Weekly Unemployment / Jobless Claims Report - Week Ending February 21st

According to the Department of Labor:

Weekly Seasonal Adjusted Initial Unemployment Claims were 667,000

Adjustment From Previous Week: +36,000 from revised previous numbers

Adjustment From Same Week in 2008: +306,000

Transportation & Transportation Infrustructure Provisions

Surface Transportation Provisions

$27.5 Billion Allocated

• 50% To be allocated directly to State DOT's based upon existing allocation formulas. States have 120 days (after funds are made available) to allocate the funds to specific expenses or projects, but may request a 1 year extension. (2-3 months to make funds available + 2-12 months to allocate money to projects + project start dates may vary based upon planning dates)
• 50% allocated to directly to State Governments
• 30% of State Funds are allocated to specific regions with no requirement for specific use nor use-it-or-lose-it provision.
• No restrictions on usage other that priority is to be given to projects that can be completed within 3 years and in economically distressed areas. No requirement for states to utilize the money for repair or maintenance first.
• $40 million included for additional USDOT Administration.

Rail Transportation Allocations

• $8 Billion for High Speed Corridors and inner city rail transportation. Money split up between 3 agencies for use: USDOT, Capital Assistance Program and High Speed Rail Program.
• Department of Transportation has 180 days to allocate funding of capital grants and determine provisions. No funds will flow from the program until such guidance is in place.
• $1.3 Billion to be given to Amtrak with $450 million (35%) allocated to security improvements and a limit that no more than 60% can be spent on Northeast Corridor Improvements.

Transit Allocations

$6.9 Billion Capital Projects

• 80% allocated to inner city projects, 10% to rural areas, 10% to High Density Areas
• $100 million to be used to reduce "energy consumption and greenhouse gases" among public transportation agencies.
• Agencies have 180 days after funds become available to allocate the funds.

$750 Million Transit Rail & Repair (i.e. subways)

$750 Million for transit projects already under construction or "shovel-ready". Available funds must be obligated within 150 days, but may take until 2012 to be utilized.

Additional Transportation Grants

$1.5 Billion to be freely allocated by the USDOT however they deem fit for transportation programs. Projects must be selected and obligated within 1 year and be able to be completed within 3 years.

Other Allocations

Estimated $5.3 billion dollars for the creation of $25 billion in a new class of "Recover Zone" bonds. Bond funds are to be allocated to States with high jobless rates, based upon an undefined formula (minimum amount to be set for each state). States are to allocate funds to areas of highest jobless rate, poverty rate or foreclosure rates. Funds may be used for transportation projects, training programs, education and economic development programs within these areas as deemed fit by local municipalities.

Estimated $4.3 billion dollars for the creation of a new class of Tax Credit Bonds for local municipalities. Tax Credit Bonds will be designed to replace current tax exempt bonds by making interest taxable for the bond holder and providing them with a tax credit for a portion of the interest. Designed to reduce interest payments States and Municipalities must pay on bond issues.

$192 million for federal tax credits for specific companies or government entities that provide public transit benefits to employees.

Stimulus Unemployment Extension Likely To Raise Business Taxes

The Economic Recovery and Reinvestment Act provides for the largest single extension of Unemployment Benefits in US history. The provisions which effectively end the Bi-Partisan welfare reform of the mid 90’s, is likely to expand the unemployment insurance rolls by 500,000 - 1,000,000 previously ineligible and low-wage workers. However, little discussion has taken place concerning the impact of the proposed changes beyond the next two years. Although an extension of the benefit period and temporary increase in the benefit amount are considered necessary measures, the CBO, economic think-tanks, a select group of Governors and economists nationwide are deeply concerned over the impact of two unemployment provisions included in the stimulus bill.

The stimulus bill offers a multi-billion dollar carrot out to individual states for use in offsetting unemployment benefits. However, like all federal money, Congress and the Obama Administration have attached strings to the funds.

The first 1/3 of the money offered to the states requires that the accepting state revise their current Unemployment Insurance guidelines to base qualification upon not only employment but also quarterly income. A handful of states such as New York have similar provisions in place and will become eligible for the funds immediately. However, a majority of states including California have avoided such changes in Unemployment Benefits qualifications in the past out of budgetary concerns.

The remaining 2/3 of the ‘Stimulus Carrot’ will become available to any State that adopts two of the following four expanded qualifications for benefits.

A) States must include workers only seeking Part-Time Employment
B) States must include workers who VOLUNTARILY terminate employment due to compelling reasons such as a family illness or domestic abuse.
C) States must include those in "training programs".
D) States must include those who request additional funds for dependents who qualify.

