Huge teacher layoffs threatened

One of the main reasons the United States developed the world's strongest and most innovative economy is that it invested in education.

The commitment to provide free, universal public education made it possible for tens of millions, the children of farmers, sharecroppers and workers, many of who were immigrants from Ireland, Eastern and Southern Europe, China and elsewhere, to master the language and numeracy skills they needed to contribute to the growth of the nation and its democracy.

In establishing the University of Virginia and in his support for land grant colleges like the University of Wisconsin, Thomas Jefferson established a national precedent of public support for higher education that has continued until recent years.

Progressive states like Wisconsin built on these traditions by investing in vocational schools which today have developed into the Wisconsin Technical College System, a sophisticated post- secondary education and training system that provides local industry with the skilled workers and technicians it needs.

But in the last few years, the nation's thirty year romance with reducing taxes has combined with the Great Recession to undermine education funding at all levels. The nation's public schools are now approaching, in the words of U.S. Secretary of Education Arne Duncan, "an education catastrophe" as state budget cuts will eliminate between 100,000 and 3000,000 teaching positions.

Last year the American Recovery and Reinvestment Act was responsible for preventing 342,000 teacher layoffs, 5.5% of the country's total K-12 teaching jobs.

But this year with no additional stimulus dollars massive layoffs are expected. 90% of the nation's school districts plan to layoff teachers in the fall, up from 66% last year.


Districts in California have given pink slips to 22,000 teachers. Illinois authorities are predicting 17,000 and New York is projecting another 15,000 position will have to be eliminated to balance the budget. Across Wisconsin from Milwaukee to the Fox Valley, from Madison to Stevens Point and Menasha, teaching positions are being cut. A record 13% of the nation's school districts are considering a four day school week.

Deficit hawks will argue that we have to live within our means; that we just can't afford to keep all of these teachers. They disingenuously assert that if we spend more federal money on teaching our children we have to cut other federal spending to prevent the deficit from growing even larger. They are proposing cuts in education in the name of the protecting our children and grandchildren from having to pay the nation's growing debts.

This is nonsense. 66% of the federal budget is non-discretionary spending like Social Security, Medicare and interest on the debt. It cannot legally be cut.

Half of the remaining third is national defense spending which is for all practical purposes non- discretionary when the nation is fighting two wars. That leaves only 17% of the federal budget that can be cut. And that 17% includes education, job training, veterans benefits, food stamps, unemployment benefits, justice, environment, and research and development. What exactly do they propose we cut to pay for education? Education? Job Training? Veterans benefits?


A nation that can't afford to educate its citizens is a nation that will not prosper.

Education is an investment in the future of the nation, its economy and its people. Most economists agree that it is necessary to go into debt to jump start the economy and or to make investments in education, science, research and development and infrastructure; investments that are the basis for increased economic growth and prosperity. If we fail to make these strategic investments, economic decline is assured.

Cuts on the scale being projected also threaten the nation's economy recovery. While the economy has begun to grow, unemployment and underemployment continue to hold back growth. The federal stimulus provided a temporary increase in demand that prevented the severe recession from becoming a depression. But most of that money has now been spent. Eliminating 300,000 teachers will lead to a significant reduction in demand that could undermine the weak recovery causing a double dip recession.

Iowa Senator Tom Harkin has proposed a $23 billion school bailout bill that will help schools across the nation avoid the catastrophic layoffs that are planned. Congress should pass this bill!

A year and half ago Congress bailed out CitiGroup, Goldman Sachs and other Wall Street banks. The deficit hawks didn't demand cuts in federal spending to provide Wall Street with hundreds of billions of dollars.


Is it more important for us to keep these private investment firms alive than it is to educate our young people? Are we more more committed to investing in Wall Street speculation than in the real economy and people that produce goods and services?

Congress needs to pass Senator Harkin's emergency education funding bill now. Otherwise, we will get exactly the kind of nation we won't pay for.

Milwaukee Journal Sentinel’s Sensationalism Misses Real Story

The Milwaukee Journal Sentinel circulation must really be down, or its editors have a pathological hatred of the American Recovery and Reinvestemnt Act.

There are no other possible explanations for its sensationalist, above the fold, front page article about the failure of the Milwaukee Area Technical College (MATC) and four other stimulus fund recipients to meet a reporting deadline.

That’s right, the Journal Sentinel thought missing a deadline merited front page and distorted coverage. Sure, MATC’s administration needs to tighten up its reporting procedures, but its failure to meet a deadline on money it has not even received hardly constitutes front page news.

Here’s how distorted the reporting was: the Journal Sentinel first said five organizations received a grand total of two hundred thousand dollars. But after acknowledging that amount, the paper quoted the chairman of the Federal Recovery Board claiming: “…they took millions and thumbed their noses at the taxpayers.”

If only MATC had received millions of federal dollars, it wouldn’t be struggling to meet the huge increase in demand for its services.

The real scandal that merits front page coverage is that MATC’s enrollments have soared as Iraqi veterans and dislocated workers seek occupational training, but state aid to the tech college system has fallen to 13%, the lowest level in history and way below the state’s 33% commitment.
And while President Obama has proposed a significant increase in federal support for two-year colleges, Congress has yet to approve the needed funding while the GOP appears committed to opposing absolutely everything Obama wants.

Rather than manufacturing imaginary scandals, the Journal Sentinel should use its bully pulpit to demand that the federal government increase its investments in higher education.

