British Open Economic Debate Ahead of 2015 Election

The chancellor of the Exchequer, George Osborne, on Monday promised more austerity and further welfare cuts while warning that the task of repairing government finances was “not even half-done.”

That vow followed a call on Sunday by Ed Miliband, the Labour leader and head of the opposition, for better protection for low-wage workers.

Only a year ago, Britain faced the risk of a return to recession, and Mr. Osborne’s austerity program was getting much of the blame. But Britain is now expected to be one of the fastest growing advanced economies in 2014, and that turnaround has left political parties scrambling for advantage at the start of the new year.

While the economic uptick is good news for the Conservative government, led by Prime Minister David Cameron, Mr. Osborne warned against a “dangerous new complacency,” arguing that, if given the chance, the opposition Labour Party would squander the gains made rather than consolidate them.

Despite its claims that austerity has laid the foundation for recovery, the government was put on the defensive late last year when the Labour Party campaigned over the cost-of-living squeeze felt by many voters whose pay increases have lagged behind big jumps in energy and other bills.

Mr. Miliband, writing in the Independent newspaper on Sunday, called for tougher action against unscrupulous firms that he said exploit cheap labor.

Calling for stiffer fines for companies that breach minimum wage laws and a ban on recruitment agencies hiring only foreign workers, Mr. Miliband also sought to defuse the debate over immigration and worries that workers from Eastern Europe were undercutting pay levels.

“Unless we act to change our economy, low-skill immigration risks making the problems of the cost of living crisis worse for those at the sharp end,” Mr. Miliband wrote. “It isn’t prejudiced to believe that.”

Mr. Osborne, speaking on Monday at a factory in Birmingham, sought to put the focus firmly back on deficit reduction, asserting that his economic program “is working,” but that an additional £25 billion in spending cuts will be needed after the next elections, due in May 2015, including £12 billion from the welfare budget.

The speech effectively challenged Mr. Osborne’s opponents to say whether they would match his target and, if so, how they would achieve it — if not through restricting welfare payments.

Mr. Osborne highlighted some potential welfare savings including cuts to housing benefits for people younger than 25, and the new restrictions on subsidized housing for those over certain salary thresholds.

Yet, on Sunday Mr. Cameron made clear that significant increases in the state pension will continue, insulating many older people from the squeeze on public spending. Political parties are wary of upsetting retired people because they tend to vote more than other age groups.

Labour countered Monday that it would focus more on growth as a way to reduce the scale of cuts. “We will get the deficit down in a fair way,” Labour’s finance spokesman, Ed Balls, said in a statement. “We know that the way to mitigate the scale of the cuts needed is to earn and grow our way to higher living standards for all.”

Meanwhile, Nick Clegg, leader of the Liberal Democrats, the junior party in the coalition government, distanced himself from Mr. Osborne’s comments on welfare. The Conservatives are making a “monumental mistake” in a remorseless search for cuts and in focusing the burden of consolidation on the working poor, Mr. Clegg, who is deputy prime minister, said at a news conference on Monday in London.

Although Britain’s next general election is more than a year away, elections for the European Parliament in May this year will provide an earlier test of the parties’ relative popularity with the British public.

As the general election approaches, and with opinion polls pointing to an inconclusive outcome, Mr. Clegg’s party is trying to distinguish its image from that of the Conservatives.

Judge sets new federal election calendar for Ga.

ATLANTA (AP) - A judge has set an election calendar to be used by Georgia in next year's federal contest.

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Voter ID Ads Could Continue Until Election Day

Commonwealth Court Judge Robert Simpson this morning declined to hasten the pace for deciding on a motion filed by challengers to Pennsylvania?s new voter ID law asking him to enforce the injunction he issued earlier this month keeping the law from taking effect this November.

Modest Jobs Growth in Final Report Before Election

Whoever wins the election on Tuesday might even inherit an accelerating economy in 2013, if (and that is a big if) Congress is able to smooth over that pesky fiscal cliff in the few weeks after the election.

