Just over a week ago, the Senate fell one vote short of overcoming a Republican filibuster to pass a three-month extension of assistance for the long-term unemployed.
Mitt Romney and Paul Ryan want to cut domestic spending in order to increase military spending. Regardless of whatever else may be true - that is, regardless of whether you think more military spending is otherwise a good idea, or how you feel about the public services that would be axed by greater domestic cuts - their plans to cut domestic spending in order to increase military spending would cost hundreds of thousands of American jobs.
How many jobs? A plausible estimate is that their plans to cut domestic spending in order to increase military spending would cost at least 530,000 jobs.
What does 530,000 jobs mean in the context of the U.S. economy? According to the Bureau of Labor Statistics, there are currently about 12.8 million unemployed out of a labor force of about 155 million, for a measured unemployment rate of 8.3%. If an additional 500,000 people were employed today, there would be 12.3 million unemployed and the unemployment rate would be 8%.
By comparison, in September 2011, economist Mark Zandi of Moody’s Analytics estimated that if two stimulus measures were allowed to expire the end of 2011 - the 2% employee payroll tax holiday and the emergency unemployment insurance program - that would cost 750,000 jobs in 2012. As you may recall, there was a huge fight about whether those two stimulus measures should be allowed to expire. The job loss from replacing military cuts with domestic cuts is roughly of the same order of magnitude. If it was worth fighting about saving those 750,000 jobs by extending the stimulus, then it's worth fighting about saving 530,000 jobs by not replacing military cuts with domestic cuts.
Remember, "It's the Economy, Stupid?" So how come Democrats in Congress - over the objections of the Obama Administration - are helping Republicans press sanctions on Europeans who buy oil from Iran - sanctions that would increase unemployment in the U.S. during the 2012 campaign?
The National Defense Authorization Act now contains a Senate amendment by Republican Senator Mark Kirk - supported by many Democrats in Congress - that would sanction European banks and companies that do business with Iran's Central Bank, in order to stop Europeans from buying Iranian oil. This is a big deal, because Iran is the world's fifth-largest oil exporter, and blocking Iranian oil exports to Europe would raise the price of oil, in Europe and in the United States.
Kirk's amendment would hurt the U.S. economy, at a time when economic contraction in Europe could push the U.S. back into recession.
Is fear of the economic blowback of the sanctions on Europe that Kirk wants to impose justified? Many Europeans seem to think so.
On Tuesday, Reuters reported:
The European Union is becoming skeptical about slapping sanctions on imports of Iranian oil, diplomats and traders say, as awareness grows that the embargo could damage its own economy without doing much to undercut to Iran's oil revenues.
"Maybe the aim of sanctions is to help Italy, Spain and Greece to collapse and make the EU a smaller club," one trader joked.
The remark reflects the growing unease that EU sanctions would hit hardest some of the continent's weakest economies, because Iranian oil provides the highest share of their needs, not to mention the rest of the bloc.
Next week the Western Hemisphere will see a tale of two elections: two elections that have a number of key features in common, and some key points of divergence. In common: the incumbent center-left faces a challenge from the Right. The head of state, the incumbent leader of the center-left, will not be on the ballot, but the election is widely viewed as a referendum on his policies.
Election Day is "the poll that matters," but the key divergence is that on Sunday in Brazil, the center-left is forecast to coast to victory, while on Tuesday in the U.S., the Right is widely forecast to make big gains, with better than even odds of taking the House.
What explains this divergence?
There are many factors, of course, but there is one key cause: in Brazil, Lula brought home the bacon, in economic indicators of the quality of life, for the Workers Party's electoral base: working people. Measured unemployment in Brazil is now at a record low of 6.2 percent.
When the majority of voters in Brazil ask themselves, "are we better off now than we were before the Workers Party came to power," this is the reality that they reflect on: the Brazilian economy has performed much better for working people during the Lula years than during the eight years of opposition candidate Jose Serra's party. Per capita income grew by 23 percent from 2002-2010, as opposed to just 3.5 percent for 1994-2002. The minimum wage, in real terms, grew by 65 percent during Lula's presidency. This is more than three time the increase during the prior eight years.
In Brazil, as in the U.S., a significant rise in the real value of the minimum wage lifts not just the workers who are at the very bottom of the wage distribution, but the much larger group of workers whose wages are near the bottom.