Bleak Unemployment Assumptions in Obama Budget
EmailPresident Obama doesn’t think unemployment within the next decade will return to the relatively low level it was in 2007 when he launched his presidential campaign, at least according to supplemental documents to his Fiscal Year 2011 budget.
Whether you consider the president’s assumptions about unemployment bleak or realistic, they will likely not come as welcome news to the millions of unemployed and underemployed – or to Democrats hoping to win elections in the next decade.
In the supplemental volume “Analytical Perspectives,” the Obama administration estimates that the annual average rate of unemployment will remain at 10% for 2010, and dip only slightly next year, in 2011, to 9.2%.
In 2012, the year President Obama faces re-election, unemployment will average 8.2%, the budget projects. It will be at 7.3% in 2013.
The average annual rate of unemployment in 2008 was 5.8%; President Obama’s budget does not anticipate a return to a level below that until 2016, when the budget projects 5.5% unemployment.
The average annual rate of unemployment in 2007, the year then-Sen. Obama launched his presidential campaign, was 4.6%.
The president doesn’t anticipate unemployment returning to that level at any point from now until 2020; the budget projects its lowest level of unemployment, 5.2%, in 2017, the year after he would end his second term, assuming he is re-elected.
-jpt
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I believe Ron Paul stated that unemployment would continue to get worse and that the flight of capital out of the US would also continue. That is until the proper liquidation of debt occurs. The government is trying to prop up certain sectors of our economy that need to deflate drastically. No structural changes will occur to our economy until the government stops distorting the free market.
Posted by: Huh | February 4, 2010, 1:01 pm 1:01 pm
As a matter of budgeting, this would make sense would it not?
Posted by: Ryan C | February 4, 2010, 1:07 pm 1:07 pm
With Obabble in the White House, everything is “bleak”.
Posted by: Ron | February 4, 2010, 1:18 pm 1:18 pm
Unless Obama does something to coerce US manufacturers to return to production in the US, with incentives and / or special taxes, there will be no relief from the jobless situation.
Posted by: Rick McDaniel | February 4, 2010, 1:24 pm 1:24 pm
This corrupt administration has no problem governing “against” the will of the people of America. We don’t want their government-run HCR.
Posted by: WE NEED THEM TO CREATE JOBS! | February 4, 2010, 1:34 pm 1:34 pm
Barack! Say it ain’t so! A decade of misery ain’t the way to be talking at the end of your first year. We’ve got to get tougher with trading partners who try to screw us with currency manipulation and get trade surpluses. No more trade deficits with any country including China.
Posted by: Bob | February 4, 2010, 1:44 pm 1:44 pm
Huh — Good post. Ron Paul has a good head on his shoulders.
Posted by: lfrichar | February 4, 2010, 1:46 pm 1:46 pm
“”"”"”"”We’ve got to get tougher with trading partners who try to screw us with currency manipulation and get trade surpluses. No more trade deficits with any country including China.”"”"”
Posted by: Bob
That would go directly against Obama’s foreign policy of “being nice to everyone”.
Posted by: lfrichar | February 4, 2010, 1:48 pm 1:48 pm
This long term relatively high unemployment produces a real problem for states and budgets. There’s going to be a real problem for millions of Americans. Housing and rentals are increasingly too expensive for average Americans. If the GOP gets in office in 2010 or 2012, we are so screwed.
Posted by: Bob | February 4, 2010, 1:49 pm 1:49 pm
ARRA STimulus plan is a total failure.
all it has done is plug states deficits.
fraud and abuse is rampant in ARRA
Posted by: james | February 4, 2010, 2:12 pm 2:12 pm
“”"”"”Housing and rentals are increasingly too expensive for average Americans. If the GOP gets in office in 2010 or 2012, we are so screwed.”"”"”
Posted by: Bob
Sp why exactly would we be screwed if the GOP gets in? You do realize the Dems basically forced banks to give loans to low income people to buy houses? That is what started the housing debacle. Are you saying the GOP CAUSES expensive housing? Please humor us.
