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!
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 www.bls.gov/news.release/pdf/empsit.pdf), 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 (www.naceweb.org/s12072011/job_market_new_graduates/) through November:
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.
Perhaps unsurprisingly, we learn from a recent Washington Post story (www.washingtonpost.com/politics/obamas-2012-political-strategy-keep-attacking-unpopular-congress/2011/12/30/gIQATe7WRP_story.html) 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.
Although the US continues to have one of the highest levels of income disparities in the developed world, the growth in income disparity has been about as great or greater in other countries, including those with substantially different economic and social systems, including Israel, New Zealand, Germany, France, Finland and Sweden.
So, to the extent this is a problem in the U.S., we are not alone in it getting worse.
The only country that showed a decline in income disparity was Greece, perhaps due to their financial system cratering which, I suppose, is one way to solve the problem.
The OECD chart below gives the relevant data - increases are shown by the distance between the top of the blue lines and the red diamonds.
See the OECD Report at www.oecd.org/document/40/0,3746,en_21571361_44315115_49166760_1_1_1_1,00.html
With the rise of the Occupy movement (relatively quiescent now, after many evictions from public spaces), income and/or wealth inequality has become the issue de jour in some circles, even resulting in mention in recent speech by the President.
Putting to one side the fact that there have been relatively few specific proposals by any pubic officials to address income differentials in America, a question remains: How much are Americans actually concerned about this issue?
The answer, it appears, according to a recent Gallup Poll (www.gallup.com/poll/151568/Americans-Prioritize-Growing-Economy-Reducing-Wealth-Gap.aspx), is:
Not as much as some might expect.
When asked to rate the relative importance of government policies in various areas, here were the results regarding percentages rating such policies as extremely important:
Grow and expand the economy - 32%
Increase the opportunity for people to get ahead if they want to - 29%
Reduce the income and wealth gap between rich and poor - 17%.
Apparently, Americans remain strongly supportive of economic growth and equality of opportunity, but not of government steps to reduce the outcome of income or wealth disparities.
As the Gallup survey notes in its summary - "It is clear that while some Americans, disproportionately Democrats, consider it important that the federal government enact policies to reduce the income and wealth gap, many more Americans consider it important that the government grow the economy and increase the equality of opportunity."
A separate Gallup question found that "the fact that some people in the United States are rich and others are poor" is deemed "an acceptable part of the economic system" by 52% of those asked, a reversal from the last time the question was asked (in 1998) when 52% said that it was "a problem that needed to be fixed."
So, while steps to reduce income/wealth differentials may or may not be good policy (some differentials being an inherent part of any free market system - George Clooney will always make more than Joe the Plumber), it seems clear that support for proposals to reduce such disparities are, relatively speaking, simply not a high priority for most Americans.
In that regard, it may be that the Occupy activist's priorities are shared by only a small proportion of most Americans.
Political discourse moves on a number of different levels.
The short-term level is the one we most often see in the media, perhaps due to the media's self-imposed pressure to have something to talk about in between elections. The reporting on a candidates recent troubles, or yesterday's Occupy demonstrations, probably fall into this category.
The mid-term focus is, understandably, on such things as active campaigns and elections: Who won what and why, and what the prospects are for significant policy changes.
Often ignored are the longer-term forces in play, such as demographics, systemic changes in the economy and government's role, such as the growth of entitlement spending. It's certainly arguable that these forces have at least as much impact on public policy and politics as any of the shorter term movements, even if they are not regularly highlighted in the media.
It's those longer-term forces that I find most interesting and a recent graph from the Gallup organization highlights some of the systemic problems which face those urging a greater role for government in our society. See the graph below.
Looked at long-term, this dataset has a number of interesting lessons for us:
First, concern about a larger government role has grown with time.
Second, that concern has, throughout the period studied, been at a higher level than concerns over business or labor power.
Third, that concern is now at a level which is the second highest in the period studied, and is only one percentage point below the historical high. What makes this remarkable is that this is true even in an era of a poorly performing economy, from the standpoint of job creation, and during a period of concern over income inequality.
What is perhaps more surprising is that concern over big government is the leading concern, not merely among Republicans (as one would expect) and independents, but even among self-identified Democrats!
What this means for the upcoming election is something I'm not competent to analyze, but it will be interesting to see how this impacts any possible effects of the Occupy Wall Street movement.
As the Gallup report notes:
"The Occupy Wall Street movement, focused on 'fighting back against the corrosive power of major banks and multinational corporations,' has drawn much attention and a large following. Still, the majority of Americans do not view big business as the greatest threat to the country when asked to choose among big business, big government and big labor. In fact, American's concerns about big business have declined significantly since 2009.
Similarly, these are daunting numbers for anyone advocating an increased government role, such as those favoring a single payer system in health care.
The full Gallup report is at www.gallup.com/poll/151490/Fear-Big-Government-Near-Record-Level.aspx?utm_source=add%2Bthis&utm_medium=addthis.com&utm_campaign=sharing#.TuaETC1jbVs.twitter