The nation’s employers added 171,000 positions on net in October, the Labor Department reported on Friday, and more jobs than initially estimated in August and September. Hiring was broad-based, with just nearly every industry except state government adding jobs. The unemployment rate ticked up slightly to 7.9 percent in October, from 7.8 percent in September, but for a good reason: more workers joined the labor force and so officially counted as unemployed.

None of this makes for a game-changer in the presidential race, analysts said. But it appeared to provide some relief for President Obama, whose campaign could have been sideswiped by bad news from the volatile monthly jobs report. With the latest numbers, the economy finally shows a net gain of jobs during his presidency. His record had previously been weighed down by huge layoffs in his first year in office after the financial crisis.

The report also allayed widespread suspicion that September’s plunge in the unemployment rate — to below 8 percent for the first time since the month he took office — might have been a one-month statistical fluke.

“Generally, the report shows that things are better than we’d expected and certainly better than we’d thought a few months ago,” said Paul Dales, senior United States economist for Capital Economics. “But we’re still not making enough progress to bring that unemployment rate down significantly and rapidly.”

Mitt Romney, the Republican presidential nominee, said in a statement that the jobs report was evidence of the need to change the nation’s economic policies.

“Today’s increase in the unemployment rate is a sad reminder that the economy is at a virtual standstill,” he said. He also noted that October’s unemployment rate of 7.9 percent was higher than the 7.8 percent when Mr. Obama took office in January 2009. Unemployment peaked at 10 percent in October of Mr. Obama’s first year in office, and has been skidding downward very, very slowly since then.

Economists were hopeful that once the election was over and Congress addressed the major fiscal tightening scheduled for the end of this year, job and output growth could speed up further.

“If we can do this kind of job growth with all the uncertainty out there, imagine if we were to clear up those tax issues and hold back the majority of tax increases that are pending at the end of the year,” said John Ryding, chief economist at RDQ Economics. “We could do much better in 2013, maybe as well as we appeared to be doing earlier this year.”

The jobs snapshot for October was based on surveys conducted too early in the month to capture work disruptions across the East Coast caused by Hurricane Sandy. Economists expect that businesses and employment will resume their normal activity by the next jobs survey, in mid-November, and that some industries will even show an increase in hiring because of the storm.

“We had a lot of lost hours worked and production stuff still delayed, but much of that will be offset by hiring of emergency workers, government workers and construction, to do all that emergency fixing,” said Diane Swonk, chief economist at Mesirow Financial.

In October, the biggest job gains were in professional and business services, health care and retail trade, the Labor Department said. Government payrolls dipped slightly. State and local governments have been shedding jobs in most months over the last three years.

One of the low points of the report was in hourly wages, which remained flat in October after showing barely any growth in the previous several months.

“Perhaps the decline in real wages is a factor here in being able to employ more people,” Mr. Ryding said. “It’s something to keep in mind when we think about creating jobs and whether we’re maybe creating the wrong sort of jobs.”

A report from the National Employment Law Project, a liberal research and advocacy organization that focuses on labor issues, found that while the majority of jobs lost in the downturn were middle-income jobs, the majority of the jobs created since then had been lower-wage ones.

Stock markets opened higher after the jobs report on Friday, but fell for the day, apparently weighed down later by a number of concerns from the possible lingering effects of the storm to the uncertainty about the outcome of the election.

The United States has now posted job gains for 25 consecutive months, but the increases have been barely large enough to absorb the increase in the working population. About 12 million unemployed people remain waiting for work, with about two out of five of those people out of a job for more than six months.

That is in addition to more than eight million people who are working part time but really want full-time jobs.

“I’m not just competing against all the other people who are out of work,” said Griff Coxey, 57, of Cascade, Wis., who was laid off in May from his controller job at a small business. “I’m also competing against all those people who are actually working but are underemployed.”

Like two million other idle workers, Mr. Coxey is scheduled to lose his unemployment benefits the last week of the year, when the federal extensions expire. He said he still had some savings to fall back on, but many workers do not.