Posted by: lfrichar | February 4, 2010, 2:19 pm 2:19 pm
fraud and abuse is rampant in ARRA
Posted by: james | Feb 4, 2010 2:12:35 PM
___________________________________
Please provide source and date and backup information.
Posted by: tierra | February 4, 2010, 2:56 pm 2:56 pm
You do realize the Dems basically forced banks to give loans to low income people to buy houses?
_____________________________________
This lacks some truthful elements; like the following – Bush and the Republicans providing down payment assistance to millions who didn’t have their finances together enough to make a down payment. A noble idea perhaps, but as it turns out – a recipe for disaster.
Date: Monday, July 1 2002
“President Bush announced an Administration effort to increase home ownership rates among African Americans and Hispanics by 5.5 million by 2010.
“The plan would provide down payment assistance to 40,000 minority homebuyers each year . . .
“Bush’s plan would be closely tied to some $440 million in minority loan programs offered by Fannie Mae and Freddie Mac. President Bush commended Fannie Mae and Freddie Mac’s efforts . . .”
Posted by: tierra | February 4, 2010, 3:12 pm 3:12 pm
“”"”A noble idea perhaps, but as it turns out – a recipe for disaster.”"”"
Posted by: tierra
Wow, you almost complimented the GOP! I didn’t leave truth out. What you fail to mention is the people getting those loans and the banks were at fault. They were offering loans of $417K to people who knew they only made $20K per year. That is the complete fault of banks and people, not the policy. The effort was noble, the people and banks were greedy.
Posted by: lfrichar | February 4, 2010, 3:27 pm 3:27 pm
I didn’t leave truth out.
_________________________________
Actually you did. It’s interesting that the number of foreclosures on mortgages is about the same as the number of people Bush and the Republicans’ program targeted to have the tax payer help pay the down payments – about 5.5 million.
Posted by: tierra | February 4, 2010, 3:35 pm 3:35 pm
“in 2006, unemployment was 4.5%, market was 13500…..Then the democrats took control of Congress……..good-bye economy’
Ahh the simple right winger.
The economic collapse had nothing to do with a financial system built on risk that lost.
Nope, to the right winger it was the Democrats.
Why?
Because the right wing media said so and right wingers are good little parrots.
Could you name a policy the Democrats enacted that caused the economic collapse?
Posted by: Ryan C | February 4, 2010, 3:35 pm 3:35 pm
“You do realize the Dems basically forced banks to give loans to low income people to buy houses?”
Except that is not true at all.
Banks were happy to loan money to risky people, repackage those loans as derivatives then make an enormous profit selling this “less risky” derivatives.
It was a house of cards built by Wall Street and enabled by the non existent oversight and regulation by the Bush admin.
Posted by: Ryan C | February 4, 2010, 3:37 pm 3:37 pm
“They were offering loans of $417K to people who knew they only made $20K per year. That is the complete fault of banks and people, not the policy.”
But I thought it was the fault of the Democrats.
I guess that was just a lie.
Posted by: Ryan C | February 4, 2010, 3:39 pm 3:39 pm
Ryan C — I didn’t “blame” the Dems, I simply said they basically pushed the banks into loaning. I blamed the banks and the people for their part in going beyond their means and the banks allowing it. I do see however, your normal GOP bashing remarks. So, did the GOP not offer legislation for more oversight? See, I blame both for the current state of affairs, but when it comes to housing, the banks, people, then politicians were at fault.
Posted by: lfrichar | February 4, 2010, 3:54 pm 3:54 pm
“”"” guess that was just a lie.”"”"
Posted by: Ryan C
Or you misunderstood. If you want pointers and examples on lies, I can point you towards your boy Obama. he is getting quite good at it.
Posted by: lfrichar | February 4, 2010, 3:59 pm 3:59 pm
I didn’t “blame” the Dems, I simply said they basically pushed the banks into loaning.
