Unemployment benefits extensions are set to expire on Tuesday, Nov. 30. At the moment, there doesn't seem to be many on Capitol Hill overly concerned that another two million people, many of whom seem the extensions as their only financial lifeline in a flat economy, will soon see their unemployment benefits disappear. According to OpenCongress.org, there is nothing about unemployment benefits scheduled for introduction or debate in Congress on the last two days of November.
The lame duck House of Representatives is in session. For Republicans, that means that anything they oppose can be delayed, voted against, tabled, shelved, or sent on to the Senate to be filibustered. The lame-duck Congress is not only in session, it is in season -- and Republicans are loaded and prepared to kill off as much of the Democratic legislation as they can push through in the next few weeks before the Republican-heavy 112th Congress convenes.
Part of that lame-uck legislation is emergency unemployment benefits and the Tier unemployment extensions. Republicans already knocked down a proposal to extend unemployment benefits through February 2011. They argued that the Democratic proposal did not pay for the extensions and would therefore increase the deficit and the national debt. Instead of compromise or finding the means to pay for the unemployment benefits extensions, Democrats simply fell back on the argument that the unemployment extensions were necessary for a sluggish economy and that there had never been an instance where the unemployment rate was above 7 percent and the U. S. Congress had denied unemployed Americans emergency benefits.
In short: the Republicans are crying fiscal and future expenditure responsibility (something their record indicates they know little about) to deny benefits while the Democrats cry economic and humanitarian necessity (while ignoring fiscal responsibility and therefore playing into Republicans' hand).
But as the last unemployment benefits extension package reaches expiration, there are rumblings of a deal in which Republicans, who are exceptionally interested in continuing the Bush tax cuts to all Americans (including the 2-3 percent of the income earners that are among the wealthiest in the nation), might be open to a compromise with Democrats, who only want to extend the Bush tax cuts for those making less than $250,000 per year. Some believe that Republicans might find leeway in their opposition to the unpaid-for unemployment benefits extensions if the Democrats allow the passage of continuation legislation for the Bush tax cuts, which will expire at the end of the year. This deal would include President Obama's signature of approval.
In order for millions that might see homelessness, financial ruin, and/or another financial lifeline extinguished in the next few weeks (or months, if benefits remain unextended through January and so on), Congress will be working on a December deal where the richest and those able to afford the cessation of the Bush tax cuts, not to mention adding nearly a trillion dollars to the national deficit over the next decade.
Sounds like a deal being negotiated by people who have the time and money to do so. While millions are watching their unemployment benefits (which average -- with an emphasis on average -- around $300 per week) expire in an economy that is producing only one job (and usually one that underpays the unemployed prospective job seeker) for every individual looking for work, a group of legislators that count amongst themselves 261 millionaires (according to OpenSecrets.org) will try to reach a compromise on legislation that will extend benefits to the jobless and extend tax cuts to the nation's wealthiest.
Having plenty of money and receiving a paycheck that exceeds $3,346 per week (which is the current regular salary of each member of Congress -- $174,000 per year) apparently dulls one's senses to the urgency of those struggling to simply maintain their household and find meaningful employment. As the Bush tax cuts expiration date nears, it will be interesting to note how quickly Republicans and Democrats come together to get something passed in the lame duck Congress. Because there is little doubt that the Bush tax cuts -- all of them -- will now be extended in order for both parties to get what they want. It is now just a matter of negotiating the terms of compromise.
And how lame the Democrats really are will be seen in the number of months of unemployment benefits extension they command in order to give the Republicans (and the wealthy) their precious tax cuts. Given the economic expectations of the coming year (unemployment to remain relatively level with its current rate) and the damage to the national debt the Bush tax cuts will incur in the next decade, anything less than a year of unemployment benefits extensions would be lame indeed.
Tuesday, November 30, 2010
Wednesday, November 24, 2010
New Unemployment Claims Drop
New U.S. claims for unemployment benefits last week dropped to their lowest level in more than two years while consumer spending rose in October, pointing to a moderate strengthening in economic activity.
