Demand is escalating for multi-generational housing as buyers scale down during the deepest housing crisis since the Great Depression, according to a survey by Coldwell Banker Real Estate in Parsippany, New Jersey.
Thirty-seven percent of the company’s real estate agents polled in January said that in the past year, buyers were increasingly shopping for homes that fit more than one generation. Almost 70 percent of the agents said they expect economic conditions will drive still greater demand for this type of housing over the next year.
34% of the young workers surveyed still live with parents—theirs or a spouse’s. For those making less than $30,000 per year, 52% were still living with parents. That doesn’t just affect young people, either.
Another thing that poll found was a loss of hope among young workers. In 1999, 77% of young workers said they felt “hopeful and confident about being able to achieve economic and financial goals over next five years.” In 2009, just 55% felt that way.
This housing trend of families gathering together to buy houses that will fit multiple generations is yet another sign of a loss of optimism. People aren’t thinking that having adult children living with their parents is just temporary—they’re planning for it to continue for years to come. Do you think they’d be doing that if they thought things were going to get better any time soon?
In advance of the planned bipartisan meeting on health care reform, the White House released a health care reform proposal. You can read the proposal here; mcjoan at Daily Kos writes that:
The strong message from the White House is that they are prepared to use reconciliation to pass this bill, with Pfeiffer reiterating their need for an “up or down” vote on reform, breaking a Republican filibuster as needed.
Jason Rosenbaum summarizes the bill at HCAN, while ThinkProgress has a table laying out the key differences between this bill, the Senate bill, and the House bill.
Both point to improved subsidies for lower- and middle-income people; the closing of the Medicare Part D donut hole; an increase in the value of insurance plans that will be exempted from the excise tax, and a delay in when the excise tax starts hitting people’s policies. According to ThinkProgress,
The White House explained that it paid for its changes (which cost approximately $75 billion) by levying higher penalties on individuals and employers that don’t meet the legislation’s requirements, extending the payroll tax to unearned income, $10 billion in fees on branded pharmaceuticals, and increased savings from Medicare Advantage.
The proposal also eliminates the so-called Cornhusker kickback and provides full federal funding for Medicaid expansion for four years starting in 2014. Between 2018 and 2019, the federal government will pay 90% of the cost of the expansion and provide extra funds to states with generous Medicaid programs.
The question, of course, is “will it pass?” If it gets through the Senate using reconciliation to bypass the inevitable Republican filibuster, is it a strong enough bill to pass the House? That we’ll have to wait to see, but after being stalled for months, any movement toward the health care reform this country so badly needs is more than welcome.
As important as human stories are, the New York Times sort of buries the lede in their major new story about people dealing with long-term unemployment.
Shining a light on the fact that people who have worked all their lives are sending out “dozens of resumes a week” and not getting interviews, let alone jobs; that people who once earned substantial commissions from their sales jobs are now desperate for sales jobs with a set wage barely big enough to scrape by on; that when unemployment insurance extensions are delayed, as is happening right now, people suffer; shining that light is important.
But understanding why is more important, and that’s information the Times gives us, but doesn’t foreground. So this is the big story here: Businesses don’t want to be employers.
“American business is about maximizing shareholder value,” said Allen Sinai, chief global economist at the research firm Decision Economics. “You basically don’t want workers. You hire less, and you try to find capital equipment to replace them.”
And our safety net was built for a system in which there are jobs, has over the years been shredded in ways designed to punish people for not having jobs, and isn’t being rewoven to adjust to the new reality.
We’ve written before about the Student Aid and Fiscal Responsibility Act, an excellent bill that would simultaneously save the government billions of dollars and increasing the financial aid available to students. I’m going to repeat that: This bill saves money and helps students graduate from college with less debt. Who could possibly object to that?
The financial industry, of course.
See, the bill saves money by cutting out the big lenders that currently act as middle men between the government and the students. The government subsidizes and guarantees the loans, and the lenders impose fees and high interest—even though, because the loans are guaranteed, they don’t face much risk. The big private lenders see that as their money. They don’t get that they’re supposed to be providing a service and helping kids afford to go to college. They’re only interested in how big a cut they can squeeze out of the student loan business.
