After months and months of telling viewers that deficit spending is the MOST important economic issue, the media has just realized that people aren't buying it and that the jobless recovery is a better way to blame Obama. And to be sure, the Obama White House seems to be their own worst enemy, by not focusing on job stimulus and grabbing the framing away from the Republicans.

Let's be clear: Austan Goolsbee is partially right when he says that the jobs must come from the private sector. But what he leaves out is no company will simply hire people absent an increase of demand for whatever service or product they offer. Why cut into their profit margin unnecessarily like that? And demand doesn't increase unless there are people looking to purchase those services (tellingly, one of those services that are seeing an increase in demand are for legal assistance for the rising number of divorces and bankruptcies people are going through). And people don't demand additional goods and services if they are struggling financially--be it unemployed or underemployed. And hence, a vicious cycle: in order to get customers, we need to have a thriving middle class with low unemployment. But we won't have that unless we get people working. And that's where the government has to come in. By directing federal dollars towards infrastructure projects, the government hires companies, who must hire people, thus injecting much needed demand and money into the economy. But unfortunately, we've seen little movement from either the White House or Congress to invest federal dollars as such.

No, where we are is still buying into the whole GOP framing, as demonstrated by US Chamber of Commerce's Martin Regalia, insisting that deficit spending is the #2 priority behind extending the debt ceiling. See how the media still gives equal weight to the same talking points that have not done a single thing to improve the economy or employment rate? Even with Chrystia Freeland and Paul Krugman pointing out that this insistence that the government "get out of the way" and not suppress economic recovery with pesky regulations (presumably those few set to avoid another financial meltdown or ecological disaster), Regalia holds on to these GOP arguments and prevents any real discussion of solutions from happening.

But then again, that may be *exactly* the GOP's (and by extension, the Chamber of Commerce) intent:

Fortunately for Republicans, our broken political system doesn’t function like most democracies, so they are relieved of this tough choice and direct accountability. Thanks to divided government, and more importantly the filibuster, even in the minority, Republicans still have sufficient power to hold basically everything hostage to demand spending cuts. They are able to win the cuts while forcing the Democrats who control the White House to share the political blame for unpopular moves.

This strategy is on the verge of working out great for the Republicans again

Republicans are about to push President Obama to reach a “compromise” on spending cuts so he will share the blame. Cuts that are not only likely to be unpopular, but as David Dayen points out, highly anti-stimulative. The CBO’s baseline assumptions are already very dark.

CBO projects that the unemployment rate will gradually fall in the near term, to 9.2 percent in the fourth quarter of 2011, 8.2 percent in the fourth quarter of 2012, and 7.4 percent at the end of 2013. Only by 2016, in CBO’s forecast, does it reach 5.3 percent, close to the agency’s estimate of the natural rate of unemployment (the rate of unemployment arising from all sources except fluctuations in aggregate demand, which CBO now estimates to be 5.2 percent).

These employment assumptions are based on basically consistent spending levels. If Republicans manage to push for immediate cuts, further reducing aggregate demand, the likely result is higher than projected unemployment in 2012. Slow growth and high unemployment is almost always devastating to incumbent presidents, which, in this case, would be a huge political win for Republicans.

I can fully appreciate how the Republican Party’s seemingly bipolar behavior on deficits and spending cuts is such a smart policy and political win-win for the party. What I fail to understand is why Democrats are so willing to play into their rhetorical trap, or Democrats’ stubborn refusal to even consider changing the absurd rules that make this strategy possible.

But it's more than just political calculus, as Robert Reich points out:

(T)here’s a third reason for Washington’s inaction [besides Republican political machinations and Democratic Party spin]. It’s not being talked about — which is itself evidence of the problem.

The unemployed are politically invisible. They don’t make major campaign donations. They don’t lobby Congress. There’s no National Association of Unemployed People.

Their ranks are filled with women who had been public employees, single mothers, minorities, young people trying to enter the labor force, and middle-aged men who have been out of work for longer than six months. You couldn’t find a collection of people with less political clout.

And until such time that we can come together to make our collective voices heard, I don't know that it will ever pierce through the insularity of the Beltway bubble.

