Last week, President Obama spoke in Ohio and pressed Congress to boost federal investment in the nation’s infrastructure. This serves as a great time to reiterate all the reasons why boosting infrastructure investments is a no-brainer:

1)  Our infrastructure is terrible. More than one in four bridges are structurally deficient or functionally obsolete, indicating that the Minnesota bridge collapse wasn’t an isolated event. The American Society of Civil Engineers conclude that we need to double our investment in surface transportation infrastructure just to keep it from literally crumbling beneath our feet.

2)  Win the future. Public investments such as infrastructure are vital to long-run economic growth and fuel higher incomes and living standards for decades. A recent and comprehensive review of the literature on this topic finds that a sustained 1 percent increase in public capital growth rate translates into a 0.6 percentage-point increase in the private-sector GDP growth rate.

There’s an even stronger case for doing it now:

3)  It creates jobs. Regular readers of this blog won’t need to be reminded that millions of Americans are still suffering under the worst jobs crisis since the Great Depression. Job creationh as become an economic, political, and moral imperative. Infrastructure investments create jobs now, when we need them most.

4)  A LOT of jobs. Infrastructure creates 16 percent more than a payroll tax holiday, nearly 40 percent more than an across-the-board tax cut, and over five times as many as temporary business tax cuts. We need to squeeze as much job creation out of each dollar of cost, and infrastructure certainly passes the test.

5)  It’s targeted. The construction industry has been disproportionately hammered by the recession and has even greater unemployment levels than the economy as a whole.

6)  We’ve got cheap financing. The recession has precipitated a capital flight to safety, with the safest assets being U.S. government bonds. That has made the cost of borrowing insanely cheap (10-year Treasuries hit a record-low last week), with real interest rates actually negative. Capital markets are actually paying us to borrow their money.

7)  We’re getting great deals. During economic downturns, infrastructure projects are less costly as many contractors are competing for work amidst slack labor and capital markets. Many states actually had difficulty getting Recovery Act infrastructure funds out the door because contract bids kept coming in below the states’ original estimates.

8)  Delay costs money. Deferring maintenance of our infrastructure saves money in the short run, but costs much more in the long run. It’s certainly cheaper to repair a bridge than to rebuild it after its collapse.

9)  There’s no one else. States governments are facing nearly $150 billion in shortfalls in this fiscal year and the next, and, unlike the federal government, states generally cannot run deficits. Adding to this situation, fiscal relief from the Recovery Act has petered out, falling from $127 billion over the last two years to only $6 billion over the next two years. Local governments face equally difficult fiscal challenges. At this point in time, only the federal government can make these needed investments.

Economic policy tends to be pretty complex stuff, but this is a BIG exception. We need infrastructure work, we need jobs, the price is low, and we’re being given nearly free money to do it. All we lack is the political will.

Diane Ravitch is a glass half-empty kind of gal, while I suffer from excessive Panglossian tendencies. In the spring of 2007, we made a bet. The payoff is dinner at the River Café, at the foot of Brooklyn Heights, overlooking New York harbor and the Manhattan skyline, tucked neatly under the lights of the Brooklyn Bridge.

Four and a half years ago, we surveyed the damage being done to American education by NCLB, the “No Child Left Behind” iteration of the Elementary and Secondary Education Act:

• conversion of struggling elementary schools into test-prep factories;
• narrowing of curriculum so that disadvantaged children who most need enrichment would be denied lessons in social studies, the sciences, the arts and music, even recess and exercise, so that every available minute of the school day could be devoted to drill for tests of basic skills in math and reading;
• demoralization of the best teachers, now prohibited from engaging children in discovery and instead required to follow pre-set instructional scripts aligned with low-quality tests;
• and the boredom and terror of young children who no longer looked forward to school but instead anticipated another day of rote exercises and practice testing designed to increase scores by a point or two.

