Employers cut another 467,000 jobs in June as payroll employment declined for the eighteenth consecutive month, the Bureau of Labor Statistics reported (pdf, 215kb). The unemployment rate edged upward one tenth of one percent to 9.5 percent, the highest rate since a matching figure in August 1983. A broader measure of unemployment—one which includes persons who have not looked for work in the previous four weeks, persons who have given up looking for work because they believe no jobs are available for them, and persons working part time but who want and are available for full-time work—increased to 16.5 percent, from 16.4 percent a month earlier (see Table A-12, line U-6).

The Bureau provides a comprehensive collection of data on the labor force from the Current Population Survey.

Nine months before the 2010 Census is taken, the Census Bureau is still operating without a Director, as the nomination of Robert Groves remains blocked by a Senate hold six weeks after his nomination was reported out of the Senate Homeland Security Committee by unanimous voice vote. “The longer this nomination is held up, the greater the risk to the accuracy and success of the 2010 Census,” said Commerce Secretary Gary Locke, urging Congress to move the nomination forward.

Citing “serious questions about the Bureau’s preparations for conducting the 2010 Census,” the Government Accountability Office added the 2010 Census to its high-risk list in March 2008.

Two reports released in 2008 by the Congressional Research Service (CRS) covered the practice of anonymous holds in the US Senate. The first (pdf, 169kb) summarized new rules enacted in Section 512 of the Honest Leadership and Open Government Act of 2007 (pdf, 255kb) that were intended, CRS said, “to constrain the frequency of anonymous holds and promote more openness and transparency with respect to their use.” The second CRS report (pdf, 97kb), a more general summary of the practice, concluded that “the newness of Section 512 means that it remains a work in progress. Some time needs to pass before an assessment might be made of its impact and influence on senatorial decisionmaking and behavior.”

We’re starting to get an idea.

Forty-six states ended their fiscal year on June 30, and at least seven states have extended their legislative sessions or gone into special sessions to resolve their budgets, according to the National Conference of State Legislatures (NCSL). An NCSL press release summarizes the situation as of June 30, and links to information about where the budget process stands in each state, procedures that may apply in each state when budgets are late, a topical summary of measures that have already been taken to balance FY 2010 state budgets, and more facts about the budget process in each state.

Governors’ budget proposals are available online for several states where legislative sessions have been extended, including California, Illinois, Connecticut, Tennessee, and West Virginia.

The federal budget, already on an “unsustainable path,” would reach an “explosive fiscal situation” if tax cuts set to expire at the end of 2010 were extended and the alternative minimum tax (AMT) indexed to inflation, the Congressional Budget Office (CBO) reported.

In its latest analysis of the long-term budget outlook, CBO measured two scenarios: an “extended-baseline scenario” in which tax cuts enacted in 2001 and 2003 expire as scheduled at the end of next year and the AMT is left unchanged, and an “alternative” scenario under which “expiring tax provisions in the Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA) and the Jobs and Growth Tax Relief Reconciliation Act of 2003 (JGTRRA) would be extended, and the AMT would be indexed to inflation.”

Federal Debt Held by the Public Under CBO's Two Budget Scenarios (As a percentage of GDP) ~ Source: Congressional Budget Office

Under the extended-baseline scenario, “federal revenues will grow somewhat faster, on average, than the economy – increasing from 20 percent of GDP in fiscal year 2012 to 22 percent by 2035 and 26 percent by 2080. But even if revenues rose to those unprecedented levels, they would not be sufficient to keep the budget in balance over the long term in that scenario. Federal debt held by the public would stay near 60 percent of GDP during the coming decade but then would turn upward and reach 79 percent of GDP by 2035. In the absence of policy changes, by 2046 the ratio of debt to GDP would be higher than the level that the United States experienced shortly after World War II.”

“Under the alternative fiscal scenario, by contrast … revenues would grow only slightly faster than the economy, equaling 22 percent of GDP by 2080. Slowly growing revenues combined with sharply rising expenditures would create an explosive fiscal situation. Under the spending and revenue policies incorporated in this scenario, federal debt would surpass 100 percent of GDP in 2023 and exceed 200 percent of GDP by the late 2030s,” the report said.