First, there's this technical definition that says there's a recovery. Why? Because some rich people are getting richer? If the economy doesn't serve the broadest group of citizens and there aren't jobs for people who want them, what kind of recovery is that? Perhaps this is why economists are so often confused.

Maybe, as Atrios says, somebody should do something?

A slowdown in American manufacturing and weak employment data sent stocks lower on Thursday as investors continued to absorb news of a weak economic recovery.

The separate reports from the Federal Reserve and the Labor Department were a fresh reminder of the slow pace of the recovery. Manufacturing, in particular, had shown tentative signs of a rebound in recent months.

The reports were enough to reverse the upward trend of the previous two days, when the market rose 1.1 percent.

“You had a one-two punch in one day,” said Doug Roberts, chief investment strategist for the Channel Capital Research Institute.

The result was a broad sell-off. The Dow Jones industrial average fell 144.33 points, or 1.39 percent, to 10,271.21. The broader Standard & Poor’s 500-stock index declined 18.53 points, or 1.69 percent, to 1,075.63, and the Nasdaq composite index fell 36.75 points, or 1.66 percent, to 2,178.95.

Financial, materials and industrial stocks all fell more than 2 percent.

You really can't blame them for not listening. After all, the U.S. is caught up in deficit fever, too - a cyclical illness that occurs only when we have a Democratic president or Democratic control of the House. The only thing that worries the Villagers is when the government spends money on the people who gave it to them:

TORONTO -- President Obama warned Sunday that the world economic recovery remains "fragile" and urged continued spending to support growth, an expansionist call at the end of a summit marked by an agreement among developed nations to halve their annual deficits within three years.

The president's remarks tempered the Group of 20's headline achievement at the summit, a deficit-reduction target that had been pushed by Canadian Prime Minister Stephen Harper, the host of the meeting and a fiscal conservative. Although there is broad agreement that government debt in the developed world needs to be reduced, there is concern that cutting too fast and too deeply will slow growth and possibly spark a new recession.

In a news conference at the meeting's conclusion, Obama said that the world's largest economic powers had agreed on the need for "continued growth in the short term and fiscal sustainability in the medium term."

"A number of our European partners are making difficult decisions," Obama said. "But we must recognize that our fiscal health tomorrow will rest in no small measure on our ability to create jobs and growth today."

The group's closing statement included the specific deficit-reduction target, but it was couched in caveats -- that deficit reduction needed to be "calibrated" to avoid harming growth, paced differently in each country and paired with other reforms to strengthen the economy.

Obama and European leaders, in particular, came to the meeting with sharply different views of the strength of the global economic recovery, with the U.S. president more pessimistic. The declaration, in the works for weeks, gave each side what it wanted, although the specific deadlines went further than the Obama administration had preferred before the meeting.

Mooooo!

"Republicans said we can't vote for this or they'll say mean things about us!" Of course, it's just an excuse to do what they want to do to make big contributors happy:

The Senate effectively rejected a slimmed-down package of jobless benefits and state aid late Thursday, rebuffing President Obama's call for urgent action to bolster the economic recovery.

Sens. Ben Nelson (D-Neb.) and Joseph I. Lieberman (I-Conn.) voted with a united Republican caucus to block the approximately $120 billion package. The measure needed 60 votes to advance, but garnered only 56.

Democratic leaders, who had predicted victory less than 24 hours earlier, vowed not to give up on the measure, but acknowledged that they have no clear path to securing the one or two Republican votes needed to push it to final passage. Though the sprawling package contains a number of must-pass provisions, Republicans have been steadfast in their opposition, insisting that the full cost of the measure be covered by cutting existing government programs.

"Americans are frustrated with the amount of spending and borrowing around here," Senate Minority Leader Mitch McConnell (R-Ky.) said after the vote. "Let's not wave on through legislation that is going to worsen the deficit and dig an even deeper hole than we are in."

With midterm elections looming this fall, conservative Democrats also had voiced opposition to the size of the package and its impact on deficits, already driven to record levels by government spending to combat the recession. But congressional leaders have struggled to pare the legislation back.