Diane morosely predicted that, despite this evident disaster, NCLB would certainly be reauthorized with its destructive testing and accountability provisions intact. After all, she moaned, it had the support of elites from both parties, the Washington think tanks, the big foundations, and the editorial boards of the New York Times, Washington Post, and other influential media outlets. No serious opposition was visible. How could the law not be continued? Indeed, she worried, its supporters were so removed from the reality of classrooms, so impervious to evidence, they could well decide to intensify requirements that schools chase phony test score gains to the exclusion of all else.

I smugly responded, “not a chance.” The NCLB accountability system is so self-evidently calamitous that its principles will never survive congressional reauthorization. Don’t pay attention to elite opinion, I said. The internal contradictions of a law that orders all children nationwide to perform above-average are so explosive that any attempts to “fix” them (as policymakers were then vowing to do) would never be able to claim a congressional majority, no matter how obstinate NCLB’s supporters might be.

For example, I said to Diane, consider the law’s absurd demand to prohibit the normal variability of human ability so that all children, from the unusually gifted to the mentally retarded, must achieve above the same “challenging” level of proficiency by 2014. The only way states could fulfill this requirement would be to define “challenging proficiency” at such a low level that even the least talented of students could meet it. NCLB enthusiasts would then cry “foul” and insist that a reauthorized law allow Congress to dictate a national proficiency standard. But this, in turn, would make the law unacceptable to supporters who had gone along in 2002 only because they felt assured that federal intrusion into state control of education would be limited. Or if, instead, NCLB proponents attempted to mollify critics by giving schools more flexibility – for example, by permitting them to escape condemnation for not meeting impossible academic benchmarks by citing other measures, like attendance rates or parent satisfaction – the NCLB enthusiasts would balk at this backdoor way of “leaving children behind.”

There is no way out of this impasse, I assured Diane. NCLB will limp along past its 2007 expiration date, with no possible map for reauthorization, with temporary annual continuing resolutions while proponents fruitlessly attempt to conceive of ways to climb out of the holes into which they had dug themselves. Eventually, I told Diane, by 2016 we’ll still be requiring all children to be proficient by 2014, and declaring virtually every school in the country to be failing. At some point, I predicted, some Secretary of Education will have no choice but to issue waivers from the law’s requirements to every state in the country while the law itself remained on the books, an embarrassing monument to policy foolishness.

Everything I predicted has now come to pass, and I should be able to call Diane’s hand and collect my dinner at the River Café. But I’m afraid I must concede. I won the bet on technical points, but Diane won on the merits. The glass really is half-empty, maybe more so.

What I had not anticipated was that a Secretary of Education (Arne Duncan, it turned out to be) would use his authority to grant waivers to states (now all of them) unable to meet NCLB’s requirements, conditioning the waivers on states’ agreements to adopt accountability conditions that are even more absurd, more unworkable, more fanciful than those in the law itself. Mr. Duncan’s philosophy has been revealed: if a policy fails, the solution should be to do more of it.

So the secretary is now kicking the ball down the road. States will be excused from making all children proficient by 2014 if they agree instead to make all children “college-ready” by 2020. If NCLB’s testing obsession didn’t suffice to distinguish good schools from failing ones, states can be excused from loss of funds if they instead use student test scores to distinguish good teachers from bad ones. Without any reauthorization of NCLB, Mr. Duncan will now use his waiver authority to demand, in effect, even more test-prep, more drill, more unbalanced curricula, more misidentification of success and failure, more demoralization of good teachers, and more needless stress for young children.

The Obama administration is presenting its waiver proposal as the grant of new “flexibility” to states. Yes, perhaps. If states agree to implement Mr. Duncan’s favored reforms of evaluating teachers by student test scores and expanding charter schools, and if states promise to meet even more impossible “college ready” standards established by the federal government, the secretary will let them figure out on their own how to do it.

Some Republicans have complained. The secretary, they say, cannot do an end run around Congress by implementing his own more extreme version of No Child Left Behind, when he has been unsuccessful in getting Congress to enact these very same proposals into the law itself. But these critics, most of whom supported NCLB in 2002, have only themselves to blame. They initially wrote into the law the right of a secretary to issue waivers based only on his or her own personal fantasies about what constitutes a state pledge to “increase (sic) the quality of instruction … and … improve academic achievement” – to be precise, in NCLB‘s Title IX, Part D, Sections 9401(b)(1)(i) and (ii).