The report also warned that “if current laws do not change, federal spending on Medicare and Medicaid combined will grow from roughly 5 percent of GDP today to almost 10 percent by 2035 (what this report describes as the intermediate term) and to more than 17 percent by 2080 (what this report considers to be the long term). That projection means that in 2080, without changes in policy, the federal government would be spending almost as much, as a share of the economy, on just its two major health care programs as it has spent on all of its programs and services in recent years.”

American forces in Iraq are working to close some outposts and pull combat troops back from Iraqi cities by June 30, under the terms of an agreement reached in November 2008. The Status of Forces Agreement (SOFA) set June 30 as the deadline for “the withdrawal of combat forces from the cities, villages, and localities” of Iraq. The agreement also mandated all US forces to withdraw from Iraq by December 31, 2011.

First quarter GDP declined at a slightly less rapid pace than reported in earlier estimates, and the decline was less steep than over the previous quarter, according to final estimates reported by the Bureau of Economic Analysis. The final estimate of a 5.5 percent drop in GDP was slightly better than the preliminary estimate of a 5.7 percent decline reported last month, and less steep than the 6.3 percent decline registered in the fourth quarter of last year.

The economy was helped by a 1.4 percent jump in consumer spending, a measure which had fallen by 4.3 percent over the previous quarter, and imports fell more sharply than exports, according to the new numbers.

Advance estimates for second quarter GDP will be reported on July 31.

GDP is one of several measures of the economy included in BEA’s National Income and Product Accounts (NIPAs). BEA has posted documentation which includes an introduction to the NIPAs and a primer on GDP.

Individuals whose names turned up on the FBI’s terrorist watch during routine criminal background checks over the past several years were allowed to proceed with the purchase of a weapon approximately 90 percent of the time, according to data analyzed by the Government Accountability Office (GAO).

In its new report, GAO examined data from the FBI’s National Instant Criminal Background Check System (NICS) which detailed 963 checks triggered by attempts to make a weapons purchase and resulting in valid matches with the Terrorist Watchlist maintained by the Bureau’s Terrorist Screening Center (TSC) over the period from February 2004 to February 2009. In 865 of these cases, the transactions “were allowed to proceed because the checks revealed no prohibiting information – that is, the persons who were subjects of terrorist watch list records were deemed eligible to possess or receive a firearm or explosives,” GAO said.

“According to the Department of Justice (DOJ), under current federal and state law, there is no basis to automatically prohibit a person from possessing a firearm or explosives because they appear on the terrorist watch list,” the report said. “Rather, there must be a disqualifying factor pursuant to federal or state law, such as a felony conviction or illegal immigration status.”

The new report updates a 2005 GAO study which reported that individuals on the watch list were allowed to proceed with weapons purchases in 35 of 44 attempts between February and June 2004.

The new report said that in 2007, DOJ “provided legislative language to Congress that would provide the Attorney General with discretionary authority to deny the transfer of firearms or the issuance of a firearm or explosives license or permit when a NICS background check reveals that the purchaser is a known or suspected terrorist and the Attorney General reasonably believes that the person may use a firearm or explosives in connection with terrorism.” GAO said a “related bill was introduced in the 111th Congress and is currently pending,” but that neither “DOJ’s proposed legislative language nor the related bill include provisions for the development of guidelines further delineating the circumstances under which the Attorney General could exercise this authority.” Such guidelines would help DOJ ensure that “the intended goals for, and expected results of, the screening are being achieved,” and that “terrorist watch list records are used in a manner that safeguards privacy and civil liberties protections,” GAO said.

Sen. Frank Lautenberg (D-NJ) issued a statement calling the report “proof positive that known and suspected terrorists are exploiting a major loophole in our law,” and said he would sponsor a Senate bill to “close the ‘terror gap’ in the nation’s gun laws.”