____________________________________
Actually you did. And you left out the role Bush and the Republicans played – and didn’t initially mention the banks nor the homeowners’ roles. Only after you were challenged did you mention anyone but the Democrats.
Posted by: tierra | February 4, 2010, 4:06 pm 4:06 pm
“”Only after you were challenged did you mention anyone but the Democrats.”"
Posted by: tierra
You and Ryan will fight against anything. I said the Dems basically forced the banks to loan. Whether Bush had a policy or not wasn’t relevent. Now, the banks and people were the major cause of the housing crumble. Geez, you all read into crap.
Posted by: lfrichar | February 4, 2010, 4:11 pm 4:11 pm
“Ryan C — I didn’t “blame” the Dems, I simply said they basically pushed the banks into loaning”
Except that is not true.
Even with you backtracking from “forcing” to “pushing”
“So, did the GOP not offer legislation for more oversight?”
I know of at least 1 bill the GOP kicked around in committee when they were in control of Congress.
They never brought it to the floor for debate or a vote even though they had the majority.
Posted by: Ryan C | February 4, 2010, 4:47 pm 4:47 pm
“I said the Dems basically forced the banks to loan. Whether Bush had a policy or not wasn’t relevent”
Huh?
How did Democrats force banks to loan to people?
And why are Bush’s efforts in this matter irrelevant?
Posted by: Ryan C | February 4, 2010, 4:48 pm 4:48 pm
Community Reinvestment Act of 1977 (Carter) forcing banks to open the tap in low-income distressed area..Revised in 1993 by the Clinton Administration..making it “less of a burden.” In 1999 Clinton Administration pressured FANNIE MAE to again open up the tap on mortgages for low income, people who really could not afford a house…and the cycle continued until 2007 when it all BLEW UP….blah blah blah…This little ole mess started years ago so anyone who says it began just 10 short years ago is….wait for it….nuts….
Posted by: Parallax View | February 4, 2010, 5:50 pm 5:50 pm
“low income, people who really could not afford a house…and the cycle continued until 2007 when it all BLEW UP..”
The cycle absolutely did not continue as is. Republicans decided it was OK to give sub-prime mortgages to almost anybody regardless of income or whether they qualified for conventional mortgages or not and dump off the risk on other markets disguised as securities. The proof is that the housing bubble which “BLEW UP” was not composed primarily of low income people.
Posted by: Skip | February 4, 2010, 6:55 pm 6:55 pm
AND….. OBAMA WANTS US TO PAY FOR ADDING 70,000 NEW FEDERAL JOBS IN THE NEXT TWELVE MONTHS. GEE, I WONDER WHICH WAY THESE NEW PARASITES ARE GOING TO VOTE? DUH!!!
Posted by: Tom Barnow | February 4, 2010, 7:14 pm 7:14 pm
The CRA was passed by the Carter administration.
In 1995 the Clinton administration authorized subprime loans under the CRA. Democrats added these provisions for the securitization of subprime loans and then ENFORCED the lending to high risk individuals. By 2000, one trillion dollars had been loaned to subprime borrowers.
Bear Stearns (collapsed in 2008) was the first to buy subprime mortgage securities. In October of 2000, Fannie Mae purchased two billion dollars worth of these subprime securities.
Subprime mortgages started to grow after 2000, and home prices started to rise. As we all know, Fannie Mae is a government sponsored enterprise. Fannie Mae GUARANTEES mortgages. Then Fannie Mae sells them to banks and investors. The more mortgages they sell, the more money they make.
Fannie Mae wanted to increase the number of mortgages sold. How does one increase the number of mortgages sold? This is done by making the loans available to low income borrowers through “affordable mortgages”. These loans were made available by allowing wider variances that borrowers needed to qualify for loans. These variances apply to:
1. loan-to-value ratio. 2. borrower contribution. 3. housing expense-to-income ratio. 4. others
REMEMBER…The banks HAD to issue subprime mortgages or pay stiff penalties mandated under the CRA. So how does one keep the loans affordable?