And Arne Duncan has gotten away with this before. Here, Democrats should be ashamed. In Feb. 2009, when the American Recovery and Reinvestment Act (the ARRA, or “stimulus” bill) was enacted, Republicans charged that the law had little to do with job creation or economic growth, but was only a subterfuge for the Obama administration to make social policy without congressional debate. Mostly, the Republican charge had no merit but in the case of education policy, it hits the mark. The secretary has been distributing $5 billion in ARRA grants only to states that entered and won his “Race to the Top” competition by promising to raise standards even higher than those unachievable under NCLB. These so-called stimulus funds are not distributed to states with the highest unemployment rates but to those that outbid others by promising to establish data systems to evaluate teachers based on students’ math and reading scores, be most ruthless in firing teachers and principals in schools with low scores, and replace them with the most rapid expansion of charter schools.

The Duncan policies, like NCLB, will eventually implode. But the damage being done to American public education has now gone on for so long that it will have enduring effects. Schools will not soon be able to implement a holistic education to disadvantaged children. Disillusioned and demoralized teachers who have abandoned the profession or have retired are now being rapidly replaced by a new generation of drill sergeants, well-trained in the techniques of “data-driven instruction.” This cannot easily be undone.

Some state education officials have murmured intents to refuse the Duncan waiver conditions, and dare him then to withhold federal education dollars. But there is little indication that these officials will follow through, or that others will join the resistance. Most states will meekly apply for the Duncan waivers. Courage is in short supply among education and policy leaders.

So Diane, start perusing the menu. My victory on points is to no avail. I owe you dinner.

The State Department announced today in the Federal Register that its Bureau of Educational and Cultural Affairs (ECA) will be conducting “on-site reviews” of 14 of the biggest sponsors involved in the Summer Work Travel (SWT) program, the largest category in the J-1 visa Exchange Visitor Program. “Sponsors” are the private sector entities to whom the State Department has outsourced the management functions of the J-1 program. Sponsors profit from fees paid by the student participants, and then contract with employers and staffing companies across the country that ultimately hire the J-1 students in a variety of industries, for example at national parks, amusement parks, restaurants, drug stores, canneries and factories. Last year, 132,000 foreign students from around the world came to the U.S. to work for four months in the Summer Work Travel program, making it one of the largest guestworker programs in the U.S.

EPI has previously detailed the numerous problems inherent in the entire J-1 program. The allegations that led to the recent strike by J-1 student workers at the Hershey Chocolate Company in Pennsylvania are clear examples – and have resulted in a handful of federal investigations. Thus, I welcome any review or evaluation of the program and the entities involved. Nevertheless, I am puzzled by today’s notice.

The Department claims that it will conduct these on-site reviews in order to “enhance its continued oversight and monitoring of designated sponsors” because it intends “to evaluate regulatory compliance” with the new regulations that went into effect in July. If that were truly what the Department intended to accomplish – then this notice in the Federal Register, and this type of “review” instead of an actual investigation – is far from the best way to determine whether the program is functioning properly.

Why issue a public notice that affords all sponsors one-to-three months to prepare for an impending on-site review? Is this just a PR stunt?

And then there’s the substance of the on-site reviews, which is baffling. Before the actual on-site review takes place, which will last two business days, each sponsor will be notified in writing, and will have 10 business days to respond to requests for documents, and to prepare for the visit. If the State Department is supposed to be the cop on the J-1 beat (which it should be), then this is an odd way to uncover misbehavior. Giving the sponsors two full weeks to cover up, delete or destroy any evidence of wrongdoing will not help the State Department get to the bottom of it.

