Friday, May 03, 2002

Window of Ignorance By PAUL KRUGMAN "The latest budget news is worse than even the most dour pessimists had thought possible. But the unfolding fiscal disaster hasn't yet penetrated the public's consciousness — and the administration is trying to exploit that window of ignorance." "In fiscal 2000 the federal budget was in surplus by $236 billion. This year's deficit will be more than $100 billion, possibly more than $150 billion." "How did a huge surplus turn into a huge deficit? The recession, the tax cut and terrorism — in that order — all played a role. Also, it now seems clear that the big surplus in 2000, almost twice as large as the surplus in the previous year, was an aberration — that tax receipts were inflated by the technology bubble." " . . . terror-related spending is only a minor factor in this year's budget (the war in Afghanistan cost only $10 billion), the administration plans a huge defense buildup, which will swallow much of the gains from economic recovery." "What it's really about is exploiting a window of opportunity. Mr. Bush is still riding a wave of wartime popularity; the public still doesn't know how bad the budgetary situation is." 1:28:16 PM  Google It!  comment  []

Jobless Rate Climbed to 6% in April "The nation's unemployment rate rose to 6 percent in April, its highest level in nearly eight years, the Labor Department reported today. Still, employers expanded their payrolls for the first time in nine months. Economists said the report is consistent with an economy that is in the early stages of recovery. The rise in the unemployment rate to 6 percent from 5.7 percent in March puts it at its highest level since August 1994, when the unemployment rate was also 6 percent." " . . . in its report today, the government reversed what it had initially reported for March. Instead of a gain of 58,000 in payroll employment in that month, the revised figures now show businesses actually shed 21,000 jobs." "' . . . this economy and the stock market are still on fragile ground. At current levels, short-term interest rates are not where they should be for the long haul. But this is no time to be moving them higher.'" 1:26:03 PM  Google It!  comment  []