BA Spending Daily September 5, 2012

National Debt Surpasses $16 Trillion
Bankrupting America, an en educational project of Public Notice, writes, “The national debt yesterday surpassed an unprecedented $16 trillion, amounting to more than $50,900 of debt for every man, woman and child in the United States.  Since 2009, the debt has increased 50 percent, and the U.S. Senate hasn’t passed a budget in more than three years.  For the first time in history America’s creditworthiness has been downgraded, yet time and again, Washington has refused to make the rational decisions necessary to get our fiscal house in order. ‘Today’s sad milestone of a $16 trillion national debt will probably not garner much attention in Washington or the media since we are in the midst of political party conventions. Americans are worried though. The debt and government spending are top concerns for Americans, according to our recent poll, with large majorities seeing the connection between the debt and the health of both the economy and their personal financial well-being,’ said Gretchen Hamel, executive director of Public Notice.”

DNC Day One: No Mentions of America’s Now More Than $16 Trillion Debt
After the first day of the Democratic National Convention there was no mention by any of the prime-time speakers that the national debt surpassed $16 trillion earlier in the day.  Last week the Republican National Convention featured a debt clock in Tampa, putting the issue of our skyrocketing debt front and center each day.  Bankrupting America will continue to urge both parties to address our debt reduction and monitor the prime-time speakers at the Democratic National Convention.  While the debt and government spending may not be top concerns for our members of Congress, it’s at the top of the minds of the families and small businesses they represent.

BlogHer: “$16 Trillion Debt Now Larger Than The U.S. Economy: Dems, Please Discuss.”
Gretchen Hamel writes in BlogHer, “The national debt just eclipsed $16 trillion, according to a press reports on a statement released by the U.S. Treasury — which caused $16Trillion to trend on Twitter. Our debt is larger than the entire U.S. Gross Domestic Product; that is every good and service produced in the U.S. each year. … The Republican National Convention included a debt clock, a heartening step to ensure a focus on the problem — but little more than a gimmick without a plan of action to fix it. … There have been no reports that Democrats plan to incorporate a debt clock into their convention; it is unclear how much, if it all, they intend to address it during the official program.”

August Jobs Growth Likely Slowed, May Prompt Fed Action
Reuters reports, “Jobs growth likely cooled in August with the elevated unemployment rate remaining stuck as businesses worried over an uncertain economic outlook, an outcome that could potentially seal the case for a further easing of monetary policy. Employers are expected to have increased payrolls by 125,000 workers last month, according to a Reuters survey of economists, a step down from July’s 163,000-job gain. The unemployment rate is seen holding steady at 8.3 percent. The fresh U.S. jobs tally will be released on Friday at 8:30 a.m. (1230 GMT), a week after Federal Reserve Chairman Ben Bernanke left the door wide open to more monetary stimulus and described the labor market’s stagnation as a ‘grave concern.’”

European Economic Crisis Leads to Rise in Depression and Suicide
CNBC reports, “Europe is approaching a crisis as the region’s debt crisis and austerity measures increase the rates of depression, suicide and psychological problems – just as governments cut healthcare spending by up to 50 percent, according to campaigners, policy makers and health organizations. Europe is approaching a crisis as the region’s debt crisis and austerity measures increase the rates of depression, suicide and psychological problems – just as governments cut healthcare spending by up to 50 percent, according to campaigners, policy makers and health organizations.”

Re-employed Settle For Lower-Paying Jobs
Bloomberg reports, “A surge in long-term U.S. unemployment, which Federal Reserve Chairman Ben S. Bernanke has cited as evidence of a ‘far from normal’ labor market, finally is abating. That’s good news for American companies, which are taking advantage of a pool of 5.2 million people whose career hardships have made them eager to return to work. Most of the re-employed have had to settle for reduced pay, allowing businesses to keep labor costs low while boosting profits amid sluggish sales gains following the deepest recession since the 1930s. … Workers have become less selective after benefits of as much as 23 months expire. Fifty-four percent of the long-tenured unemployed have had to settle for lower wages to secure another job, according to a Labor Department report released Aug. 24. One in three said their compensation was at least 20 percent below what they made at previous employers.”