Also, many of the serious problems that occur in the program happen at the workplace – not the sponsor’s corporate headquarters – and are potential violations of labor and employment laws. The administrative functions and roles of the sponsors are less important than whether the J-1 student has been paid the minimum wage or was working in a safe environment. Thus, it would make much more sense to conduct surprise, on-site reviews of the employers where the J-1s are actually employed. That way the State Department could evaluate whether the students are safe and are being treated fairly – and if they’re not, the ultimate responsibility would fall on the sponsors, whose job it is to oversee and ensure that the employers are flying straight. If they’re not, then both the employer and sponsor should be kicked out of the program.

Another problem with State’s review is that officials will not be speaking with or interviewing the actual J-1 student participants about any problems they may have had with the program or their particular sponsor. As I’ve learned anecdotally from some colleagues who advocate on behalf of J-1 student workers, when State conducts an investigation regarding a particular complaint, its investigators almost never speak with the J-1 worker or the employer. Instead, they only speak with the sponsor, who has a financial interest in avoiding sanctions by State. This conflict of interest makes it highly unlikely that the sponsor will be a zealous advocate for the J-1 worker who may have suffered abuse, or that the sponsor will be forthcoming with any evidence that would make it look bad. Officials of well-established sponsors which have been in business for decades also have established relationships with the State Department staff, which can create inappropriate expectations between the investigator and the subject of the investigation.  Ideally, the investigation would be at arms length. These visits will give sponsors an opportunity to personally lobby the Department about the final regulations, which have not yet been issued, and indeed on page 3, the Department admits as much, saying that these on-site reviews are “an opportunity for sponsors to provide feedback” about the rules generally.

The State Department’s review of some of the sponsors in the J-1 Summer Work Travel program could have been a step in the right direction, but by publicly notifying and giving sponsors time to prepare for it, and by not reviewing work sites or interviewing employers and J-1 student workers, the actual value of this action might prove to be negligible.

I was asked by the Congressional Black Caucus for their “For the People” Jobs Commission to discuss the needs of and challenges confronting groups such as the chronically unemployed, the underemployed, new labor force entrants, and formerly-incarcerated individuals in the current labor market. One point I made was that a tight labor market—a labor market with strong job growth and low unemployment—benefits all groups.

I illustrated this point with the example of black youth—new labor force entrants—over the 1989-2000 and 2000-2007 business cycles. The business cycle from 1989 to 2000 had strong job growth; the business cycle from 2000 to 2007 had weak job growth.

For black 16-to-24 year olds who were not enrolled in school, the strong job growth over the 1989-2000 business cycle shaved 3.7 percentage points off their unemployment rate. This decline in the black youth unemployment rate was three times as large as the 1.2 percent decline in unemployment for white youth.

Click figure to enlarge

In contrast, the weak job growth of the 2000-2007 business cycle added 1.5 percentage points to the black youth unemployment rate. While the 1989-2000 business cycle put 72,000 black youth into jobs, the weak 2000-2007 business cycle reduced the number of black youth employed by 29,000. These comparisons provide an important reminder that macroeconomic policy strongly affects disadvantaged groups. Robust job creation not only benefits Americans generally, it also provides benefits specifically for black youth and other groups with challenges finding work.

While the country faces a jobs deficit of over 11 million jobs and a national unemployment rate of 9.1 percent, it will be difficult to improve employment outcomes for the chronically unemployed, the underemployed, new labor force entrants, and formerly-incarcerated individuals. We need strong job creation to put us in the best position to help these groups.

Today marks the one-year anniversary of several elements of the Patient Protection and Affordable Care Act, notably the provision allowing young adults up to age 26 to stay on or join their parents’ employer-sponsored health insurance policy.

Several folks blogged about this last week, notably Health and Human Services Secretary Kathleen Sebelius, Sara Collins, Tracy Garber, and Karen Davis of the Commonwealth Fund, and writer Jonathan Cohn. They all cited the newly released Census data on health insurance, which detailed how  the uninsured rate for young adults, 18-24, fell between 2009 and 2010 and, in fact, this was the only age group with a statistically significant decline in their uninsurance rate. They argued that the health insurance provision allowing young adults to stay on or join their parents’ employer-sponsored health insurance policy is to credit for this up-tick in coverage.

