Saturday, January 14, 2012

The Debt Ceiling Fight - It's Coming Back

For those (like the writer) who found the federal debt dealing fight of last Summer to be essentially political theater, with no resolution of long-term structural issues, we should be aware that this particular drama will probably be replayed before the end of the year, or very soon thereafter.

The current debt limit is about $16.4 trillion.  Researchers at Goldman Sachs have run the numbers and they forecast that we will hit that mark in late November, conveniently after the elections.  Shifting some federal internal finances around could operate to move that date to mid-January, but still making it likely that the debt crisis will be addressed by a lame-duck Congress.

The chart below, courtesy of Goldman Sachs, presents the reality of the situation.

Of course, an unexpected economic surprise (conflict with Iran, collapse of the Euro, etc.) could move the decision date up substantially, due to lessened tax revenue.

So, stay tuned!

Tuesday, January 10, 2012

Occupy Wall Street, College and Jobs

One of the issues raised by the Occupy movement has been unemployment among college graduates, especially if combined with large levels of educational-related debt.

So, I thought it might be interesting to research the actual current unemployment level among college graduates, so as to have a firm idea of the magnitude of this problem.

It turns out that it may not be as much of a problem as some people might think.

According to the most recent numbers from the Bureau of Labor Statistics (see, for persons 25 years and older, the seasonally adjusted unemployment rate for college graduates (including those with advanced degrees) as of December 2011 was only 4.1%.

[To put this in context, the unemployment rate for those without a high school diploma was 13.8%, for those with a high school diploma was 8.7% and for those with some college but without a bachelor's or higher degree was 7.7%.]

And in the last year or so, the unemployment rate for college (and above) graduates has continued a significant downward trend.  See the following chart, based on BLS data, from the National Association of Colleges and Employers ( through November:

Unemployment Among College Grads

So, the take-away may be that while unemployment is a very unfortunate condition for anyone, for those with college or other advanced degrees the problem may not be as bad as some people might think.

Tuesday, January 3, 2012

The President's Re-Election Strategy

Perhaps unsurprisingly, we learn from a recent Washington Post story ( that the President's core re-election strategy will be to "(k)eep beating up on an unpopular Congress.

Given an economy with continuing serious issues regarding a significant lack of jobs and concerns about continuing wealth and income inequalities to which no one has made any meaningful proposals to address, this may be a natural path for the President to take.  After all, if Congress has an historically low approval rating, running against it may hold out the possibility of tapping into a shared distaste for an evidently ineffective institution.

However, the strategy is not without some significant risks, including the following:

1.  Such a strategy does not actually address any of the voters' substantive concerns, such as unemployment, high debt levels, structural deficits, the need for entitlement reform, budget cuts or social inequalities or present a record of solving those issues.

2.  For the first two years of his term, the President's party not only controlled both houses of Congress, but their most significant achievement (ObamaCare) has features opposed by large portions of the electorate.

3.  During that period, as well as thereafter, there was no meaningful progress on entitlement reform, the structural deficit and increasing debt levels, budget cuts or otherwise.

4.  Similarly, the President not only failed to support the recommendations of his own fiscal commission, but also advanced no specific proposals for entitlement reform, the structural deficit and increasing debt levels, or budget cuts.  Generally, if one plans to complain about obstructionism, it's a political advantage to have a record of having made your own proposals, with specific, substantive detail, for solutions to major outstanding issues, which the voters can then evaluate.

5.  Finally, if (as seems likely), the Republicans retain control of the House (and practical "blocking" control of the Senate), running against the folks you will have to work with, and claiming they put party over country, bodes ill for future cooperation between the two branches of government.  This may be especially so if Governor Romney is the eventual nominee and can present a record of having successfully having worked with a Democratic legislature in his home state.