The Obama Administration expects the above qualification changes to provide Unemployment Benefits to an additional 500,000 to 1,000,000 Americans. However, many economists fear that the number of individuals on unemployment may balloon as some states adopt the more liberal qualifications.

The deep concern with this expansion of unemployment benefits is the long-term ramifications of such changes. By design, Federal funding forcing these changes is only sufficient to cover the additional expenses to the states for a period of 18-30 months. With many states such as California already facing shortages within Unemployment Benefit funding, many State Comptrollers expect that this block of federal stimulus money will dry up within months; without providing long term solutions or stimulating anything.

The concerns as outlined by the CBO and most economists are simply: How do states pay for these additional benefits when the stimulus money is gone? The only solutions are that the Federal Government must continue to provide billions per year in additional unemployment funding, State’s must abolish the changes, or States must raise the unemployment tax. The concerns have already prompted the State of Oregon to begin consideration of a raise in their current unemployment insurance premiums assessed on statewide employers. With a average nationwide unemployment tax hovering around 1.75% of payroll on US employers (varies by state), many states will be forced to increase taxes on local employers, in some cases raising the maximums and doubling fees.

The expansion of Unemployment qualifications is not stimulative, rather it only provides a short term fix that will require billions of dollars a year for states to maintain. If the federal government wishes to mandate major expansions of unemployment, then long term funding should first be considered. The way that the unemployment expansion is being implemented is nearly identical to how the federal government has mandated expansions of Medicaid benefits and qualifications in the past; and those unfounded Medicaid benefits have created increased taxes and major shortfalls within state budgets. It looks like business carries on as usual in Washington, with this administration, just like others before it, failing to challenge the lack of fiscal responsibility within our government.

Stimulus Unemployment Changes

Summary of changes to Unemployment Benefits & Programs

Unemployment Benefit Increase - $25 Increase in weekly benefit checks through the end of 2009.

Extended Unemployment Benefits - Extends current legislation extending unemployment benefits by an additional 33 weeks beyond the 26 week base benefit.

Food Stamps Increase - 13% increase in current food stamp benefits.

Income Taxation - The first $2,400 of unemployment benefits would not be subject to Federal Income Taxes.

State Unemployment Benefit Expansion

Income-Based Eligibility - One Third of the stimulus money will be granted to states which change the eligibility guidelines to include income-based eligibility. The move is expected to benefit low-wage workers and drastically increase unemployment rolls.

Increase Eligibility For Benefits - Two-thirds of the stimulus money set aside for unemployment is based upon State's adopting two of four potential changes to their unemployment programs. If a state fails to adopt the changes, they do not receive funds. The four choices are:

• States must include individuals who are only seeking part-time work.
• States must include individuals who voluntarily leave employment to care for compelling reasons such as a family illness or domestic abuse.
• States must include those in "training programs"
• States must include those who request additional funds for dependents who qualify.

COBRA Changes - Provides a 65% Tax Credit To Employers as a subsidy for COBRA Premiums.

Weekly Jobless Claims Report - Week Ending February 14th

According to the Department of Labor:

Weekly Seasonal Adjusted Initial Unemployment Claims were 627,000

Adjustment From Previous Week: Unchanged from revised previous numbers

Adjustment From Same Week in 2008: +301,000

Behind The Stimulus Plan Claims Of 3.5 Million Jobs

How do you measure Job Creation?

Many questions surround the job creation numbers put forth by partisan's in Washington, and primarily the rhetoric put forth by the Obama administration. As a result, the question we should be asking is where do these numbers come from and how might they be affected?

First of all, let me point out that the 3.5 million Jobs that the administration has settled on comes directly from a CBO analysis that determined that the stimulus plan could produce 3.5 million jobs. However, just like Paul Harvey would state, now let's hear the rest of the story...


Job numbers are determined by utilizing Economic "multipliers" built upon economic variables and historical re-creation. The margin of error built into these formulas is measured in the hundreds of thousands and even the millions. In layman's terms, an accuracy rate that mirrors your accuracy in predicting lottery numbers. Moreover, these multipliers are built upon historical data, which in many economic sectors just doesn't exist or existed during a period in which are economy was structurally different. For instance, within the Energy sector, the Economic Recovery and Reinvestment Act predicts the creation of 26,000 mining jobs nationwide. However, because these numbers are built upon historical impact studies taken during periods of continuous sector growth, the numbers are 'wishful thinking' at best. The creation numbers do not take into account the ongoing shriveling of this industry, the impact of environmental regulation promised by congressional and administration leaders, nor the unmeasurable impact of alternative energies. As a result, the question becomes how do you drastically expect the expansion of an industry that has consistently shed jobs due to an attack on domestic natural resources.


