Fountain of sorrow, fountain of light…

It wasn’t a bad Friday here in Los Angeles – as usual, bone-dry and near ninety with the hard sun riding high in the steel-blue sky. And here, where Laurel Canyon meets the Sunset Strip, you could imagine the good old days – Joni Mitchell at home just up the hill, in the canyon shade, sipping lemonade and chatting with Neil Young and Jackson Browne, about chord changes or their agents or whatever. The Canyon Rock era was a mellow time. And Jackson Browne just played a club over in Silverlake – even if he is sixty-two and more of an icon than a rock guy now. But maybe he sang Fountain of Sorrow – “Fountain of sorrow, fountain of light… You’ve known that hollow sound of your own steps in flight… You’ve had to hide sometimes, but now you’re all right.”

Hey, it was that kind of day. Things are awful, everyone betrays everyone, and there’s nowhere to hide, but you do your best. And in that song Jackson Browne was just kind of riffing on Dover Beach – that 1867 poem by Matthew Arnold – “for the world, which seems / To lie before us like a land of dreams, / So various, so beautiful, so new, / Hath really neither joy, nor love, nor light, / Nor certitude, nor peace, nor help for pain; / And we are here as on a darkling plain / Swept with confused alarms of struggle and flight, / Where ignorant armies clash by night.”

Fountain of sorrow, fountain of light – you do your best. And all morning long the news burbled along with confused alarms of struggle and flight, and the ignorant armies sure were clashing. But it wasn’t war this time. It was the economy – again – and the release of the government jobs report for June – which was awful.

In fact, Andrew Leonard looked at it and proclaimed that there is zero good news and a ton of terrible numbers in this report – which accounts for all the confused alarms of struggle and flight. Okay, the economy added only 18,000 jobs in June – and folks expected ten or twelve times that many. And May’s initial 54,000 jobs gain was revised down to 25,000 – on closer examination that was cut by more than half. And April’s 232,000 new jobs number was revised downward too – to 217,000. Oops. So unemployment edged up to 9.2 percent. But the U-6 number that gives the broadest measure of unemployment – counting those who have just given up looking for work and are this not officially “unemployed” really – jumped from 15.8 to 16.2. Oh yeah, add in that average working hours per week and hourly wages both fell, which Leonard points out is “a sign of a slack labor market getting slacker.”

And government payrolls dropped by 39,000 – and the number of long-term unemployed – those jobless for twenty-seven weeks or more – held steady at 6.3 million. That’s just not getting better. And if that’s not dismal enough for you, the overall labor participation rate shrank, so hundreds of thousands just stopped looking for jobs, to join the millions who already threw in the towel.


The government report delivered numbers sharply at odds with a private sector report from Wednesday that counted 130,000 new jobs, and was far under the expectations of Wall Street economists. After a week in which there were a few tentative signs that economic growth might not be flat-lining, after all, this labor report is unequivocal: The recovery has stalled.

So what do we do now? What seems to be government policy to deal with this?

More spending cuts, which will surely result in more government job loss and the subtraction of aggregate demand from a weak economy. Exactly what the United States doesn’t need now, but the tragedy of our current political process is that almost no one in any power to do anything in Washington will look at these numbers and say, hey, wait a minute – maybe deficit reduction shouldn’t be our highest priority.

Ah, Jackson Browne and Matthew Arnold – there will be no help for pain. And Leonard also looks at the politics of this – 1) the economy is broken, and Washington can’t fix it, and 2) in a show of bipartisan unity, both parties “unite in ignoring the true meaning of a horrible jobs report.”

And Leonard is not pleased with Austan Goolsbee, chair of the president’s Council of Economic Advisers, who interprets the numbers as “reflecting the recent slowdown of economic growth due to headwinds faced in the first half of this year.”

Leonard wonders what “headwinds” this guy is seeing:

While it is still theoretically possible that temporary factors – the Japan earthquake, gas prices, etc – are responsible for the current slowdown, the reality of the current situation calls for much stronger rhetoric from the administration, at the very least. The jobs report is a disaster, both for millions of Americans and for Obama’s political prospects. The White House should be making it clear, every single day, that job creation must be the No. 1 priority.

But when you hear what Goolsbee’s got in his job-creation toolbox: “measures to extend the payroll tax cut, pass the pending free trade agreements, and create an infrastructure bank to help put Americans back to work” maybe it’s not so hard to understand why Obama hasn’t got more to say. That’s some thin gruel, there, folks. Yeah, sure, House Republicans pose a formidable, perhaps even impossible-to-overcome, obstacle to passing any kind of effective job-creation legislation, but is that all you’ve got, Austan? Come on.