So the lenders are waging a major lobbying effort against saving the government money and helping kids go to college:
“We haven’t left any stone unturned — we’ll meet with anyone who will meet us,” Mr. Remondi said in an interview. “We’re trying to identify at least 12 senators who would be helpful in this process.”
At the same time, Sallie Mae and other lenders have staged a series of town-hall-style meetings at their job centers around the country to help mobilize opposition to the White House plan and collect thousands of signatures for a petition drive in support of their own plan.
But money talks in the Senate bigtime. And Democratic lobbyists — like former Clinton official Jamie Gorelick — have no shame. Gorelick hilariously says the White House is reluctant to make Senators make a vote that “is very unpopular” in their states. This gives new meaning to the phrase “no brainer.”
Instead of tackling the massive jobs crisis head-on, with large-scale legislation that combines needed solutions on multiple fronts, the Senate appears to be adopting a piecemeal approach.
The most urgent immediate priorities should be extending jobless benefits and other safety net programs, and providing major fiscal relief to state and local governments. Those two pieces could be legislated separately if need be. But the Senate’s current plan starts with the wrong piece. And a not-so-good piece at that. The proposed tax break for employers that is the core of the Senate bill would likely have little impact on job-creation.
It’s great that the Senate is prepared to do something to help create jobs. Unfortunately, its most likely course of action, the Schumer-Hatch tax credit will probably create almost no jobs.
The basic deal with Schumer-Hatch is provide a tax credit equal to the 6.2 percent employer side of the Social Security tax. This credit would last for the rest of 2010. If the employee is kept on the payroll for a year, then the employer gets an additional $1,000. Only workers who have been unemployed for at least 60 days are eligible for the credit.
There are two basic problems with the credit. First, there are more than 4 million workers hired every month already. A firm could get the credit for any hires among these 4 million who has been unemployed for 60 days, even if they would have hired the person anyhow. This is a lot of money for nothing.
The second problem is that the credit is far too small to provide any significant incentive to hiring.
The New York Times, which called the bill “puny” and “pathetic”, wrote:
Most of the $15 billion would cover the cost of a payroll tax holiday in 2010 for employers that hire unemployed workers. Since there are more than six unemployed workers for every job opening, a tax break for hiring is worth a try. But the proposed credit is too small to have a noticeable impact. At best, it would create about 250,000 additional jobs from April through the end of the year, according to an analysis by Moody’s Economy.com.
An even bigger problem is that the hiring credit is unlikely to work as intended unless it’s paired with other federal support to generate and maintain consumer demand — mainly extended unemployment benefits and more fiscal aid to states. No matter what Congress does to lower the cost of labor, employers won’t hire unless they believe demand will be sufficient to sell whatever the business produces.
A detailed analysis by Timothy J. Bartik, senior economist with the W.E. Upjohn Institute, published last week by the Economic Policy Institute (EPI) warned “Not all job creation tax credits are created equal”:
Well-designed employer tax credits can encourage significant job creation, and at an affordable cost per job. But the devil is in the details. The employer tax credit in the Senate’s “jobs bill” is likely to create few jobs, and at an excessively high cost.
The Senate’s employer tax credit is based on a design proposed by Senators Chuck Schumer and Orrin Hatch. The Schumer-Hatch proposal has several questionable design details: (1) credits are awarded for hires, not net job creation by employers; (2) the credits are limited to hires of persons unemployed at least 60 days; (3) the credit rate is only 6.2% for the rest of 2010; and (4) there is a modest retention bonus of $1,000 per new hire retained for a year, but little up-front cash to encourage job creation.