Along the same line, consider the tens of thousands of "Green" jobs promised by the bill. Those numbers carry an even greater margin of error, as there is no historical data available and the public's willingness to utilize such services cannot be measured. Additionally, take for instance the thousands of jobs expected to be created through the Energy Efficiency Tax Credits. On paper, the tax credit is attractive, but in reality successful creation of jobs within the industries affected by the tax credit are premised upon Americans making the decision to upgrade their homes with the qualified windows, air conditioning units or furnaces. The "multipliers" are unable to consider real world factors, such as: How likely are Americans to invest hundreds or thousands of dollars to replace their windows, AC units or furnaces in order to receive a 30% tax credit? That is unless they have no other choice.


The truth is that when you throw such a large sum of money at the economy it will inevitably create some jobs. However, the current administration, who have commended themselves for honesty, have failed to mention that their 3.5 million jobs are based upon the literal best case scenario. In reality, the non-partisan CBO report, which the administration has used for the estimation, actually estimated that in the best case scenario the bill would create 1.2 Million-3.5 million jobs in the short term (also warning of a negative long-term economic impact). The administration and congressional leaders have simply left off the lower end of that estimate for political gain.


Even more disturbing however, is the administrations allocation of Jobs across the United States, whereas the administration is promising specific numbers of jobs in each State with no empirical evidence to support such numbers. The "multipliers" used by the administration are based upon national historical data and census built demographics, without any regard to the economic or regulatory variables that exist from state-to-state. As a result, the administration basically extrapolated local impact based upon the current production of geographical areas. As an example, once again look at the mining industry. For hypothetical reasons lets assume that West Virginia accounted for 12% of the US mining production. Therefore the administration allocated 12% of the funding and theoretical jobs to the state of West Virginia. This extrapolation does not take into affect any regulatory or economic conditions that exist in that state. If you live in a state where the industry is dying out due to a lack of resources or regulation, these numbers are simply not attainable. As a result, money does not necessarily arrive in the regions where it will best be spent. For instance, let's assume that $6 billion dollars (not an actual figure) was to flow into the mining industry within West Virginia, a state that is friendlier to the industry and which has seen an increase in it's percentage of national production. On the other hand, let's assume $1 billion was to flow to the mining industry in California, which has consistently shed jobs within the industry and chosen to push the industry out of the state. The national job estimates do not factor in the regional variables, as a result, the money allocated to California is less likely to produce as many jobs as if a larger share of the money were re-allocated to West Virginia.


Even more detrimental to the reliability of the government produced Job numbers are the real-world variables that the administration cannot account for. For instance, the administration has openly tauted that the Economic Recovery and Reinvestment Act will create 400,000 jobs by investing billions in infrastructure and technology (broadband) industries. However, the 'multipliers' used to determine these numbers cannot account for real world variables, such as the economic responsibility of most small business owners. For instance, assume that you were a road contractor and as a result of this stimulus plan your company received a contract to repave a substantial amount of roadway. The government, based upon the amount paid to you automatically assumes that you will now create new jobs. However, as a business owner, you have a responsibility to make decisions that look beyond a single contract and do not put your business or current employees at risk. As that business owner, you are going to consider the fact that this influx of cash is only temporary, with no reasonable assurance that long-term growth is achievable within the industry. As a result, these business owners will first and foremost try to maximize the production of their current employees and only hire new workers on an as needed basis, setting aside billions for a rainy day. With economic uncertainty looming, every industry and business will operate in this mode. Unfortunately our government is unable to comprehend that concept, considering that they spend every tax dollar and more that flows in the door.


The important thing for all Americans to recognize is that the rhetoric out of Washington is based upon the 'best case scenario' when it comes to job creation; and even then the 'best case scenario' isn't all together reassuring. If a single variable should occur when real world principles meet the government's hypothetical 'multipliers', the results could mean far fewer jobs than what the administration is promising. If the government's best estimate provides for a margin of error of 2.4 million jobs then perhaps it would have been smarter to pass this stimulus through a series of smaller targeted appropriations rather than a single all-encompassing bill. All things considered, a single economic, political, human behavior or other variable could throw the estimate off by hundreds of thousands of jobs; and there is one variable that could be the most detrimental: If financing of $1 trillion dollars cannot be found, will our government turn to the even worse option of simply printing the necessary funds?

We provide the facts and monitor the spending; we'll let you draw your own conclusions.

Tax Code Provisions

This is the First Post on the Individual Tax Breaks Thread, New Posts Will Appear Updating The Thread With Specifics & Additional Provisions

First Time Home Buyers - $8,000 Tax Credit (no repayment required)



Disadvantages - For First Time Home Buyers Only, Subject To Tightening Credit Standards



Car Buyers - Sales Tax Is Deductible



Disadvantages - Sales Taxes vary greatyly from State to State and not likely to benefit short-form filers or low income earners. Nationwide average is $600 in sales tax generating a net $120 - $150 Benefit for the average middle class family.





