From Volume 8, Issue 23 of EIR Online, Published June 9, 2009

U.S. Economic/Financial News

Financial Press Lies About Soaring Unemployment

June 6 (EIRNS)—The two leading Anglo-American financial propaganda sheets, the Wall Street Journal and the London Financial Times, published nearly identical front-page stories today, lying about "slowing" unemployment rates. While admitting that the new unemployment rate in the U.S. is a stunning 9.4%, both papers misrepresented the new data. The FT: "The latest non-farm payroll figures yesterday showed the pace of job losses slowed in May. U.S. employers cut 345,000 jobs last month, the Labor Department said, far fewer than expected and the lowest monthly total since September." The WSJ was even more blatant: "The slowing pace of U.S. job losses last month added to hopes that the recession is drawing to a close. But in a sign that the downturn continues to inflict damage, the jobless rate reached its highest level in 26 years."

How does the sleight-of-hand work? The Bureau of Labor Statistics (BLS) issues two different sets of unemployment data, based on two different surveys of the nation's workforce. The so-called Establishment Data, based on a survey of employers, showed a non-farm job loss of 345,000. But the second set of survey data, the Household Data, based on a survey of households, showed that the unemployment figures for May reached 14,511,000, an increase of 787,000 from the April figure of 13,724,000. And it is the household data that the 9.4% unemployment rate is based upon! The BLS press release clearly stated these numbers: "The number of unemployed persons increased by 787,000 to 14.5 million in May, and the unemployment rate rose to 9.4%."

While there may be some legitimate reason for compiling the two sets of data (the Establishment Data actually tracks "nonfarm payroll employment"), the idea that the financial press don't know the true overall unemployment figures is not credible.

Governors Find State Budgets Collapsing

June 6 (EIRNS)—The Obama Administration's failure to address the disintegration of the U.S. economy is hitting states hard, a new report by the National Governors Association indicates. The annual Fiscal Survey of the States, released on June 4, finds that fiscal conditions deteriorated for nearly every state, and that conditions deteriorated for more states in 2009 than in 2008. State tax revenues declined 6.1% in 2009 over 2008, while spending pressures increased on safety-net programs, such as unemployment insurance and Medicaid, as job losses have been mounting. State general fund spending are estimated to decline 2.2% in 2009 and governors' budget recommendations call for a 2.5% decline in 2010, which would be the first time in the history of the survey that state spending has decreased two years in a row. Forty-two states have reduced enacted budgets in 2009 by $31.6 billion, as compared to 13 states in 2008 and three in 2007.

The report notes that the "American Recovery and Reinvestment Act of 2009," the so-called stimulus bill, has had only a marginal effect, reducing the magnitude of spending cuts, but not the need for them.

Obama Flip-Flops on Taxing Health-Care Benefits

June 3 (EIRNS)—President Obama indicated yesterday that he is willing to consider taxing employer-sponsored health benefits to help pay for an "expansion" of health-care coverage—which the Washington Post calls "a pivot" from some of his earlier campaign rhetoric, when he attacked John McCain for proposing exactly this: "For the first time in American history, he [McCain] wants to tax your health benefits," Obama said last September. "Apparently, Senator McCain doesn't think it's enough that your health premiums have doubled. He thinks you should have to pay taxes on them, too."

According to press accounts, White House officials moved quickly to "clarify" that taxing the benefits is not Obama's first choice, but they refused to rule it out.

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