In the newest update of its analysis of the President’s budget, the Congressional Budget Office estimated that under President Obama’s policies, “the deficit in 2009 would total $1.8 trillion and equal 13.0 percent of gross domestic product (GDP)… In 2010, the deficit would measure 9.9 percent of GDP, or $1.4 trillion, CBO estimates. The cumulative deficit over the 2010–2019 period would equal $9.1 trillion (5.2 percent of GDP), more than double the cumulative deficit projected under the current-law assumptions embodied in CBO’s March baseline. As a result, debt held by the public would rise from 57 percent of GDP in 2009 to 82 percent of GDP by 2019.”

Separately, CBO issued an assessment of current health care reform proposals which concluded that without substantial reforms in health care delivery, “the significant costs of many current proposals to expand federal subsidies for health insurance would be much more likely to worsen the long-run budget outlook than to improve it.”

A newly disclosed memorandum from Neil Barofsky, the inspector general overseeing the Troubled Asset Relief Program (TARP), to Treasury Secretary Tim Geithner indicates a dispute over the independence of Barofsky’s office.

The dispute came to light in a June 17 letter to Geithner (pdf, 440kb) from Sen. Charles Grassley (R-IA), Ranking Member of the Senate Finance Committee. In his letter, Grassley said the April 7 Barofsky memo raised “potentially serious questions” about the authority of the Special Inspector General for the Troubled Asset Relief Program (SIGTARP). Grassley told Geithner he had learned of “certain Treasury documents that were being withheld from SIGTARP auditors on a specious claim of attorney-client privilege,” a disagreement which had “escalated into broader questions about whether SIGTARP is subject to your direct supervision and direction.”

“The ability of Inspectors General to secure agency records subject to audit or investigation is essential to ensure the integrity and reliability of their work on behalf of Congress and the American People. The Inspectors General were created by Congress as a means to combat waste, fraud, and abuse and to be independent watchdogs ensuring that federal agencies are held accountable for their actions,” Grassley wrote.

In his April 7 memo, included as an attachment to Grassley’s letter, Barofsky wrote that “SIGTARP believes that the Emergency Economic Stability Act of 2008 (EESA), Pub. Law No. 110-343 (pdf, 596kb), provides that SIGTARP is an independent entity within Treasury, that SIGTARP is not subject to the Secretary’s supervision, and that attorney-client privilege is not a bar to SIGTARP’s access to Treasury’s records or information.”

Speaking to the legislative intent of SIGTARP’s creation, Barofsky noted that “Congress expressly placed the Treasury Inspector General and the Special Inspectors General for Iraq and Afghanistan Reconstruction under the supervision of the Secretary of Treasury and the Secretaries of State and Defense, respectively… Given that Congress knows how to assign supervisory duties, the omission of this language in EESA signifies its clear intention to preserve SIGTARP’s independence and not subject us to the Secretary’s ability to shut down an audit or investigation. Indeed, the legislative architect of section 121 of EESA, Senator Max Baucus, so stated in his statement of support of EESA’s enactment, ‘I designed the office of this inspector general to be truly independent,’ and not report to the Secretary. See Congressional Record, p. S10218 (Oct. 1, 2008) (pdf, 76kb).” (Emphases in original.)

Regarding attorney-client privilege, Barofsky wrote that the “existence of an applicable privilege does not relieve Treasury from its responsibility under EESA, as amended, and the IG Act to cooperate with SIGTARP and produce records and information deemed necessary to the accomplishment of SIGTARP’s mission.”

Four newly released CIA documents posted online by the American Civil Liberties Union (ACLU) offer first-person accounts of the treatment of detainees under CIA custody at Guantánamo. The heavily redacted documents, released through a FOIA lawsuit brought by the ACLU, are transcripts of Combatant Status Review Tribunals (CSRTs) conducted in 2007.

In one passage, Khalid Sheikh Muhammad describes an interrogator’s attempt to get information about the location of Osama bin Laden: “Where is he? I don’t know. Then he torture me. Then I said yes, he is in this area…”