California Environmental Law Abused, Hurting Jobs Growth Efforts
The New York Times reports, “Environmentalists in this greenest of places call the California Environmental Quality Act the state’s most powerful environmental protection, a model for the nation credited with preserving lush wetlands and keeping condominiums off the slopes of the Sierra Nevada. But the landmark law passed in 1970 has also been increasingly abused, opening the door to lawsuits — sometimes brought by business competitors or for reasons unrelated to the environment — that, regardless of their merit, can delay even green development projects for years or sometimes kill them completely. With California still mired in what many consider its worst economic crisis since the Great Depression, the law, once a source of pride to many Californians and environmentalists across the country, has turned into an agonizing test in the struggle to balance environmental concerns against the need for jobs and economic growth.”

Manufacturing Report Indicates Slowing Recovery
The Wall Street Journal reports, “The U.S. factory sector contracted for the third straight month in August, a worrying sign from a corner of the economy that has been a bright spot in a lackluster recovery. A closely watched gauge of the factory sector, released Tuesday by the Institute for Supply Management, showed manufacturing activity slipped to 49.6 from 49.8 in July. It was the third consecutive month in which activity fell. Readings below 50 indicate contraction. The ISM report was the latest signal that two engines of the recovery—exports along with business spending on capital equipment and other investments—are running on fumes. Exports contracted during the month, though less than in July.”

Food Stamp Use at Record High
Bloomberg reports, “Food-stamp use reached a record 46.7 million people in June, the government said, as Democrats prepare to nominate President Barack Obama for a second term with the economy as a chief issue in the campaign. Participation was up 0.4 percent from May and 3.3 percent higher than a year earlier and has remained greater than 46 million all year as the unemployment rate stayed higher than 8 percent. … Food-stamp spending, which more than doubled in four years to a record $75.7 billion in the fiscal year ended Sept. 30, 2011, is the U.S. Department of Agriculture’s biggest annual expense. … Reductions to the program have also emerged as a point of contention in debate over a farm bill to replace current law that expires Sept. 30.”

Tough Months Ahead for Europe
Real Clear Markets reports, “The European debt crisis took a breather in the summer months as thinner markets and promises of central bank intervention from both the U.S. and Europe bolstered equity prices. … As the calendar turned to September, Europe’s debt crisis began to flare up almost immediately. New data from the ECB shows that funding costs for businesses in the European periphery are at the highest level in a half decade. Meanwhile, Moody’s lowered the debt rating outlook for the EU on September’s first day of trading. Neither story implies good things for the already-depressed and uncompetitive economies of the southern portion of the continent. But the darkest days for Europe might come this fall. Over the next two months, it will be forced to either face the reality that the monetary union is unsustainable, or face certain backlash from a dissatisfied and vitriolic European electorate.”

With Sequestration Pending, Defense Industry Braces for Cuts
Reuters reports, “U.S. defense companies are bracing for additional cuts in Pentagon spending, even if Congress reaches a deal to avert a controversial $500 billion across-the-board budget cut due to go into effect in January, industry officials said on Tuesday. Dennis Muilenburg, head of Boeing Co’s defense and security unit, said in an interview with Reuters reporters and editors that his firm anticipated the Pentagon would face more spending reductions even if Congress acts to avert the cuts looming in January under the process known as sequestration. ‘We know that there’s still a gap to close in terms of the overall budget deficit,’ Muilenburg said. ‘Certainly the defense budget, being one of the large components of the overall federal budget, will have to be considered in that process.’ … The Pentagon is facing $500 billion in across-the-board cuts to defense spending over 10 years beginning in January, after Congress failed to reach a compromise deal to reduce federal spending by an equivalent amount. A similar amount will be cut from non-defense government programs.”