matter, but new businesses, which by definition create new jobs. Real job creation, though, doesn’t kick in until those small businesses survive and grow into larger operations. In fact, according to path-breaking work by the economist John C. Haltiwanger and his colleagues, once they accounted for the outsize contributions by new and young companies, they found “no systematic relationship” between net job growth and company size.
It’s unlikely such findings will change politicians’ speeches trumpeting small businesses. But if we want to get our job market back on track, they should inform our policy thinking. For example, it’s not only the case that start-ups are of particular importance to robust job growth. They’ve been creating fewer jobs over the last decade. Employment at start-ups fell by almost half, and those losses predated the “Great Recession” — probably one reason job growth was so lackluster over the last decade’s expansion.
Economists do not yet have a good answer as to why start-ups and surviving young companies are creating fewer jobs, but it may have something to do with “allocative inefficiency.” Too many resources flowed to financial engineering in the last decade, and too few went to R & D and innovation outside of the financial sector. The decline of American manufacturing plays a role here as well, as the sector has historically accounted for 70 percent of job-creating private-sector R & D, often in partnership with start-ups and small suppliers.
This isn’t to say that public policy should abandon small businesses. Many face distinctive hurdles compared with large businesses: they have tighter profit margins and thus less room for mistakes, they have diminished access to credit markets and, even with creditworthy borrowing records, many say they’re not getting the loans they need. Small manufacturers often have less access to export markets, and, with emerging economies growing a lot faster than advanced economies, that’s a big disadvantage.
Yet the sector’s primary lobbying group — the National Federation of Independent Business — tends to fight less for these pragmatic policies and more for the standard conservative agenda of lower taxes and deregulation. Indeed, the group has become a purely partisan operation, fighting more for Republican electoral victory than small-business growth. For example, it opposed the president’s jobs bill, even though independent analysts estimated it would significantly increase economic demand, and the federation’s own survey shows that “poor sales” — a k a weak demand — is a much bigger problem for its members than taxes or regulations.
The next time a politician tells you how he or she is for small business (which will likely be the next time you hear a politician say anything), be mindful that to the extent that size matters at all for job growth, it’s really about new companies that will start small and, if they survive, perhaps grow large. Everything else is largely noise — and too often, noise that has little to do with what this economy really needs.
By: Jared Bernstein, Op-Ed Contributor, The New York Times, October 23, 2011
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