There was a time when American businesses actually took pride in being American businesses, employing Americans. Now that The World Is Flat, companies are in a constant game of musical chairs, seeking out the cheapest possible foreign locations to bump the price of stocks.

Even if a federal subsidy helped them bump up their first quarter profits:

NEW YORK (AP) -- Federal rebates for energy-efficient appliances pulled shoppers back into stores, helping Whirlpool Corp.'s revenue rise and its first-quarter profit more than double, the company said.

Guess how Whirlpool is repaying American taxpayers for their support:

Whirlpool Corporation is shutting down a refrigerator plant in Evansville, Indiana that will put 1100 people out of work. Are they having trouble selling refrigerators in these bad economic times? No. Whirlpool is profitable and still selling plenty of refrigerators here. But they want to ship these jobs to Mexico where they can produce them cheaper and without having to respect U.S. labor and environmental regulations.

Whirlpool took $19 million in economic recovery money and now instead of helping our economy recover, it’s destroying 1100 good American jobs. The AFL-CIO has started an online petition drive telling Whirlpool to “Keep It Made In America” to save our jobs. You can find it at unionvoice.org/campaign/Evansville.

The AFL-CIO says Whirlpool should reverse its decision to keep these 1100 jobs in the U.S. and help our economic recovery. The labor federation says taxpayer economic recovery money should be used to create jobs in America, not ship them to cheap labor markets in other countries.

I know if I ever buy another refrigerator, it won't be a Whirlpool.

This is the second wave of the mortgage crisis, one that was predicted by the liberal economists who inhabit the blogosphere. It's unlikely that we'll see a sustained economic recovery until after this shakes out:

By the end of 2010, about half of all commercial real estate mortgages will be underwater, said Elizabeth Warren, chairperson of the TARP Congressional Oversight Panel, in a wide-ranging interview on Monday.

“They are [mostly] concentrated in the mid-sized banks,” Warren told CNBC. “We now have 2,988 banks—mostly midsized, that have these dangerous concentrations in commercial real estate lending."

As a result, the economy will face another “very serious problem” that will have to be resolved over the next three years, she said, adding that things are unlikely to return to normalcy in 2010.

Brave New Film's Rethink Afghanistan:

Today is the seventh anniversary of the Iraq invasion.

There's a temptation as we begin to end our combat presence in Iraq to search for a happy ending. But there has been no 'victory' in Iraq. We created this video as a reminder of the damage done to Iraq and to our country over the last seven years. We also know that there will be no economic recovery here at home as long as we're spending $100 billion a year on another war that isn't making us any safer - the war in Afghanistan.

That's why we're asking you to report the Afghanistan War as an example of waste, fraud and abuse on the White House's official economic recovery website, Recovery.gov, today. Simply scroll down to the field marked "What" and paste this message into the text box: "I'd like to report the waste of billions of dollars of our national wealth in Afghanistan on a war that doesn't make us safer. It's fraud to portray this as a war that increases our security, and it's abusive of U.S. troops and local civilians to drag out this war any longer. End the war so we can have real economic recovery."

As of today, iCasualties lists 4,703 allied servicemembers killed in Iraq and Iraq Body Count estimates that 95,680 - 104,382 Iraqi civilians (not insurgents/military/soldiers) have been killed. And that doesn't include injured veterans or those who committed suicide. Tens of thousands of families have been torn apart by the what we now know was the illegal invasion and occupation of Iraq. We've spent $747.3 BILLION in Iraq, with the full cooperation of the pearl-clutching deficit hawks in the Republican Party.

And not one of us can honestly claim that we are safer.

What a sad anniversary.

Richard Trumka's not making an idle threat here. Union supporters don't have much to cheer about in this healthcare bill, and I don't think he's exaggerating the impact on the midterm elections. It's just that, for whatever reason, Obama's a lot more interested in the welfare of bankers than he is in workers:

President Obama sought on Monday evening to assuage organized labor's misgivings about the health-care overhaul, even as several key union leaders warned that the bill's final outlines could severely dampen their enthusiasm for the Democratic ticket in this year's elections.