2009 Tax Credit - $400 per individual, $800 for married couples.



Disadvantages - Income phasout starting at $75,000 for a single taxpayer, $150,000 for a married couple. Break equates to just $8 per week.



2009 Tax Credit - $250 Tax Credit For Social Security Recipients and Disability Recipients



Alternative Minimum Tax StopGap Measure - Temporary extension of the Bush Tax Cuts aimed at preventing 24 million Middle Class Americans from being hit by the AMT in 2009.



Disadvatages - Temporary StopGap Measure that if not extended in the future will revert the income limits for the AMT back to their levels in 1999, thus subjecting 24 million Middle Class households to the AMT.



Education Tax Credit - Up too $2,500 tax credit in 2009 and 2010 for higher education expenses.



Disadvantages - Income phaseout at $80,000 for an individual and $160,000 for married couples. 2 year measure.



Expanded Child Tax Credit - $1,000 Child Tax Credit expanded to lower income families who pay no income taxes.



Disadvantages - Removes billions from the collection of Social Security (FICA) taxes, taxes that were intended to be held in trust for the payment of future benefits.



Expanded Earned Income Tax Credit - Expands the size of the Earned Income Tax Credit



Disadvantages - Again removes billions from the collection of Social Security (FICA) taxes.



Home Efficiency Tax Credit - Tax Credit for the purchase of energy efficient windows, furnaces or air conditioners will increase to 30% of qualified costs.



Disadvantages - Maximum of $1,500 credit. Consumers, who have tightened the belt, must actually make the purchases.

Recovery.gov - BIG ON GRAPHICS, short on substance

For weeks we have heard the administration direct the public to their "special" website, Recovery.gov , and I imagined that with the passage of a final bill that the site would undergo a transformation into an information portal on the Economic Recovery and Reinvestment Act. Now that the legislation has been signed into law, that transformation has yet to appear.

Recovery.gov is a beautiful site, full of well placed graphics, but short of substance and details. In fact, visiting the site, most people would be hard-pressed to find any details outside of the Presidential Rhetoric that we have heard in speeches.

At a minimum, you would expect a summary of the bill's provisions, after all, this was a bill that was designed to avert "catastrophe". Perhaps the White House just hasn't had enough time to read the 1,500 page bill. After all, if over 300 members of the Senate and House can vote on a bill without reading it, then why should we expect any more from the White House.

Recovery.gov is filled with graphs telling you about expected job creation and how many Billions were committed to Energy, Tax Breaks, State Relief, etc... However, there is no break down, nothing to show how this stimulus plan will help the average family and nor how the money is being spent.

Recovery.gov was intended to demonstrate the need of the bill and provide transparency to the public as to how the money was being spent. Recovery.gov was supposed to show a distinction between the Bush Administration and Obama Administration so far as accountability and transparency were involved. Yet, informing the public that $59 Billion is being spent on Health Care and $111 Billion on Infrastructure and Science without providing any details as to how the money is intended to or being spent can hardly be defined as an exercise in transparency.

Visit the site, but don't waste too much time, outside of a few colorful graphs, the site is the equivalent of an ambiguous political speech that sounds great but lacks substance. Hopefully, Recovery.gov will improve, but for now it appears to be relegated to the halls of mediocrity and nothing more than a cheering section for the current administration.

Visit Central Illinois' Local Job Search Engine - LincolnLandJobs.net

Welcome To Stimulus Watchdog

Welcome to Stimulus Watchdog, a non-partisan effort to shed light on the Economic Recovery & Reinvestment Act of 2009. Our effort is simple, to move beyond the spin to show you how this bill, the largest non-military spending appropriation in history, works. Come back daily to track the latest employment statistics, browse the bill text, view the tax benefits for you, view the special interest spending, and much, much more.

At the top of our home page you will notice two permanent features, the Unemployment Rate Tracker and Statistical Summary that will be updated continuously.

The full text of the Economic Recovery and Reinvestment Act is now available through our sidebar.

Summaries of the individual tax benefits and credits, along with our "Porkulus" (special interest spending) sections will be updated on an ongoing basis.

Be sure to sound off on the stimulus plan while you are here!

Daily posts including information you should know, economist analysis, and more will be provided so be sure to sign up for our email updates.

We also provide a job board that provides you access to more than 2.8 million jobs nationwide and special offers for small businesses and individuals.

Come back daily.

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Weekly Jobless Claim - Ending February 7th

According to the Department of Labor:

Weekly Seasonal Adjusted Initial Unemployment Claims were 623,000

Adjustment From Previous Week: +8,000

Adjustment From Same Week in 2008: +350,000

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