Are there alternative employer tax credits to the Schumer-Hatch approach that would be more effective in creating jobs? Yes, there are a number of good alternatives, including the proposal made by President Obama, proposals made by Senators Robert Casey and Russ Feingold, and Congressman Bob Etheridge, and finally the proposal that we developed for EPI. These better proposals have the following features:
They provide incentives that are tied to whether the employer expands employment and payroll, not simply on whether the employer is hiring. Net employment and payroll expansion is what we want to reward, not simply hiring and keeping the number of employees the same.
They focus simply on employment and payroll expansion, not who is hired, which is more complicated to administer and monitor and reduces employer interest in a tax credit.
They are large enough that it is more plausible that the credit will significantly change employer behavior, rather than simply being claimed for a hire that would have been undertaken anyway.
They provide sufficient immediate assistance that the credit can boost job creation with those employers concerned about cash-flow.
If we want to effectively encourage job growth through a tax credit, we need a program that tightly targets that goal with a large enough credit to significantly affect employer’s hiring decisions. And if we want to effectively target who gets hired, we need to run such efforts through the workforce system, which can perform the required matching, monitoring, and support.
According to our estimates, a tax credit for firms equal to 15% of expanded payroll costs would lead them to hire an additional 2.8 million employees next year. Such a credit would have to be:
1. Wide-ranging. The tax credit should be designed to stimulate a wide range of jobs across economic sectors and across all kinds of firms, regardless of size or current profitability.
2. Temporary. It should be of limited duration to encourage job creation when the labor market is weakest and to limit the cost to the treasury.
3. Large. It should be large enough so that it will lead firms to hire new employees and cause a significant number of jobs to be created economy-wide.
4. Efficient. The tax credit should target new job creation as much as possible and not simply be a handout to businesses.
In line with these principles, we suggest a broad-based refundable tax credit for employers that expand their workforce in 2010 and 2011. In the first year the credit would be equal to 15% of the net increase in that portion of a firm’s payroll subject to Social Security taxes. In the second year the credit would drop to 10%. The reduction in the second year would encourage firms to hire sooner rather than later and would provide a significant incentive for expanded employment.
By basing the credit on total Social Security payroll taxes, it would also reward expansion of work hours as well as employment. And basing it on that portion of wages subject to Social Security payroll taxes ensures that the credit does not apply to wages increases for very high wage earners.
EPI’s job-creation tax credit is the fifth component of their American Jobs Plan, the basis of the five-point plan supported by the AFL-CIO and its Jobs for America Now coalition partners. In the interest of saving the Senate a lot of extra work, perhaps it should simply adopt this entirely workable jobs plan — piecemeal if the Senate insists.
Anthem’s rate hikes in California are only the beginning. Dramatic rate hikes are expected in a number of other states. HHS Secretary Kathleen Sebelius is releasing a report today. From TPM:
Among the findings:
Anthem of Connecticut requested an increase of 24 percent last year, which was rejected by the state.
Anthem in Maine had an 18.5-percent premium increase rejected by the state last year as being “excessive and unfairly discriminatory” – but is now requesting a 23-percent increase this year.
In 2009, Blue Cross/Blue Shield of Michigan requested approval for premium increases of 56 percent for plans sold on the individual market.
Regency Blue Cross Blue Shield of Oregon requested a 20-percent premium increase.
UnitedHealth, Tufts, and Blue Cross requested 13- to 16-percent rate increases in Rhode Island.
And rates for some individual health plans in Washington increased by up to 40 percent until Washington State imposed stiffer premium regulations.
You might think that in a time of deep recession, with over 10% unemployment that they might scale back a little – but clearly these companies have no shame.
This says it all:
“[P]rofits for the ten largest insurance companies increased 250 percent between 2000 and 2009, ten times faster than inflation,” the report finds.
And this really sums it up: Pirates of the Health Care-ibean
Nearly 200 major national, state and local organizations representing tens of millions of Americans have signed on to a letter to Congress calling for an immediate full-year extension of the urgently needed jobless benefit programs initiated in last year’s Recovery Act, before they expire February 28th.
We are writing to strongly urge the Senate and the House of Representatives to act immediately to continue the Recovery Act’s aid to the jobless as a stand‐alone measure through the end of 2010.