The local newspaper apparently has an axe to grind with the stimulus program. A month ago in a front page article entitled "Economists see no stimulus jobs" it incorrectly claimed that the American Recovery and Reinvestment Act had not created any jobs, an assertion that virtually no economist agrees with. Now it implies that the program is acting irresponsibly.

The only institution that is behaving irresponsibly is the Milwaukee Journal Sentinel which in its desperate effort to increase sales, has, in the words of Steven Colbert, a truthiness problem.

Journal Sentinel misleads on stimulus

The Milwaukee Journal Sentinel sank to new lows in covering economics with an inaccurate and sensationalist front page article on the American Recovery and Reinvestment Act's job creation record.

The headline blared "Economists see no stimulus jobs."

Journal Sentinel economics reporter John Schmid wrote: "... more than two-thirds of economists responding to a a nationwide survey say the stimulus so far has failed to create jobs."

This was awful reporting on several levels.

First and foremost, it is dead wrong.

There is virtually no dispute among economists that the stimulus prevented the worst recession since the Great Depression from getting much worse by slowing the rate of job loss and saving between 1.6 and 1.8 million jobs.

The New York Times economics columnist, David Leonhardt, effectively refuted Schmid, in a column the MJS buried (on page 7 in Sunday's edition) when he wrote:

Just look at the outside evaluations of the stimulus. Perhaps the best-known economic research firms are IHS Global Insight, Macroeconomic Advisers and Moody’s Economy.com. They all estimate that the bill has added 1.6 million to 1.8 million jobs so far and that its ultimate impact will be roughly 2.5 million jobs. The Congressional Budget Office, an independent agency, considers these estimates to be conservative.

Before the stimulus was passed the nation was losing an average 650,000 jobs a month. It is widely recognized that the "widely successful "cash for clunkers" and the mortgage rebate program shave have stimulated automobile and home purchases saving thousands of jobs. Other stimulus projects have accelerated shovel ready projects and kept or put construction workers to work.

The recession began in December 2007, during President Bush’s 7th year in office. By the time President Obama was inaugurated, 4.4 million jobs had been lost. By the time the Recovery Act was passed, 5.9 million jobs had been lost. As the graph above illustrates, the job losses that were accelerating before the Recovery Act was passed have been virtually eliminated.

We should not forget the damage done to the economy before the Recovery Act. From December 2007 to March 2009, one out of every twenty private sector jobs was eliminated, a rate of destruction 50% greater than even the severe recession in the early 1980s. The economy was in a free fall. With unemployment at 9.7% today, and a record 40% unemployed for more than six months, it’s hard to appreciate how much more damage the stimulus investments prevented.

Without the two million jobs generated by the Recovery Act, the unemployment rate would now exceed 11% rather than the 9.7% rate in January.

Schmid not only misinformed his readers about the stimulus bills' impact, he also misrepresented the survey. It did not ask whether the stimulus had created jobs, but whether it had created jobs "in their firm or industry."

That's a distinction with a world of difference.

The decision to make a minor survey of a handful of business economists the lead article on the front page was a decision with real consequences. The publics' perception of the Recovery Act's effectiveness bill will shape future federal economic policy decisions including:

• Will unemployment benefits be extended for the more than two million people who are about to run out of them?


• Will the feds provide additional job training dollars so the unemployed can acquire the training they need to get back on their feet?


• Will Congress provide financial assistance to the states which face a $357 billion budget shortfall and local governments with an additional $80 billion budget deficit? Without it, state and local governments will be forced to slash spending, laying off police officers, firefighters, teachers, and other public employees or raise taxes to balance their budgets, threatening the nascent recovery.


• Will Congress provide additional health care funding so that's states don't raise eligibility limits or cut programs?


• Will Congress invest in repairing our national infrastructure, our schools, highways, the electric grid, water systems, ports, dams, and levees which must be upgraded, rebuilt or replaced if the U.S. is to remain a first class economy in the Twenty First Century?

The American Recovery Act helped reverse the nation's economic free fall, even if it wasn't large and targeted enough to stimulate a robust recovery. The economy is showing signs of life, but it remains on life support.

Private demand, consumer spending and private investment remain anemic. The only engine of growth and employment remains public demand. Without an accurate analysis of the Recovery Acts positive results, public opposition will grow, fanned by partisan opposition, and Congress will retreat from making the strategic investments our nation needs to revive the economy.

That's the real story. And its the story John Schmid and the Milwaukee Journal Sentinel missed.

Recession causes deficit to grow

The While House released an updated estimate of the federal budget deficit, which shows it now totals $1.6 trillion or 11.2% of gross domestic product. This is $262 billion less than what was estimated in May. The Congressional Budget Office showed a smaller improvement.

The new numbers confirm that the recession has caused the deficit to increase significantly.

Lower incomes, higher unemployment, and reduced business activity have combined to produce the lowest level of federal revenues – as a portion of GDP – in more than 50 years.

Policy measures aimed at stabilizing the economy have also added to the deficit, though to a much smaller extent: Stimulus investments made under the American Recovery and Reinvestment Act account for only about one-eighth of the deterioration in the 2009 deficit relative to pre-recession estimates.

Some will use this report as an opportunity to call for immediate action to reduce the deficit, or to suggest that we need to abandon or delay major policy initiatives, like investments in green technologies and two year colleges and health care reform. But given that the current deficit is largely caused by the recession, any efforts to reduce the deficit would choke off a recovery. That would be self-defeating and irresponsible.