By Brian Beutler
The Recession in Spain
By Matthew Yglesias
The Spanish economy is hurting in a bad way amidst the global recession. I won’t try to pretend to have a particular deep grasp of the situation, but while the whole world is doing poorly right now Spain is doing especially badly — it’s a bit akin to the Florida of Europe, they grow citrus fruit and they had a ridiculous property bubble and now the economy’s in the toilet:
In barely a year, Spain has gone from creating a third of Europe’s new jobs to losing 40,000 a week as its decade-long housing bonanza collapsed at the same time as the global credit crisis. Spain’s jobless rate rose from 8.7 per cent to 14.4 per cent in 2008, a far bigger jump than elsewhere in the European Union. On average EU unemployment levels rose from 6.8 per cent to 7.4 per cent. Already 3.2 million people are out of work, but economists believe that 18 per cent of the workforce will be out of work by the end of 2009. In Spain unemployment benefit is usually paid for a year, so thousands who lost their jobs last year will be without state support this summer. Most will try to find work in the growing black economy.
The Bank of Spain was forced to concede last week what everyone knew already: the economy is in recession. During the fourth quarter of 2008, Spain’s gross domestic product contracted by 1.1 per cent, after a decline of 0.2 per cent in the previous quarter.
The Euro probably makes things worse. In the past, unusually poor economic conditions in Spain would lead to sharp devaluation of the peseta and boost the competitiveness of Spanish exports, but that’s now not the case. Meanwhile, the European Central Bank is going to set monetary policy based on a combination of the general situation in Europe (bad, but not as bad as in Spain) mixed with its habitual over-caution. And E.U. authorities in Brussels have enough clout to make it difficult for peripheral countries to pursue fiscal expansion, but not enough muscle to seriously focus resources on especially hard-hit countries.
Command and Control
by Ryan Avent
As Matt often emphasizes, there are a great many ways in which the government shapes our land-use patterns. Sprawl apologists often argue that low-density, suburban-style development has dominated the American landscape over the past half century because it is clearly superior to alternatives. Now, there’s no doubt that many Americans prefer suburban life. At the same time, it’s impossible to ignore the overwhelming way in which government policy has encouraged such development, intentionally, and unintentionally. The government didn’t necessarily intend for a massive network of (largely) free-to-user highways to spur suburban growth and gut urban centers, but it indisputably did. Similarly, the government’s long-term commitment to increased rates of homeownership wasn’t necessarily about changing land-use patterns. But as economist Ed Glaeser notes at the New Republic, the relationship between the policy and the outcome is clear:
Roughly 87 percent of all single-family detached homes are owner-occupied. Roughly 87 percent of all homes in buildings with five or more units are rented. Multi-family dwellings have common spaces, such as lobbies, and common infrastructure; sharing joint control over these things can often be quite difficult. Landlord control over large buildings irons out the difficulties of dealing with the cacophony of collective control.
The connection between homeownership and structure type implies that when the federal government gets into the business of supporting homeownership, it also gets into the business of supporting single-family detached homes–and this means supporting lower-density living. New Yorkers have converted plenty of rental units into co-ops, but still 77 percent of the households in Manhattan rent. The government’s big post-war push into homeownership was inevitably also a push to suburbanize. You do not need to be an enemy of the suburbs to wonder why the government is implicitly urging Americans to drive longer distances and flee denser living.
Of course, this is just one of many reasons why we should be skeptical of policies that subsidize homeownership. Such subsidies are regressive. They encourage heavy, leveraged investments in undiversified assets that perform unexceptionally over time. They reduce mobility, which prevents households from responding to changing economic conditions. And should there be a massive housing bubble and collapse, they put millions of households at risk of foreclosure and bankruptcy, and contribute to global economic meltdown. But for all this, the odds of a reversal of these policies, like the mortgage interest reduction, are basically zero. Which is yet another reason that we ought to focus on undoing other suburban subsidies wherever its politically feasible. Congestion pricing, which could address crowded freeways while funding better urban transport, is a good place to start.
Nuclear meltdown in Finland
This is the radioactivity-free kind of meltdown, as Helsingin Sanomat reported:
The Finnish nuclear power company Teollisuuden Voima (TVO) is seeking damages of EUR 2,400 million from the consortium of Areva and Siemens for delays in the construction of Finland’s fifth nuclear reactor in Olkiluoto.
Makes one look forward to what might happen if a truly litigous country had a major nuclear Renaissance fueled by, say, taxpayer money (see The nuclear bomb in the Senate stimulus plan).
The Finnish newspaper has a great photo of “The Olkiluoto III nuclear reactor construction site in December 2008.”