Congress and President Obama took bold action one year ago to enact major benefits for today’s jobless families, including the extension of jobless benefits and subsidized COBRA coverage. Subsequent expansions of the program, including the 14‐20 week expansion of Emergency Unemployment Compensation (EUC), have also gone a long way to respond to the severity of the crisis of long‐term unemployment that has now gripped the nation, with more than 40% of all unemployed workers still struggling to find work after six months and more than six unemployed workers looking for every available job.
While the jobless aid provided by the Recovery Act has been significant, the decision of Congress to adopt limited extensions of the program have caused severe hardship, both for unemployed workers and the state systems that are struggling with severely outdated equipment and insufficient staff and resources to process over 10 million unemployment checks each week. Indeed, as result of the limited two ‐month extension that expires February 28th starting in the week of February 15th, the states will be forced to spend time and resources they can ill‐ afford to waste notifying workers that the extended UI programs are shutting down. They will also need to start reprogramming their computers to implement the required shut‐down as of March 1st.
If Congress does not take final action by February 22nd, the states will no longer be in a position to reverse the process and there will be mass confusion among desperate workers whose only means to pay their groceries and housing is their limited unemployment benefits. Moreover, the delay will wreak havoc on the state agencies as a result of the extra work required to shut down the programs and the immediate need to respond to the flood of phone calls that will start coming in from panicked workers.
By every economic indicator, the extension of jobless aid provided by the Recovery Act should continue through the end of year. As recently documented by the Congressional Budget Office, the extension of jobless aid also provides the most significant boost to the economy and job growth of any policy option being debated by Congress. It provides $1.90 in stimulus for every dollar spent, and will be responsible for creating 800,000 jobs this year alone. In spite of the importance of this program, the House of Representatives passed a jobs bill in December that includes an extension of jobless aid only through June and the recent draft of the Senate jobs bill only continues the program through May.
Given the severity of the crisis and latest evidence of the problems associated with a short‐term continuation of the program, these limited extensions of jobless aid can no longer be sustained. These short‐term extensions simply do not measure up to the realities facing unemployed workers in today’s economy or to the serious challenges facing the state agencies that process the benefits.
Accordingly, we call on Congress to enact a stand‐alone continuation of the jobless aid provisions of the Recovery Act as its first measure of business when it returns from recess, and to continue the program through the end of the year.
Working America is one of the nearly 200 co-signing organizations.
When Congress returns from its Presidents’ Day recess on Monday, February 22nd, clearly the jobless benefit extensions must be the first order of business.
The growing coalition movement for jobs is planning a national call-in to Congress next week on this urgent issue. Stay tuned. And take action now to tell Congress: Don’t let the lifeline be cut off — extend jobless benefits and create jobs for Main Street.
This is something Massachusetts is going to want to fix:
The depth and duration of the recent recession have twisted a system designed to help people through short bouts of unemployment, officials said. Normally, unemployed workers in Massachusetts do not collect benefits for an entire year. The limit is 30 weeks, with workers allowed to refile a claim after a year if they worked in the previous 12 months. That rule was meant as an incentive for unemployed workers to take part-time or temporary jobs.
But with federal extensions making unemployed workers eligible for nearly two years of benefits, that incentive has become a penalty. Federal law requires states to adjust benefits after a year for people who worked in the previous 12 months. Workers who were unemployed more than a year, and who took a short-term job during that time, have benefits based on the wages from that temporary position, which are often less than their permanent wages.
The government has much less income inequality than most American job sectors—cashiers make a living wage, and nobody is earning inflated CEO wages. In other words, government jobs are solid middle-class jobs. So naturally they’re being attacked as paying way too much.
Being able to buy health insurance across state lines sounds like a good idea. Why isn’t it?
