Economy Watch: Jobs Bill Sunk by Senate
- Oct 12, 2011
The U.S. Senate, in a procedural vote on Tuesday night, voted 50 to 49 to open debate on President Obama’s $447 billion jobs bill, thus effectively scuttling the measure since 60 votes would be need to close debate on the bill and vote on it. Not too many observers were surprised that the bill failed, even in the Democratic-controlled Senate (three members of that party voted with the Republicans).
The next move, by both the White House and members of Congress, is to push for elements of the bill to be passed as separate measures. That also isn’t a shock, since the president himself has been talking about that option recently as he tours the country, using his bully pulpit to either encourage Congress to act or to try to gain political points by asserting that Congress—at least the Republican members—would rather see him defeated next year than do anything to help the economy.
The package was a mix of public works, tax cuts and extended unemployment benefits. Lately, Democratic senators added a provision to install a surtax of 5.6 percent on income in excess of $1 million, which the president said he was “comfortable with.” The last president to ask for a surtax, incidentally, was Richard Nixon, who requested a temporary extension of an LBJ-era surtax, and got it (that was the measure that also created the notorious Alternative Minimum Tax). It isn’t clear yet which pieces of the jobs bill will emerge as new bits of legislation in the coming weeks.
Employment trends still moving downward
The Conference Board said on Tuesday that its Employment Trends Index decreased in September to 100.95, down from a revised figure of 101.37 in August. According to the organization, this month’s weakness in the ETI was driven by negative contributions from six out of the eight components, including Jobs Hard to Get, Initial Claims for Unemployment Insurance, Percentage of Firms With Positions Not Able to Fill Right Now, Part-Time Workers for Economic Reasons, Industrial Production and Real Manufacturing and Trade Sales.
“Despite the somewhat better than expected employment numbers released on Friday, the decline in the Employment Trends Index in September suggests that weak job growth is likely to continue for the rest of 2011,” noted Gad Levanon, director of macroeconomic research at the Conference Board, in a statement. “Even as the economy remains slow going into the next year, we do not expect a major acceleration in layoffs, because employers have kept their workforce quite lean since the 2008/09 recession.”
The Conference Board also said on Tuesday that its Measure of CEO Confidence, which had declined in the second quarter, fell further in the third quarter. The measure now stands at 42, down from 55 in the second quarter. A reading of more than 50 points reflects more positive than negative responses.
Slovakia fails to approve euro-zone bailout fund expansion
Slovakia doesn’t make the news all that much, but on Tuesday the country had the eyes of the world on it as the Slovakian parliament failed to approve an expansion of the European Financial Stability Facility, which is the formal name for the bailout fund set up by the EU. The vote was 55 aye and most of the rest of the 150 parliamentarians abstaining or making themselves scarce for the vote, meaning that it wasn’t precisely a rejection of the EFSF.
In fact, the vote seemed more to be function of internal Slovak politics than anything else—something to do with one faction or other wanting the government to fall, in hopes of benefitting from an early election. A second vote is expected before long, and that will likely pass over some opposition.
Wall Street gyrated a lot on Tuesday and ended up mixed. The Dow Jones Industrial Average lost 16.88 points, or 0.15 percent, while the S&P 500 gained a minuscule 0.05 percent and the Nasdaq advanced 0.66 percent. The Street seems to be waiting on more quarterly numbers, though if they’re anything like Alcoa’s miss of its third-quarter earnings per share projections, investors will not be happy this week.