Here are more details on the meltdown between the partners in this debacle:
Democratic Senator Ben Nelson May Oppose Stimulus Package Because Of Pell Grant Funding
College students sought financial aid in record numbers last year, leading even Bush administration officials to call for an increase in Pell Grant funding — “the most important form of aid to needy students.”
Yet Sen. Ben Nelson (D-NE) is arguing against the House version of the economic recovery package because of its funding for Pell Grants. Nelson says he wants to eliminate “non-stimulative” and non-“job creation” items in the bill:
Even some Democrats are speaking out against including popular programs — such as an almost $15 billion increase in funding for Pell grants for higher education — in legislation that is supposed to spark an economic recovery. “You don’t want to be against Pell grants,” said Sen. Ben. Nelson (D-Neb.). “But the question is: How many people go to work on Pell grants?”
Increasing Pell Grant funding is a key way to preserve jobs in this tough economy. As grant recipients pay tuition and buy books, college faculty and staff will stay employed at a time when the education sector is experiencing widespread job cuts.
And with unemployment rising, Pell Grants provide workers with greater access to higher education — boosting their prospects for gaining employment. CAP’s Will Straw notes:
Improving the skills of unemployed American workers and providing funds to allow lower-income students to work their way through college would provide a boost to the economy and improve the workforce skills needed when businesses begin to hire again as the economy improves.
Furthermore, because the recession has forced colleges to raise tuition and cut aid, students receiving Pell Grants will quickly spend their loans, providing a short-term stimulus to the economy. In the long-term, increasing access to higher education is an investment that will help alleviate a human capital-starved economy.
Although Nelson has championed Pell Grant funding in the past, he is echoing right-wing talking points in labeling parts of the bill as “non-stimulative.” Putting off the Pell Grant shortfall for a later date is something the economy cannot afford.
Update
Mike Connery has more on Nelson and higher education.
Update
,Campus Progress has launched a take action campaign on higher education funding.
Israeli Gov’t Data Reveals Extent Of Illegal Settlements
Following up on Friday’s post on Israeli Foreign Minister Tzipi Livni’s campaign promise to maintain “maximum settlers” — despite having told 60 Minutes’ Bob Simon the opposite — Israel’s Haaretz newspaper reported last month on a declassified Israeli defense ministry database revealing the huge extent of the illegal settlement enterprise:
The official database, the most comprehensive one of its kind ever compiled in Israel about the territories, was recently obtained by Haaretz. Here, for the first time, information the state has been hiding for years is revealed. An analysis of the data reveals that, in the vast majority of the settlements — about 75 percent — construction, sometimes on a large scale, has been carried out without the appropriate permits or contrary to the permits that were issued. The database also shows that, in more than 30 settlements, extensive construction of buildings and infrastructure (roads, schools, synagogues, yeshivas and even police stations) has been carried out on private lands belonging to Palestinian West Bank residents.
The data, it should be stressed, do not refer only to the illegal outposts (information about which was included in the well-known report authored by attorney Talia Sasson and published in March 2005), but to the very heart of the settlement enterprise. [...]
The information contained in the database does not conform to the state’s official position, as presented, for instance, on the Foreign Ministry Web site, which states: “Israel’s actions relating to the use and allocation of land under its administration are all taken with strict regard to the rules and norms of international law — Israel does not requisition private land for the establishment of settlements.” Since in many of the settlements, it was the government itself, primarily through the Ministry of Construction and Housing, that was responsible for construction, and since many of the building violations involve infrastructure, roads, public buildings and so on, the official data also demonstrate government responsibility for the unrestrained planning and lack of enforcement of regulations in the territories.
Similar to the way the Bush administration used a set of baroque legal opinions to redefine torture as “not torture,” successive Israeli administrations have relied on a specialized interpretation of international law to define as “legal” its policy of transferring its citizens into occupied territories in order to solidify its hold upon conquered land. A strong international consensus considers this policy illegal under the Fourth Geneva Convention, and indeed it was was recognized as such in the Israeli government’s initial 1967 legal review of the settlement option. What’s particularly noteworthy about the new revelations — in addition to being yet more evidence that aggressive settlement expansion is in no sense the work of “rogue” elements, but is in fact a concerted effort to seize more Palestinian land in anticipation of future concessions — is how much of the settlement operation is illegal even under Israel’s own interpretation.
One of the reasons conservative pro-Israel zealots have been displeased by President Obama’s choice of George Mitchell as Israeli-Palestinian envoy is that Mitchell has in the past shown that, not only does he recognize how provocative and harmful the settlements are, he’s actually been willing to say so in public.