In practice, letting people buy insurance from any state would result in an immediate race to the bottom, of the kind we’ve seen in the credit card industry. Ever wonder why all your credit card bills go to South Dakota? The reason is that unlike most states, South Dakota has a virtually limitless “usury” law, meaning businesses located there can charge as much interest as they like. Their law was literally written by Citibank in 1980. In short order, credit card companies moved their operations there (and to other states like Delaware that passed similar laws), so they can charge you 25 percent interest on your card. If everyone were allowed to buy insurance from any state, we would see something similar: Companies in states with the weakest regulations would be able to lure customers with low rates that look like a bargain, until you get sick and realize your insurance doesn’t cover anything.
But here’s a way the Republican argument can be answered: You don’t want to be forced to buy insurance in your state? Well we’ve got the ticket for you. It’s called the national insurance exchange. It’ll allow you to buy insurance from companies headquartered anywhere! As long as they meet the requirements of the exchange — which ensure that they can’t screw their customers — they’ll be available to you no matter where you live. Your concern has been addressed.
On his way out of the Senate, Evan Bayh is supporting the finance industry over college students by opposing a bill that would cut private lenders out of student loans, saving billions of dollars and increasing the amount of loans available.
Credit card company CEOs and top executives have joined the ranks of the big bonus boys at Wall Street’s biggest banks, raking in bonuses and annual compensation for 2009 in excess of $10 million each.
Leaders in the pay sweepstakes include the heads of the credit card giants Visa, Mastercard Worldwide, Capital One Financial and American Express. Joseph W. Saunders, who runs Visa, was paid about $15.5 million
Mastercard president Ajay Banga took in $13.5 million. Hans Morris, former president of Visa, got $10.7 million while the CEOs of Capital One Financial and American Express each took in $10.6 million.
The head of Wells Fargo, the bank that became bigger than ever when it took over failing Wachovia at the end of 2008, became the highest paid big bank executive.
Topping the list is John G. Stumpf, head of Wells Fargo, the bank based in San Francisco, according to an analysis of 2009 compensation in the industry. Mr. Stumpf was paid a personal best of $18.7 million in cash and stock for 2009 — up 64 percent from 2007, just before the financial crisis struck.
The bonus package given to Jamie Dimon, CEO of JPMorgan Chase, is reportedly worth $17 million, while James P. Gorman, CEO of Morgan Stanley, got an $8 million bonus despite the bank having posted the first loss in its 74-year history.
If you’re having trouble wrapping your head around such huge sums, believe me you’re not alone. Just what is an annual pay package of, say $10 million equivalent to? It’s about $192,300 a week or a mere $4,800 an hour.
Other than driving the economy into the deepest recession since the Great Depression, throwing millions of people out of work, millions more out of their homes, jacking up credit card rates and fees and forcing millions more into bankruptcy — exactly what have these elite financial executives actually done to make that kind of money?
One thing they’ve done is to take hundreds of billions of tax dollars in bailout money.
Lobbying expenditures jumped 12% from 2008 to $29.8 million last year among the eight banks and private equity firms that spent the most to influence legislation, according to data compiled from disclosure forms filed with Congress.
The biggest spender was JPMorgan Chase & Co., whose lobbying budget rose 12% to $6.2 million, enough for the firm to have more than 30 lobbyists working for it. Among other banks, spending on lobbying rose 27% at Wells Fargo & Co. and 16% at Morgan Stanley.
“I have never seen such a scrum of bank lobbyists as I have in the last year — and I’ve worked on quite a few bank issues over the years,” said Ed Mierzwinski, a lobbyist for the U.S. Public Interest Research Group, a coalition of state consumer organizations. “It seems like everybody is out of work except for bank lobbyists.”
Americans for Financial Reform is a new national coalition of more than 200 organizations including Working America — groups that are fighting back against the big banks, credit card companies and their lobbyists. A new ad from several coalition partners is being aired:
It’s time to send a message to the big banks and the credit card bonus crowd. Tell them it’s their Final Notice – Payment Past Due. Your message will tell the Senate it’s time to enact a financial crisis responsibility fee on the biggest banks and establish a Consumer Financial Protection Agency to hold Wall Street accountable.