Obama invited 10 labor leaders to the White House to discuss the negotiations aimed at reconciling the Senate and House bills, which are not heading in organized labor's direction in the three areas that it had identified as priorities. The final bill will not include the House's government-run insurance plan, or "public option"; it will probably include the Senate's new tax on high-cost health plans that could affect many union members; and its penalties for employers who do not provide insurance coverage will probably be closer to the more lenient terms in the Senate bill.

Three hours earlier, AFL-CIO President Richard Trumka said in a hard-edged speech at the National Press Club that discontent with the final bill, when combined with a general perception that Obama and Congress have been insufficiently populist in responding to the recession and financial crisis, could demoralize his members. The risk, he said, was a replay of the Democratic blowout in the 1994 elections, when, after the passage of NAFTA and other disappointments to unions, "there was no way to persuade enough working Americans to go to the polls when they couldn't tell the difference between the two parties."

"Now, more than ever, we need the boldness and the clarity we saw in our president during the campaign in 2008," he said.

Trumka stopped short of his September threat that the AFL-CIO might not support the final bill -- after all, he said, labor has been seeking health-care reform for decades. But individual members could sit on their hands. "A bad bill could have that kind of effect," he told reporters. "People could stay home. It could suppress votes."

Economist Joe Stiglitz told Bloomberg that Wall Street is hyping up the economy to sell stock:

Jan. 7 (Bloomberg) -- Nobel laureate Joseph Stiglitz said investors are “talking up” signs of a global economic recovery in a bid to boost equities.

“Wall Street is talking up the recovery because it would like to sell stocks,” Stiglitz told reporters at a conference in Paris today.

The MSCI World Index of stocks has surged 73 percent since its low of last March even while the economies of advanced nations grow below their potential rates following the worst recession since the Great Depression.

Stocks are rallying because interest rates are low and companies have been cutting costs by reducing payrolls, factors that suggest economies remain weak, said Stiglitz, a professor at Columbia University in New York.

“Whenever rates are low, stock markets are often high,” he said. By contrast, economists are “almost universally pessimistic.”

[...] He recommended a tax be introduced on financial speculation as a way of generating revenue and forcing investors to focus on the longer-term.

Now this is exactly what we've been worried about: that Wall Street would successfully push Obama for an early end to economic stimulus (which also includes extended unemployment benefits, by the way), just as bankers and Republicans did with FDR in 1937 - tipping the country right back into recession. (Krugman's been sounding the alarm for a while.)

I predict Bernanke will withdraw anything that makes it look like they don't have faith in a spring recovery, hoping to use it as a placebo effect.

And as to the millions of us still looking for work, and whose unemployment checks are about to run out? Morgan Stanley responds that there's "never an easy time to do it." I hope Mr. Roach has a big yard, since we're all going to be camping in it:

Jan. 5 (Bloomberg) -- Morgan Stanley Asia Ltd. Chairman Stephen Roach said U.S. policy makers should start to exit emergency stimulus measures now if the economic recovery is as strong as they say it is.

“There is never an easy time to do it,” Roach said on Bloomberg Television today. “The longer they wait, the greater the chance they sow the seeds for the next bubble. So I’m in favor of an early exit strategy.”

The Federal Reserve on Dec. 16 pledged to keep interest rates “exceptionally low” for an “extended period” even as officials said financial markets were healthy enough to allow most emergency lending programs to expire at the end of this month. Chairman Ben S. Bernanke and his fellow policy makers cut the benchmark rate almost to zero in December 2008.

“We’ve seen the most extraordinary monetary stimulus on the record in the 15, 16 months post-Lehman Brothers,” Roach said. “We’ll have to see the most extraordinary withdrawal of stimulus on record” and “if this recovery is as strong as Bernanke and markets think it is, the time to exit is now.”

Data since the Nov. 3-4 Fed meeting showed that “economic activity has continued to pick up and that the deterioration in the labor market is abating,” the Open Market Committee said in a Dec. 16 statement. “Financial market conditions have become more supportive of economic growth,” while the economy is “likely to remain weak for a time,” policy makers said.