In their 2001 report examining the causes of the Al-Aqsa Intifada, the commission led by Senator Mitchell noted that “Palestinians are genuinely angry at the continued growth of settlements and at their daily experiences of humiliation and disruption as a result of Israel’s presence in the Palestinian territories. Palestinians see settlers and settlements in their midst not only as violating the spirit of the Oslo process, but also as application of force in the form of Israel’s overwhelming military superiority.”
In addition to stressing the need for an end to Palestinian terrorism, the report also concluded that a Palestinian-Israeli cease-fire would be “particularly hard to sustain unless the [government of Israel] freezes all settlement construction activity.” As they often do when confronted with evidence that policies they support help to fuel violence, conservatives attacked Mitchell for his “moral equivalence.”
The settlement problem has grown much worse in the interim, thanks in no small part to the Bush administration’s decision to ignore Mitchell’s recommendations and to instead reward Israel’s bad behavior. Hopefully, in working to get peace negotiations back on track, Mitchell will bring the same kind of fair-mindedness and honesty that causes all the right people to dislike him. And hopefully, President Obama will listen to him, and begin to treat the settlement problem with the seriousness it deserves.
February!
By Brian Beutler
It’s February now, which means we’re fast approaching the end of the stretch between January 1st and Valentine’s Day when people fall in love or grow bitter or get frustrated and abandon their New Year’s resolutions. So how’d you do?
Obama’s nominees stuck in the Senate.
The Washington Post’s Al Kamen notes that while President Obama has nominated his top appointees at a record pace, the Senate has been approving them at a slower rate than they did for his predecessors:
But less than two weeks into his presidency, just 17 of the 31 nominees officially announced by the White House have been confirmed by the Senate. [...] By comparison, 19 of Bill Clinton’s nominees were confirmed in his first 10 days in office. George W. Bush, who had a much abbreviated transition because of the Florida recount, had 13 nominees confirmed in the first 10 days, according to an analysis by the Presidential Transition Project at New York University’s Wagner School of Public Service in cooperation with The Washington Post.
Among the key nominees awaiting confirmation are Eric Holder for attorney general and Rep. Hilda Solis (D-CA) for Labor Secretary. For example, Senate Republicans have obstructed Holder’s confirmation for 63 days since Obama nominated him on Dec. 1.
Update
A statement from the office of Sen. Patrick Leahy (D-VT) says that the Judiciary Committee chairman opened the chamber’s debate on Holder’s nomination this afternoon and will vote tonight at 6:15 p.m.
More Blago vs. Coleman
By Brian Beutler
I don’t really disagree with Matt’s post per se, but I do think there’s much more to this. After all, Rod Blagojevich was trying to sell Barack Obama’s Senate seat after Obama won the presidency on an anti-corruption platform, and Norm Coleman is a relatively unknown legislator. That, I’d wager, goes farther in explaining the disparity in press coverage than does the fact that Republicans are more likely than Democrats to turn a blind eye to corruption. And, moreover, I think a lot Democrats made a huge point of tossing Blago to the wolves not because they embody the spirit of pure ethics, but because they were acting reflexively to protect the president elect.
Senate Republicans’ ‘Temporary and Targeted’ Tax Cuts Are Permanently Targeted To The Wealthy
Yesterday, Senate Republicans took to the morning talk shows to discuss the proposed economic stimulus package, which the Senate will begin debating today. During their respective discussions, both Sen. Mitch McConnell (R-KY) and Sen. Jon Kyl (R-AZ) were adamant about including tax cuts that are properly targeted:
MCCONNELL: We think we ought to lower tax rates for medium- and low-income people….This is a lot of money. If we’re going to spend anywhere near this, Bob, we need to target it directly. It needs to be timely, temporary, and targeted.
KYL: The centerpiece of this is a $500 rebate to folks, about 27 percent of whom don’t even pay federal income tax. That didn’t work last year. It’s not going to work this year. And so that’s not a good place to start.
Of course, there’s a contradiction here, in that McConnell extolled the virtues of targeted tax cuts for lower-income people, while Kyl ridiculed just that sort of cut. More importantly though, the only stimulus proposal that Senate Republicans have come forward with is Sen. Jim DeMint’s (R-SC) “American Option,” which as Ben Furnas noted earlier, is $3.1 trillion in permanent tax breaks for corporations and the wealthy.
If McConnell is really concerned about giving tax breaks to lower-income people then the following statistic — the average tax break for a corporate CEO and a minimum wage worker under the DeMint plan — should be troubling:
As Ali Frick noted over at ThinkProgress, a tax credit to lower-income workers “isn’t some kind of charity; it’s one of the most effective kinds of tax cut in terms of stimulating the economy.” Since stimulus (in part) means boosting consumer demand, not padding the bank accounts of those at the top of the income scale, it makes sense that lower-income people are the ones to focus on. McConnell has the rights words, but as of yet, no action to show that he truly gets it.