No money! No money down! Interest only! Low variable rate! No income verification! Bad credit? No credit?
Experts in the U.S. Financial industry began to worry when it was realized that – In 2004, 92% of all home loans issued by Fannie Mae were variable rate. In 2005, 91% of all home loans issued by Fannie Mae were variable rate.
Fannie Mae tells the banks to make the loans, “We’ll guarantee them”. “Home ownership” kept rising and so did prices. Between September 2005 and March 2006, one year ARM (Adjustable Rate Mortgage) loans ballooned from roughly 4% to 6%. This wouldn’t have been so bad all by itself, but the real catalyst was the gas prices increase. This “squeezed” people, especially low income earners.
At this point, some borrowers stopped paying, and to a degree, some banks stopped lending. During third quarter of 2007, the subprime market collapsed.
Foreclosures started piling up. This left the market with too many sellers and not enough buyers, and thus home prices started falling. More borrowers stopped paying.
Fannie Mae “guarantees” became worthless because they kept overstating their assets, which incidentally puts them in direct violation of the Sarbanes Oxley act of 2002 which deals with accounting reporting of publicly traded companies.
After this, banks began collapsing due to worthless government sponsored securities issued by Fannie Mae. Jobs were lost, and here we are.
The expansion of the CRA is directly to blame.
Before the CRA expansion by the Clinton Administration in 1995, home prices increased with inflation, but after the CRA expansion, home prices became unhinged from inflation. CRA expansion caused home prices to rise too fast! Economic fundamentals did NOT cause this rise, regulation mandated credit DID!
People DID try to stop it!
In 2003, the Bush administration proposed a new agency within the Department of The Treasury to oversee and regulate Fannie Mae and Freddie Mac, the two largest entities in the American mortgage lending industry. But the Democrats STOPPED it. They said that to regulate lenders tightly under those agencies might diminish their ability to finance loans for lower income families.
One Democratic Congressman who was pivotal in blocking the new agency was Rep. Barney Frank (D-MA). He spoke out against the proposal and was quoted at the time as saying, “…the more pressure there is on these companies, the less we will see in terms of affordable housing.”
Another Democratic Congressman who blocked the new agency was Rep. Melvin Watt (D-NC). He spoke out against the proposal and was quoted at the time as saying, “…and in the process, weakening the bargaining power of poorer families and their ability to get affordable housing.”
Posted by: Sledge | February 4, 2010, 7:30 pm 7:30 pm
“From his earliest days in office, Mr. Bush paired his belief that Americans do best when they own their own home with his conviction that markets do best when let alone.
“He pushed hard to expand homeownership, especially among minorities, an initiative that dovetailed with his ambition to expand the Republican tent — and with the business interests of some of his biggest donors. But his housing policies and hands-off approach to regulation encouraged lax lending standards.
“Mr. Bush did foresee the danger posed by Fannie Mae and Freddie Mac, the government-sponsored mortgage finance giants. The president spent years pushing a recalcitrant Congress to toughen regulation of the companies, but was unwilling to compromise when his former Treasury secretary wanted to cut a deal.
“And the regulator Mr. Bush chose to oversee them — an old prep school buddy — pronounced the companies sound even as they headed toward insolvency.”
Posted by: tierra | February 4, 2010, 8:42 pm 8:42 pm
NY Times
Posted by: tierra | February 4, 2010, 8:42 pm 8:42 pm
It is utterly amazing that there are still those who instead of rationally discuss issues, just trash the last administration. One of the reasons Air America failed – it just got boring.
Posted by: Manitu | February 4, 2010, 8:53 pm 8:53 pm
Posted by: Sledge | Feb 4, 2010 7:30:47 PM
You can put alot of mayo on a baloney sandwich and it’s still a baloney sandwich even if you have to look harder for the baloney; and baloney is standard right-wing fare.