Initial claims for state unemployment benefits fell 34,000 to a seasonally adjusted 407,000, the Labor Department said on Wednesday, the lowest since mid-July 2008. That was well below economists' expectations for a fall to 435,000.
The news was tempered by a surprise drop in new home sales last month, a reminder that growth would remain sluggish.
Tuesday, November 23, 2010
Small investors permanently soured on stocks?
In 2008, $234 billion flowed out of equity mutual funds; the selling really intensified in the fourth quarter. In 2009, some thought the worst was over, but $9 billion still flowed out of equity funds. In 2010, the outflows picked up again.
As of the end of August, about $19 billion had left stock mutual funds.
So, what to make of this? Reuters suggests that the break between retail investors and the stock market is deep and lasting. The worry now is that a Lost Decade will create a Lost Generation of investors who avoid the market in a way not seen since the Great Depression.
Thursday, November 18, 2010
Wednesday, November 17, 2010
3 banks may be nearing deal on foreclosures
Three big U.S. banks are nearing a settlement in which they would compensate borrowers whose homes were improperly foreclosed upon, according to a CNBC report.
Bank of America Corp., JPMorgan Chase & Co. and Wells Fargo & Co. would also agree not to start foreclosure proceedings until they have exhausted all efforts to modify a borrower's mortgage, CNBC is reporting. Many borrowers have complained of receiving foreclosure notices while they're negotiating to lower their loan payments.
CNBC attributes its report of the potential settlement to officials at the banks and among state attorneys general investigating foreclosure practices. It comes as Bank of America and JPMorgan are testifying on the topic to a hearing of the Senate Banking Committee.
Bank of America Corp., JPMorgan Chase & Co. and Wells Fargo & Co. would also agree not to start foreclosure proceedings until they have exhausted all efforts to modify a borrower's mortgage, CNBC is reporting. Many borrowers have complained of receiving foreclosure notices while they're negotiating to lower their loan payments.
CNBC attributes its report of the potential settlement to officials at the banks and among state attorneys general investigating foreclosure practices. It comes as Bank of America and JPMorgan are testifying on the topic to a hearing of the Senate Banking Committee.
Monday, November 15, 2010
Actions in the foreclosure / modification puzzle
The attorney general of Florida has wrapped up his meeting with five lenders and mortgage servicers, Ally, PNC, Bank of America, JPMorgan Chase and Goldman Sachs' Litton Loan Servicing, which has also put foreclosures on hold temporarily. Florida Attorney General Bill McCollum sought the meeting way back on October 12, according to Bloomberg, to "discuss ways to promptly and effectively redeem the integrity" of foreclosures.
Elsewhere, Iowa Attorney General Thomas Miller is moving the 50-state investigation task force forward, but there's also a lot of specific activity by states.
Other meetings between banks and AGs have already been wrapped up. Colorado's AG met with several. Maine may join a class action suit against Ally/GMAC. Ohio's AG has already sued Ally/GMAC.
So it remains unclear exactly how the AGs will move toward a solution. FOX Business has reported, however, that a settlement is coming in December, one that will require judge-driven modifications, better processes and perhaps a fine. You do get the sense that solutions rather than punishment is a priority. But I am not sure if forced modifications will speed up the process. The current modification wave has hardly been inspiring.
Elsewhere, Iowa Attorney General Thomas Miller is moving the 50-state investigation task force forward, but there's also a lot of specific activity by states.
Other meetings between banks and AGs have already been wrapped up. Colorado's AG met with several. Maine may join a class action suit against Ally/GMAC. Ohio's AG has already sued Ally/GMAC.
So it remains unclear exactly how the AGs will move toward a solution. FOX Business has reported, however, that a settlement is coming in December, one that will require judge-driven modifications, better processes and perhaps a fine. You do get the sense that solutions rather than punishment is a priority. But I am not sure if forced modifications will speed up the process. The current modification wave has hardly been inspiring.
Sunday, November 14, 2010
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