But Leonard notes John Boehner’s reaction was even worse. Yes, Steve Benen points out here that when the job numbers looked good in the spring, Republicans claimed credit should be given to the new House majority – everyone was so damned happy the Republicans were back they hired like mad. But now that the numbers are really crappy, suddenly John Boehner is saying it’s all about Obama’s out-of-control spending:

Legislation that raises taxes on small business job creators, fails to cut spending by a larger amount than a debt limit hike, or fails to restrain future spending will only make things worse – and won’t pass the House. Republicans are focused on jobs, and are ready to stop Washington from spending money it doesn’t have and make serious changes to the way we spend taxpayer dollars.


Republicans are focused on jobs? House Republicans have not passed a single jobs-related piece of legislation during their majority.

And there is Felix Salmon with this – “It’s downright bonkers to think that… government spending reduces job creation, while pushing for ever-larger spending cuts is the way to be … focused on jobs.”

And Salmon gets up a head of steam:

“Spend less money, create more jobs” is the kind of world one normally finds only in Woody Allen movies, and it’s a profoundly unserious stance for any politician to take. Spending cuts, whether they’re implemented by the public sector or the private sector, are never going to create jobs. And there’s simply no magical ju-jitsu whereby government spending cuts get reversed and amplified, becoming larger private-sector spending increases.

And Leonard adds a useful fact – since Obama took office, government payrolls – federal, state, and local – have declined by 500,000 so what must happen is obvious:

Reducing government spending at the levels requested by Republicans will result in hundreds of thousands of additional job cuts. The newly unemployed will be entering a job market where opportunities are scarce to nonexistent. The subtraction of their paychecks will place a further drag on the economy. Those “headwinds” will become a gale.

So, let’s see – you fire a half million people. They have no jobs now. They have to pinch pennies – they have no money to spend. They are not buying goods or services, save for the bare necessities, if they can now afford even that. So the demand for goods and services collapses. And now businesses have lots to sell, but there are no customers out there. So they start letting workers go, as they cannot find anyone able to pay for what they’re offering, and thus they don’t need much of a workforce. And those newly laid off people have to pinch pennies too. And demand collapses further. And you have a spiral of self-reinforcing collapse – a perfect feedback loop. Supply-Side Economics, that assumes demand is a minor matter, has its limitations. If we lower the cost of doing business the economy will really take off. But what if no one can buy anything? Yeah, you can make a wonderful widget that sells for one-thin-dime. What if you’ve set it up so no one has a dime? Woody Allen wouldn’t even try this plot line. It’s too absurd.

This is not rocket science, but what does Obama now say? He says this:

President Barack Obama says the uncertainty over whether lawmakers will raise the nation’s debt limit is keeping businesses from hiring. Speaking in the Rose Garden, Obama says that once Congress reaches an agreement on the debt ceiling, businesses will have the confidence they need to add workers to their payrolls.

Leonard says that John Boehner couldn’t have said it better. Just what is Obama smoking these days?

And there is the Center on Budget and Policy Priorities – a nonprofit, nonpartisan research organization and policy institute that conducts research and analysis on a range of government policies and programs, or so they say, as they are supported primarily by foundation grants. And there is this from Chad Stone, their chief economist:

Today’s very disappointing employment report shows that two years after the technical end of the recession and after 16 straight months of private-sector job creation, the jobs deficit remains huge… It makes no sense that in an economic recovery still struggling to gain momentum, policymakers are easing up on the gas and threatening to slam on the brakes. But that is just what is happening.

And Paul Krugman puts it this way:

Ugh. That was a seriously ugly jobs report. Almost no job creation, with slow private-sector growth offset by falling public-sector employment; a falling employment-population ratio; and (I don’t know how many people have picked this up), an actual decline in wages, albeit a small one.

Let me emphasize that last point. My bottom line on the inflation-deflation issue has always been to look at wages; you can’t have a wage-price spiral if wages ain’t spiraling. And they aren’t, to say the least.

And Kevin Drum sums it up:

We are ruled by charlatans and cowards. Our economy is in the tank, we know what to do about it, and we’re just not going to do it. The charlatans prefer instead to stand by and let people suffer because that’s politically useful, while the cowards let them get away with it because it’s politically risky to fight back. Ugh indeed.

Fountain of sorrow, fountain of light… everyone betrays everyone, and there’s nowhere to hide, but you do your best.

As for the details, Karl Smith and Matthew Yglesias and Paul Krugman all have charts showing that public sector employment has fallen pretty dramatically over the past three or four years – and Smith estimates that compared to trend growth, government at all levels has shed about two million jobs. That’s a lot of folks, and Paul Krugman says this – “When you hear Republicans saying that what we need to do to create jobs is slash government spending and cut government payrolls, that’s exactly what has been happening for the past year, as the Obama stimulus has faded out.”