Labor advocates and many economists have been urging Congress to renew the benefits as part of their discussions of the “fiscal cliff” during their postelection session. So far, though, the issue has received little attention, and analysts worry that ending extended benefits could disrupt whatever forward momentum the economy has.

“Federal unemployment benefits are one of the most effective stimuli we have,” said Christine L. Owens, the executive director of the National Employment Law Project.

“The recovery is still fragile,” she said, “and to pull that amount of income and expenditure out of the economy — particularly at a time when people thinking about the holiday season — will have a significant impact on not just those individuals and their families, but the economy as a whole.”

Friday’s jobs report was unlikely to affect policy from the Federal Reserve, which has pledged open-ended stimulus until the job market improves “substantially.”

“The Fed desires both a substantial and sustainable improvement in labor market conditions and is likely to read recent payroll growth as a positive step in the right direction, but just one step in a longer journey,” said Michael Gapen, director of United States research and global asset allocation at Barclays Capital.

Youngest Agency Braces for Election Outcome

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Voter ID Ads Could Continue Until Election Day

Commonwealth Court Judge Robert Simpson this morning declined to hasten the pace for deciding on a motion filed by challengers to Pennsylvania?s new voter ID law asking him to enforce the injunction he issued earlier this month keeping the law from taking effect this November.

Off the Charts: The Dow as Election Indicator

But if all the bankers cared about was stock prices, they might be more sympathetic to the president. The stock market has done better than average during his tenure, not to mention better than during either of the two terms of his predecessor.

In the past, such a healthy stock market performance has usually been followed by a victory for the incumbent party.

The accompanying chart ranks the 28 presidential terms since 1900 on the performance of the Dow Jones industrial average — the only major stock index with a history that long — during each presidential term, and on what happened in the election that followed it. It focuses on the performance over each four-year period beginning at the end of October in each election year, giving each president credit for the performance after investors learn of his election.

By that measure, the Obama term has been well above average, with a compound annual gain through Oct. 24 of nearly 9 percent.

When the Dow has risen more than 5 percent a year, the incumbent party has retained the White House in 11 elections and lost it in only three elections. When the market fell, or rose at a rate slower than 5 percent, the incumbent party has lost the White House in eight of 13 elections.

In 18 of the previous 27 elections, the incumbent president was on the ballot, winning in 13 of the elections. Of the five losers, only George H. W. Bush in 1992 was defeated despite a good stock market performance over his term.

Both he and Taft, who lost to Wilson in 1912, might have prevailed had not third-party candidates — Theodore Roosevelt in 1912 and Ross Perot in 1992 — drained votes from the incumbent. Hoover was blamed for the Depression in 1932, and had no chance of winning re-election.

The other two presidents defeated were Gerald Ford in 1976 and Jimmy Carter four years later. Each had presided over a difficult economy and a lagging stock market during a period when the ability of the United States to be competitive internationally was widely questioned. There are echoes of that attitude now, although it is China, rather than Japan, that is deemed to be the principal competitor.

It is not uncommon for Wall Street to campaign aggressively against a president who presided over a rising market. In 1936, Franklin D. Roosevelt was denounced as a socialist, much as Mr. Obama has been this year, by Wall Streeters whose banks had been saved largely by government actions. In 1948, the stock market sold off sharply after Truman scored a stunning upset in his bid for a full term.

As can be seen from the charts, the best stock market sector over the last four years has been consumer discretionary companies — those that sell things that consumers do not absolutely need. Their success is a testament to how much the economy has recovered. Financial stocks as a group are about where they were when Mr. Obama won in 2008, but some of them remain depressed.

Among the 30 stocks now in the Dow Jones industrial average, Bank of America has been among the worst performers while United Healthcare, a health insurance company, is one of the best performers. While the health insurance bill pushed through Congress by President Obama has been denounced as a government takeover of health care, private insurance companies seem likely to be among the major beneficiaries if it is allowed to go into effect.

Floyd Norris comments on finance and the economy at nytimes.com/economix.

S.C. Voter ID Law Blocked for 2012 Election

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