This week, Kevin Sack of the New York Times, wrote a piece reiterating their points, with more recent data through March 2011 from the National Health Interview Survey. While there’s much hand-waving about how we can credit health reform for the increase in health insurance coverage among young adults, it’s relatively easy to compare health insurance numbers with labor market statistics to find compelling evidence of initial signs of health reform success.

In this figure, I compare changes in the employment rates and the rate of employer-sponsored health insurance for various age groups between 2008 and 2009. As you can see, employment rates fell for each group as did employer-sponsored health insurance.  This is not surprising given the fact that most people find health insurance on their own job.

Click figures to enlarge

Next, I compare these same changes in employment rates and health insurance rates for various age groups between 2009 and 2010. As you can see, the job-market didn’t do young adults any favors. In fact, their employment rate actually fell further than any other age group. Given the close relationship between labor market outcomes and employer-sponsored insurance, we would expect declines in coverage for all groups.  What we see instead is that employer-sponsored health insurance actually rose among young adults, while it fell for all other groups.

So, how many young adults took advantage of this new provision? A back of the envelope estimate of what young adult coverage rates would have been if the 2008-09 relationship between employment and insurance had held for 2009-10 would be a 1.1 percentage point drop in insurance rates for young adults in 2010. Instead, we see here that insurance rates actually rose by 0.6 percentage points instead of falling by 1.1 percentage points — basically, this means that up to 490,000 young adults may have obtained coverage in 2010 because of the health reform provision.

Given the fact that the labor market continued to decline for young adults, my guess is that a closer look at the Census micro-data would confirm the fact that a greater number of young adults are gaining dependent coverage through their parents’ policies.  Even without that added analysis, these figures alone are compelling evidence in support of the argument that health reform is beginning to work.

UPDATE 9/26: Looks like the TPC has “retracted” the estimates below citing an error “which involved rollover distributions from 401(k)s and similar retirement plans, caused us to significantly overstate the income of some high-income taxpayers and thus understate the tax rates they paid.” I don’t know how much of a difference this will make, but I suspect that the overall distribution will only be moderately effected, and only at the very top. I’ll post the new results when the TPC makes their correction.

***

The table below, adapted from a Tax Policy Center table here, shows the effective federal tax rate people pay in different income categories. (The “effective” rate is simply the total taxes paid divided by income, and will be lower than the statutory marginal rate because there are a variety of deductions, credits, and tax preferences in the code.)

See below as I’ve added some color to the table to help show how rates vary with income levels. Darker reds represent lower effective rates, and darker greens represent higher rates.

Paul Krugman (and others) have used this data to demonstrate that even though, on average, millionaires pay a higher effective rate than the average of those in the middle, there are still many millionaires that pay less than most in the middle class. For example, at least 25 percent of millionaires pay a lower effective rate (12.6 percent or below) than most people making between $40,000 and $50,000 (13.1 percent or higher).

When interpreting the Buffet principle, we need to decide what rate to use to set as a minimum rate for millionaires. For example, do we want millionaires to pay on average more than the middle on average? If so, we’re already there.

Click figure to enlarge

Or do we want to ensure that all millionaires pay more than the middle-class pays on average? If so, then we need to change the tax code so that millionaires pay something like a minimum of 13 percent, if we set the “middle-class” at the $30,000-$75,000 range. This would mean an increase for about a quarter of millionaires.

Or do we want to ensure that all millionaires pay at least as much as just about anyone in the middle class? In this case, the target would be closer to  a 25 percent effective tax rate, increasing taxes on about half of millionaires.

The spirit of the Buffet rule is clearly not the first category – the outrage stems from the fact that some significant fraction of millionaires do indeed pay less than a large share of the middle. This points to policy changes that would indeed increase revenue from many of those at the top (at least a quarter, and perhaps as much as half or more) that have found ways to lower their tax share to levels that are below many in the middle class.

This morning the U.S. Census Bureau released state and local data on poverty levels, income, and health insurance coverage from the 2010 American Community Survey (ACS). Echoing the national trends seen in the Census Bureau’s recent release from the Current Population Survey, many states and communities are still feeling the lingering effects of the Great Recession.