Kevin Drum argues the other way – federal employment really isn’t all that important:

It’s been relatively flat for the past four decades, while the real action in public sector employment has mostly been at the state and local level. So when conservative politicians rail against the explosion of the federal bureaucracy, they’re wrong on multiple counts. It’s mostly local government jobs that have grown over the past few decades, and it’s mostly local government jobs that have been lost over the past few years – and this has acted as a huge drag on the economy. If stimulus money should be going anywhere, that’s where it should be going.

Not that it matters at all, as David Leonhardt suggests here that officials in Washington are deliberately making “an unforced economic error.”

Federal payrolls have been roughly flat for years (even as the population has been growing). But state and local payrolls grew over the last decade, by almost 20,000 jobs a month on average.

Since the crisis began and state and local taxes began plummeting, though, governments began to cut back. At first, the federal government stepped in, with the 2009 stimulus bill, and sent fiscal aid to states. Then the aid stopped.

In round numbers, state and local governments have cut about a half million jobs over the last two years. If they had continued to hire at their previous pace – expanding as the population expanded – they would have added about a half million jobs.

In other words, the state and local austerity of the last two years has cost the economy about one million jobs.

And Steve Benen piles on:

Those one million employees could still be on the job, if Congress simply chose to rescue the state and local governments. But there’s no political will to do so. The stimulus prevented a lot of these losses, but that was before, and those funds are now gone.

Indeed, it’s important to remember that these job losses are, in the eyes of Republicans, a positive development. Under the GOP economic model, the public sector is supposed to lose jobs, and as part of the party’s austerity agenda, this is a problem that must get worse on purpose.

Yes, it is absurd:

The job losses, in other words, have a ripple effect. All of this is easily preventable, but our jobs crisis is partly the result of our political crisis. Congress can choose to spend the money to keep these workers on the job, but it runs counter to Republican philosophy, and therefore doesn’t happen.

These identical Republicans then complain bitterly when unemployment gets worse, and blame Democrats for the job losses the GOP chose not to prevent. Worse, Republicans then try to persuade the public that “out-of-control spending” is to blame for the weak economy.

It’s quite a feedback loop.

And there is always Krugman – “The situation cries out for aggressively expansionary monetary and fiscal policy. Instead, however, all the political push is in the opposite direction.”

But we get this:

Though the president and Congressional leaders did not close wide gaps on the issues of spending cuts or new tax revenues, officials briefed on the talks said, they emerged with a consensus to aim for the biggest possible deal – one resulting in up to $4 trillion in savings – and a recognition of the dire consequences of not acting before Aug. 2, when the government will lose its authority to borrow.

And Digby comments:

The good news is that the president and the Republicans have decided to do this hugely ambitious, complicated deal on a hard deadline that’s right around the corner. That way we don’t have to deal with all that messy “democracy” thing have a real debate or serious analysis before the Armageddon forces a vote.

Who says they don’t know what they’re doing, eh?

Did someone mention ignorant armies clashing by night? Is Jackson Browne singing about inevitable sorrow again? And what about this world that has neither light nor certitude, nor peace, nor help for pain?

Steve Benen has a few things to say about that:

For two-and-a-half years, Republicans have cited “uncertainty” as one of the most serious issues facing the economy. It’s a shallow and painfully weak talking point, but they’ve stuck to it. Focus groups must love it.

The irony, of course, is that these same Republicans are responsible for a debt-ceiling hostage strategy in which they’ve effectively proclaimed, “If we don’t get what we want, Republicans will crash the economy on purpose.” There’s arguably no better way to create uncertainty than by announcing the world’s largest economy will voluntarily refuse to pay its bills.

But this leads to a different question: does this uncertainty actually matter? Or is it just some amorphous concept with limited real-world applicability?

It seems Obama is thinking about uncertainty:

We’ve always known that we’d have ups and downs on our way back from this recession. And over the past few months, the economy has experienced some tough headwinds – from natural disasters, to spikes in gas prices, to state and local budget cuts that have cost tens of thousands of cops and firefighters and teachers their jobs. The problems in Greece and in Europe, along with uncertainty over whether the debt limit here in the United States will be raised, have also made businesses hesitant to invest more aggressively. …

The sooner we get [a fiscal deal] done, the sooner that the markets know that the debt limit ceiling will have been raised and that we have a serious plan to deal with our debt and deficit, the sooner that we give our businesses the certainty that they will need in order to make additional investments to grow, and hire and will provide more confidence to the rest of the world as well, so that they are committed to investing in America.