“Fannie Mae wanted to increase the number of mortgages sold. How does one increase the number of mortgages sold? This is done by making the loans available to low income borrowers”
Now there’s a big chunk of baloney. If you really want to make a killing you increase the number of mortgages across the whole income spectrum, not just to low income borrowers. This is precisely what many lending institutions in the private sector did.
“REMEMBER…The banks HAD to issue subprime mortgages or pay stiff penalties mandated under the CRA”
Only remember this if you’re a little right-wing parrot. Otherwise dismiss it. The CRA did not stipulate that banks had to make sub-prime mortgages to everybody or anybody.
“Experts in the U.S. Financial industry began to worry when it was realized that – In 2004, 92% of all home loans issued by Fannie Mae were variable rate. In 2005, 91% of all home loans issued by Fannie Mae were variable rate”
Despite this claim most of the riskiest loans were written in the private sector.
“After this, banks began collapsing due to worthless government sponsored securities issued by Fannie Mae”
They started to collapse because they were leveraging 40 to 1 in some cases and were bloated on toxic loans. They didn’t need Fannie’s help.
“But the Democrats STOPPED it.”
This is one of the biggest right-wing myths. The Democrats didn’t stop anything nor could they. The Republicans held majorities in both houses and the pertinent committees. Name the vote; name the filibuster. Nobody has ever been able to back this up besides saying:
“One Democratic Congressman who was pivotal in blocking the new agency was Rep. Barney Frank (D-MA). He spoke out against the proposal”
“Spoke out”?? We’re supposed to believe that really constitutes blocking something? -Barney Frank roared, and the wimpy Republicans scattered.
Posted by: Skip | February 4, 2010, 9:24 pm 9:24 pm
Only remember this if you’re a little right-wing parrot. Otherwise dismiss it. The CRA did not stipulate that banks had to make sub-prime mortgages to everybody or anybody.
++++++++++++++++++++++++++++++++++++++
the banks were sued because they weren’t giving loans to people they thought were high risk. I think it was framed as discrimination. So yes, they had to pay huge fines if they didn’t give out “risky loans.” and yes, that was the beginning of the end.
Posted by: wow | February 5, 2010, 3:03 am 3:03 am
So Nobama is going to take victory laps when he gets unemployment down to the “relatively low levels” of what was the high point of the quote “LOST DECADE.”
Is the mainstream media this spineless not to call out the hypocrisy.
THE LOST DECADE
Jan-2001 4.2%
Feb-2001 4.2%
Mar-2001 4.3%
Apr-2001 4.4%
May-2001 4.3%
Jun-2001 4.5%
Jul-2001 4.6%
Aug-2001 4.9%
Sep-2001 5.0%
Oct-2001 5.3%
Nov-2001 5.5%
Dec-2001 5.7%
Jan-2002 5.7%
Feb-2002 5.7%
Mar-2002 5.7%
Apr-2002 5.9%
May-2002 5.8%
Jun-2002 5.8%
Jul-2002 5.8%
Aug-2002 5.7%
Sep-2002 5.7%
Oct-2002 5.7%
Nov-2002 5.9%
Dec-2002 6.0%
Jan-2003 5.8%
Feb-2003 5.9%
Mar-2003 5.9%
Apr-2003 6.0%
May-2003 6.1%
Jun-2003 6.3%
Jul-2003 6.2%
Aug-2003 6.1%
Sep-2003 6.1%
Oct-2003 6.0%
Nov-2003 5.8%
Dec-2003 5.7%
Jan-2004 5.7%
Feb-2004 5.6%
Mar-2004 5.8%
Apr-2004 5.6%
May-2004 5.6%
Jun-2004 5.6%
Jul-2004 5.5%
Aug-2004 5.4%
Sep-2004 5.4%
Oct-2004 5.5%
Nov-2004 5.4%
Dec-2004 5.4%
Jan-2005 5.3%
Feb-2005 5.4%
Mar-2005 5.2%
Apr-2005 5.2%
May-2005 5.1%