Median annual household income fell in 35 of the 50 states and the District of Columbia between 2009 and 2010, with the remaining 15 states showing no change in median household income whatsoever. According to the ACS, the nationwide median income fell by 2.2 percent, but the median income dropped by more than 5 percent in seven states: Alaska (5.2 percent), Arizona (5.8 percent), Connecticut (6.1 percent), Idaho (5 percent), Nevada (6.1 percent), Oregon (5.5 percent), and Vermont (6.1 percent).

Only 20 states now have a median annual household income above the national figure of $50,046. Maryland and New Jersey have the highest median household incomes, both above $67,000. Mississippi, West Virginia, and Arkansas have the lowest median incomes, all of which are below $40,000.

Additionally, the distribution of income became more unequal in nine states over the past year. While income inequality did decrease for three states—North Dakota, West Virginia, and Texas—this change provides little consolation. North Dakota and West Virginia saw no change in median income—West Virginia’s median income remains the second-lowest in the country—and Texas’ median income decreased by one percent. In other words, income inequality went down in these three states either because gains at the bottom of the income distribution equaled the losses at the top, or in the case of Texas, the state on the whole simply became poorer.

The survey’s poverty and child poverty numbers are also frighteningly high. The national poverty rate is at 15.1 percent, but it runs as high as 20.4 percent and 22.4 percent in New Mexico and Mississippi, respectively. The percentage of children living in poverty is at or above 20 percent in 24 states and the District of Columbia.

The data also show that some elements of the safety net have played an important role at helping families bearing the brunt of the recession. Reliance on cash assistance income has increased over the last year. In seven states, at least one in every 25 households relies on cash assistance. In both Maine and Alaska, more than 5 percent of families receive cash assistance. At the same time, in 35 states, more than 10 percent of households receive food stamps. Nationwide nearly 12 percent of households are food stamp recipients.

Finally, the data also shows that in 20 states, more than 15 percent of people do not have health insurance coverage. The highest proportion of uninsured people is in Texas, where nearly one in four residents (23.7 percent) lacks health insurance, including 14.5 percent of children.

The Great Recession may technically be over, but today’s release is a clear reminder that America’s communities are still struggling. See the full ACS release here.

Unemployment insurance (UI) benefits in this economic downturn have helped cushion the blow of job loss for millions of families. A case in point:  the Census Bureau estimates that 3.2 million people, including nearly a million children, were kept out of poverty by unemployment insurance in 2010 (see slide 25 here). But could the extensions of UI benefits over the last three years have at the same time made the labor market substantially weaker by providing a disincentive for unemployed workers to return to work quickly, as some economists (perhaps most famously here) have claimed?

The answer is a resounding no. In the most careful study to date on the effects of UI extensions on job search in the Great Recession, Jesse Rothstein finds that the unemployment rate in Dec. 2010 would have been about 0.3 percentage points lower if UI benefits hadn’t been extended.  The unemployment rate that month was 9.4 percent, up from 5 percent in Dec. 2007, an increase of 4.4 percentage points. Thus, according to Rothstein’s findings, a very small fraction – 0.3 out of 4.4 — of the increase in the unemployment rate during the Great Recession and its aftermath can be attributed to the UI extensions. And a few additional points make the case even clearer:

