Wednesday, April 03, 2013

Wolf Bites Deeper

This man in the John Deere cap is listening to names being announced of children who are going to be allowed to stay in their Head Start classes, knowing that children whose names aren't called will be thrown out of theirs, not because of anything they did, but because of budget cuts mandated by the U.S. Congress in that neutral sounding "sequester."  He's in Columbus, Indiana, a neat little town I've seen, and Columbus was one of two places that resorted to a lottery to determine who would be dropped.  It turned out he wasn't affected, but this AP story quotes a mother whose 4 year old son was thriving in the program, learning the alphabet and numbers. He's out.  "He loves school," Miller said. "I don't know how I'm going to tell him he's not going back."

Study after study has reaffirmed the immense importance Head Start can have at a very crucial time in these young lives.  For families without the resources of the rich, this program is possibly definitive, more important to their children than the Ivy League school might be to the children of rich Members of Congress.

But this is only the beginning.  The White House estimates that Indiana alone could lose 1,000 Head Start slots.

Buzzfeed had another example: a long story on an army vet who just got a 27% pay cut at his new Defense Department job, and figures if the sequester goes on and layoffs start, he'll be the first to go. Since he's not the CEO of Penneys this cut hurt so much he's got a second job cleaning bathrooms at a pizza place. At the age of 40 he's trying to get back to combat, for the income.
But these are not just isolated instances. A piece in the Huffington Post asserts: "The grips of sequestration are just now beginning to be felt and the effects are already quite dramatic."  Amanda Terkel and Sam Stein  provide 100 examples of local services closed and people fired: a food pantry in Utah, a rehab center in Alaska, both closed; jobs lost in research, on an Air Force base, and a lot of impact on health care and schools.

It's not only that the rich and well connected aren't feeling this yet.  (Though some private airplane owners are starting to, and all air travelers probably will soon.)  It's a systems dynamics thing--it's sitting in traffic when the light is green, and moving ahead when the light is red.  Part of it is agencies holding off cuts as long as they can, hoping Congress comes to its senses, but when they finally have to cut, they will be deeper cuts.  But part of it is time lag.

The sequester cuts aren't hurting the twittering class, while all the economic news is about growth--factory orders, housing, etc.  Inflated corporate earnings make Wall Street joyous.  But it's not going to last.  None of it.  Not when money is not being spent on jobs, and when money is being taken away from the jobs that still exist, but won't for much longer.

Unemployment checks are going to be 10% lighter this month.  That's money drained out of the consumer economy immediately.  It will show up in the stats in a month or two.  The wolf is biting.  But the wolf is just getting started.

The Connecticut Effect

The NRA calmed its gun company masters and its easily panicked minions by sagely suggesting that staving off anti- massacre-by-gun  laws was just a matter of waiting out the "Connecticut Effect"--the national response to the assault rifle slaughter of 6 year olds in Newtown.

But suddenly there's another kind of Connecticut Effect.  The state government of Connecticut is poised to enact the most "far reaching gun control package in the country."  Its centerpiece is banning high capacity ammunition magazines--all new sales immediately, the registration of all existing magazines, and it bans shooting with these magazines anywhere but at a registered gun range.

Moreover, it is a thoroughly bipartisan plan.  Connecticut has a Democratic governor, and Dem majorities in its legislature.  But a process that included extensive public hearings also included extensive consultations and work with Republican legislators, to craft the legislation.

It is by far the most dramatic and the most hopeful outcome so far.  With the U.S. Congress beset by craven cowardice, it is in the states that progress is being made.  The Connecticut Effect may be to show the way.

Tuesday, April 02, 2013

Read It and Weep

It seems the Board of Directors of J.C. Penney are really upset with how the company is going, and they've decided to punish their CEO.

In a bold if not unprecedented move, they've slashed the CEO's pay--by 97%!

Quoted the New York Times: “The C.E.O. is certainly being given a message,” said Kent Hughes, managing director at the proxy advisory firm Egan-Jones Ratings Company. 

And what a message!  Somehow this guy has to make do on only 3% of his regular pay.  Hard to imagine how he can do it and still concentrate on turning the company around to please the board.

Yes, unless he dips into his savings or his stock portfolio or even his retirement, he and his family are going to have to make do for the entire year on only $1.9 million.

oh and by the way