Jun-2005 5.0%
Jul-2005 5.0%
Aug-2005 4.9%
Sep-2005 5.0%
Oct-2005 5.0%
Nov-2005 5.0%
Dec-2005 4.9%
Jan-2006 4.7%
Feb-2006 4.8%
Mar-2006 4.7%
Apr-2006 4.7%
May-2006 4.6%
Jun-2006 4.6%
Jul-2006 4.7%
Aug-2006 4.7%
Sep-2006 4.5%
Oct-2006 4.4%
Nov-2006 4.5%
Dec-2006 4.4%
Jan-2007 4.6%
Feb-2007 4.5%
Mar-2007 4.4%
Apr-2007 4.5%
May-2007 4.4%
Jun-2007 4.6%
Jul-2007 4.6%
Aug-2007 4.6%
Sep-2007 4.7%
Oct-2007 4.7%
Nov-2007 4.7%
Dec-2007 5.0%
Jan-2008 5.0%
Feb-2008 4.8%
Mar-2008 5.1%
Apr-2008 5.0%
May-2008 5.4%
Jun-2008 5.5%
Jul-2008 5.8%
Aug-2008 6.1%
Sep-2008 6.2%
Oct-2008 6.6%
Nov-2008 6.9%
Dec-2008 7.4%
HOPE & CHANGE
Jan-2009 7.7%
Feb-2009 8.2%
Mar-2009 8.6%
Apr-2009 8.9%
May-2009 9.4%
Jun-2009 9.5%
Jul-2009 9.4%
Aug-2009 9.7%
Sep-2009 9.8%
Oct-2009 10.1%
Nov-2009 10.0%
Dec-2009 10.0%
Posted by: Jeff | February 5, 2010, 7:46 am 7:46 am
“the banks were sued because they weren’t giving loans to people they thought were high risk”
Nonsense.
Banks were sued because they decided if you lived in a certain neighborhood you were not credit worthy regardless of your individual credit worthiness.
It was a practice known as redlining.
The CRA did not weaken any standards of lending.
What it did was prevent banks from eliminating whole neighborhoods as credit worthy.
For 20 years it was fine.
But then Wall Street figured out how to hide bad risk loans and turn them into major profit producers.
Next you saw the sub prime market explode.
Then the economy shifted and people began defaulting on their loans.
Suddenly Wall Street found itself leveraged to its eyeballs with the check due.
It was all about greed.
The right wing fearful of this aspect of capitalism being exposed so nakedly have decided to blame the problem on people who took out the loans.
Now those borrowers have the majority of blame for their personal situations.
But it was Wall Street that gambled and lost and nearly destroyed our economy.
Posted by: Ryan C | February 5, 2010, 3:00 pm 3:00 pm
Community Reinvestment Act of 1977 (Carter) forcing banks to open the tap in low-income distressed area..Revised in 1993 by the Clinton Administration..making it “less of a burden.”
Yeah less of a burden to BANKS trying to comply by making the system of reporting more efficient.
The dishonesty by right wingers should be stunning.
But I’ve seen you lie so many time I just shake my head.
Posted by: Ryan C | February 5, 2010, 3:03 pm 3:03 pm
“In 1995 the Clinton administration authorized subprime loans under the CRA. Democrats added these provisions for the securitization of subprime loans and then ENFORCED the lending to high risk individuals.”
How did Democrats do that when the GOP controlled Congress in 2005.
Even odder that the CRA governed less than a 1/3 of sub prime loans.
The lesson as always? Right wingers lie.
Posted by: Ryan C | February 5, 2010, 3:07 pm 3:07 pm
You know what, Bush tried to do something about the housing crisis. There was a regulator of some sort and he read the bonuses employees of Fannie Mae and Freddie Mac out loud to Barney Frank. Despite nearly every bonus being higher than the actual salary, Barney Frank said there was no problem. He went so far as to ask why this issue had even been brought to his attention. 2 Things I’ve noticed. Liberals hate that Obama is going to outspend Bush, and they blame everything on Bush.
Posted by: shoosh | February 5, 2010, 4:16 pm 4:16 pm