Well, that’s one theory, but the Center for American Progress’ Michael Ettlinger had earlier made the case that the private sector may already be “pulling back” – out of fear of a congressionally-created crisis:

Most businesses don’t make big investments or ramp up hiring when they see a substantial risk of the economy tanking. They don’t want to be on the hook for the costs if there aren’t going to be customers and revenue for what they produce. Right now the failure to increase the federal debt limit is creating such a risk and that may well be why the economy is starting to drag.

But Benen isn’t convinced:

On a conceptual level, I can appreciate why this seems plausible. The business community has been practically begging Republicans for months not to play this game of chicken, warning them that even flirting with the possibility of a crisis could do serious harm. To date, GOP officials have, uncharacteristically, ignored businesses’ pleas and pursued the irresponsible hostage strategy anyway.

But I still think businesses hire when they have customers, and they have customers when employed people are injecting money into the economy. Republicans playing Russian-Roulette with the full faith and credit of the United States seems largely detached from this.

But Benen does concede that “anything that makes employers feel a little less anxiety about the near-future certainly can’t hurt.” But he also adds that “those expecting a bright green light for employers once the debt-limit issue is resolved are likely to be disappointed.”

But disappointment is life isn’t it? Fountain of sorrow, fountain of light… just humming a Jackson Browne tune.

About Alan

The editor is a former systems manager for a large California-based HMO, and a former senior systems manager for Northrop, Hughes-Raytheon, Computer Sciences Corporation, Perot Systems and other such organizations. One position was managing the financial and payroll systems for a large hospital chain. And somewhere in there was a two-year stint in Canada running the systems shop at a General Motors locomotive factory - in London, Ontario. That explains Canadian matters scattered through these pages. Otherwise, think large-scale HR, payroll, financial and manufacturing systems. A résumé is available if you wish. The editor has a graduate degree in Eighteenth-Century British Literature from Duke University where he was a National Woodrow Wilson Fellow, and taught English and music in upstate New York in the seventies, and then in the early eighties moved to California and left teaching. The editor currently resides in Hollywood California, a block north of the Sunset Strip.
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1 Response to Fountain of sorrow, fountain of light…

  1. Rick says:

    For two freezing cold and wet days in mid-December of 1799, former president George Washington rode by horseback through his estate to mark trees he wanted cut down. After he returned on the second day, instead of changing out of his wet clothes, he had a meal, then sat reading a newspaper out loud, with an increasingly hoarse voice, to his wife, Martha, and his personal secretary, Colonel Lear, who suggested he take some medicine. According to an article by Dr. Vibul V. Vadakan, Washington declined:

    “You know I never take anything for a cold. Let it go as it came.”

    Overnight that night, Washington woke in distress, barely able to breathe. The next day, after suffering through a bout of “convulsive suffocation,” he ordered his own bloodletting. (Washington was a great believer in bloodletting, since it seemed to work well on his slaves; Martha, on the other hand, was not, and urged caution.)

    Before his doctors were done later that day, they had removed 3.75 liters, which was slightly more than half the blood in his body. That night, at ten minutes after ten, he died.

    He should have listened to his wife, who was probably ahead of her time. While the practice dated back to ancient times and was a well-accepted practice until late into the next century, we now know that, in most cases, bloodletting did more harm to patients than good. In Washington’s case, it probably increased his shock, which probably killed him.

    Where am I going with this?

    You don’t have to be a nobel-prize-winning economist to know that cutting spending during a sick economy is a way of weakening that economy, not strengthening it. Just as all the great minds of ancient times used to think that emptying blood from a sick body was a good way to cure it, we now know it was actually counterproductive. Martha sensed this. Too bad she wasn’t in charge.

    Although I do like to keep my mind from closing up like a trap, I can’t imagine what sort of silly argument anyone can give that will convince me that sucking the life-blood from a sick economy is any way to save it. Cutting jobs doesn’t create jobs, it eliminates them.

    And ironically, while it has been suggested that the Republicans are conspiring to intentionally destroy the economy, hoping then to blame Obama for it during next year’s election, they probably won’t be too far off base in doing it, since Obama is maybe equally guilty by helping them do it.

    What really scares me is, just as maybe the only way to disabuse Washington and his doctors of the curative powers of making a sick body weaker, was to allow it to kill the patient — and even then, they wouldn’t have believed it — probably the only way to disabuse Barrack Obama and his advisers (not the mention his Republican partners-in-crime) that killing the American economy is the way to save it, is to allow it to die.

    And even then, after it happens, they still won’t believe it.


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