• Rothstein shows that at least half of the extension-induced increase in the unemployment rate comes from the fact that workers who receive UI are less likely to give up looking for work. Keeping people in the labor force actively seeking work is arguably a good outcome of UI benefits — and could actually increase the share of the long-term unemployed that later finds a job — but it raises the measured unemployment rate.  His estimates imply that less than 0.2 percentage points of the 4.4 percentage point increase in the unemployment rate over the Great Recession was due to an extension-induced reduction in the rate at which workers get a new job, which is the disincentive effect policy makers are actually concerned about. Moreover, even that may be a good thing — a small UI-induced increase in the time it takes for an unemployed worker to get a new job is an asset of the UI program to the extent that it affords unemployed workers the needed space to find a new job that matches their skills and experience or keeps individuals and families from making inefficient choices just to put food on the table and pay bills.
• Furthermore, while Rothstein documents a small UI-induced reduction in the rate at which extension-recipients find a new job, that may not translate into a higher unemployment rate, due to what he calls “congestion in the supply side of the labor market.” He is unable to account for it in his paper, but the intuition is straightforward.  Job opportunities plummeted in the Great Recession. From the spring of 2009 through the end of 2010, there were at least five unemployed workers per job opening (see Chart 1 here). In fact, there were (and are) fewer job openings than workers receiving extended UI benefits. There are simply not enough jobs to go around, extensions or no. Extensions have likely affected the mix of the unemployed, with a slight shift of jobs from UI-recipients to other job-seekers, as recipients have more room than non-recipients to take time to find a job that matches their and their family’s needs. But given the lack of job openings, it is a significant leap from a small reduction in the rate of job finding for recipients to an increase in the unemployment rate.
• Finally, Rothstein’s paper looks only at the microeconomic effect of UI extensions on job search and reemployment for recipients. It doesn’t say anything about the macroeconomic effect. Spending on UI extensions is an extremely effective mechanism for injecting money into the economy since the long-term unemployed are, almost by definition, strapped for income and very likely to immediately spend their UI benefits. This spending creates demand for goods and services and generates jobs. In 2010, spending on UI benefits for the long-term unemployed was supporting around 620,000 jobs (see Table 1 here). All else equal, these 620,000 jobs lowered the unemployment rate by around 0.4 percentage points, (and all of that reflects new jobs, not workers dropping out of the labor force).  Putting the micro- and macro-estimates together, there is no doubt that the extensions of unemployment insurance benefits in recent years have not increased the unemployment rate. There is also no doubt that these benefits have provided a lifeline to laid-off workers and their families during a time when job-finding prospects are brutally weak.

Last week, we highlighted that the vast majority of gains in wealth since 1983 accrued to the top 5 percent of households and actually declined for the bottom 60 percent. Perhaps the statistic that best illustrates the disparity is median wealth, which is the wealth of the household that has more wealth than half of households and less than the other half. If gains had been equal from 1983-2009, the typical household’s wealth would have risen to $100,900, up $29,000 from $71,900 in 1983. Instead, median wealth declined 13.5 percent to $62,200.

It is also sobering to examine the racial difference in wealth trends. Wealth for the median black household has nearly disappeared, falling from $6,300 in 1983 to $2,200 in 2009 – a decrease of more than 65 percent. This means half of black households have less than $2,200 in wealth. Among white households, median wealth has fallen substantially since 2007, but at $97,900, remains higher than the 1983 level of $94,100. White median wealth is now 44.5 times higher than black median wealth.

Racial disparities in income and unemployment have been exacerbated by the Great Recession, and the persistent high unemployment ahead of us will do more damage unless we create more jobs now.

As John Irons has already noted, the letter from four leading GOP legislators to the Federal Reserve isn’t just wrong – it’s oh-so-wrong (a jargon-y new economics term).

This post just highlights one of many wrongs – it’s hand-wringing over Fed actions that might “erode the already weakened U.S. dollar.” Weakening the dollar is just what the U.S. economy needs to do to support a real economic recovery. Since the phrase “weak dollar” is a PR disaster, let’s just call it a “competitive dollar,” or even a “lean and mean dollar;” but, whatever you call it, it’s necessary if we want net exports to be a contributor to overall growth rather than a drag.

The figure below shows the contribution of net exports to GDP growth since 2000 – an overvalued dollar has led trade flows to be a consistent drag on growth for pretty much the entire period except for the Great Recession – when spending on everything (including imports) plummeted and led trade to be a stabilizing force.

Click figure to enlarge

So, to recap – the GOP Congress is against fiscal support to the economy, is against monetary support, and thinks a lean and mean dollar is a bad thing. That’s three-for-three in arguing against the only policies we have that can create jobs and lower unemployment in the near-term. It’s going to be a very long election season indeed for Americans looking for work.