D.C.’s Mayor Confronts Reid on Capitol Steps

WASHINGTON – District of Columbia Mayor Vincent Gray on Wednesday burst into a press conference organized by Senate Democratic Leader Harry Reid (D., Nev.) on the Senate steps to ask for Congress to allow the city to use its own funds to ensure that essential city services continue despite a federal government shutdown.

The U.S. Capitol Police had tried to bar the mayor from leaving his own press conference, which had just concluded, and walking to the Senate Democratic press conference on the East steps of the Senate.  But Senate Sergeant at Arms Terrance Gainer, a onetime D.C. police officer, intervened and had to allow Mr. Gray proceed, because under the Senate rules the D.C. mayor has Senate floor privileges, according to a spokesman for the mayor’s office.

Mr. Gray marched ahead, telling a reporter he was “absolutely” going to ask that the city be able to spend its own money to keep operating. As Senate Democrats tried to stay on message, Mr. Gray waited patiently next to Mr. Reid, with the crowd from his press conference chanting “Free D.C. “ in the background loudly enough to almost drown out the Senate Democratic press event.

The first question for Mr. Reid at the press conference was about the D.C. budget, from a reporter. “Don’t talk to us – talk to the Republicans,” Mr. Reid said.

Under the 1973 Home Rule Act, which created the city’s elected government, Congress must approve the district’s budget each year as part of the appropriations process before it can spend any of its local funds. Democrats have resisted efforts by Republicans to fund parts of government piecemeal, including a bill to allow D.C. to operate normally, saying instead that the GOP should just pass a clean budget bill.

The city’s budget has been caught up in that tangle, with the House voting to allow the city to spend its own money but Senate Democrats refusing to follow suit in order to abide by a larger principle: that all federal budget issues should be dealt with simultaneously.

Mr. Gray, who leads this overwhelmingly Democratic city, buttonholed the Senate Democratic leader as the press conference ended. Mr. Reid could be heard saying “I’m on your side – don’t screw it up.” With D.C. Delegate Eleanor Holmes-Norton — the city’s nonvoting representative in the House — standing nearby, Mr. Gray reacted angrily, telling reporters “I have no idea” what Mr. Reid meant.

Sen. Barbara Boxer (D., Calif.) tried to soothe hurt feelings, saying that “we’ve got to open up this government for all the people; in D.C., Virginia,” but Mr. Gray’s blood started to boil.

“We’re not a department of the government,” Mr. Gray replied.

“It’s not about a department – I’ve got problems with California,” Ms. Boxer said, but Mr. Gray pressed on, loudly and forcefully.

“All we’re asking for is to spend our own money. We’re just asking to spend our own money. Our own money. Not the federal money. Our own money.”

Mr. Gray had just wrapped up a press conference at which he explained that during the last federal government shutdown, which ended in early 1996, the District of Columbia had been exempted within days. “why are we imperiled by the federal shutdown?” Mr. Gray has asked. He said that pretty soon the city would have depleted funds it had been relying on to keep basic services like for trash collection running. “What are we supposed to do then?” he said. “Free us so we can spend our own money.”

With the fight getting heated, Ms. Norton tried to play peacemaker.

“You certainly couldn’t expect him to be here unexpectedly and the mayor not to come forward to speak with him,” she said. “The mayor has asked for a meeting with the majority leader. That is the next step. That is what we will pursue.”

Pedro Ribeiro, a spokesman for the mayor, said that D.C. was already starting to feel the strains in a way that states aren’t.  The federal government contributes 70% of funds for Medicaid, for example, and such mandatory programs are exempt from the federal shutdown. The money gets deposited into state and local funds, but D.C. cannot access its federal matching funds because Congress has not approved the city’s budget, Mr. Ribeiro said. He said the result is that clinics and doctors don’t get paid.

“You’ve got patients who aren’t going to receive treatment; you have folks in long term care whose providers aren’t going to be compensated who can’t make payroll,” Mr. Ribeiro said.

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Mall Protesters Want Immigration Back in Spotlight

WASHINGTON—Frustrated by congressional inaction, protesters flooded the National Mall Tuesday to demand passage of immigration legislation, an issue that has faded from the spotlight in recent months.

“I want my voice to be heard,” said Janet Buruca, age 20, a U.S. citizen who lives in Washington, D.C., and who says she has a cousin who is facing deportation. “We are good people. We don’t want no more family separations.”

The rally and concert followed events over the weekend in more than 90 cities where people pressed Congress to pass legislation and, in the meantime, pushed the Obama administration to halt deportations. On Tuesday, the crowd packed nearly two blocks on the National Mall.

“Don’t deport my mom,” one hand-scrawled sign read.  “#TimeIsNow,” said another.

Organizers estimated around 15,000 people attended the rally. No independent crowd count was available.

Following the rally on the Mall, protesters marched to the U.S. Capitol for an act of “civil disobedience.” There, police arrested 208 protesters, including Reps. Luis Gutierrez (D., Illinois), Keith Ellison (D., Minn.), Joseph Crowley (D., N.Y.), Al Green (D., Texas), John Lewis (D., Ga.), Raul Grijalva (D., Ariz.), Charles Rangel (D., N.Y.) and Jan Schakowsky (D., Ill.). This marks Mr. Lewis’s 45th arrest, according to his Twitter feed.

The rallies came amid mounting frustration, particularly in the Hispanic community, over slow action in the House of Representatives on immigration. At the start of the year, the legislation was seen as a good opportunity for bipartisan cooperation, and the Senate did pass a bipartisan bill. But there have been no floor votes in the House.

The Senate’s comprehensive bill, which passed in June, includes an overhaul of visa rules, an expanded guest worker program for low-skilled immigrants, billions of dollars for border security and a path to citizenship for nearly 12 million people in the U.S. illegally.

The House Judiciary and Homeland Security committees have cleared a half dozen bills addressing discreet immigration issues, but none have been scheduled for a full House vote.

“We want a vote on immigration in the House, and we want it now,” Sen. Robert Menendez (R., N.J.), told Tuesday’s rally.

Rep. Mario Diaz-Balart (R., Fla.), one of the few Republicans who have worked to pass a comprehensive House bill, said both parties have failed to finish the work.

“We’ve heard a lot of lip service and a lot of promises,” he said.

Some frustration was also directed toward President Barack Obama, whose administration continues to deport people in the country illegally. Advocates have pressed Mr. Obama to unilaterally halt the deportations, something he has said he doesn’t have the authority to do.

“The system is breaking up families,” said Rabbi Jason Kimelman-Block of Bend the Arc, a Jewish social-justice group. “There are still over a 1,000 people being deported everyday even during the shutdown.”

Rep. John Lewis (D., Ga.) likened the movement for immigration reform to Dr. Martin Luther King’s March on Washington in 1963. Then as now, he said, protesters told legislators: “We cannot wait. We cannot be patient … The time is now.”

Ahead of the rally, Sen. Jeff Sessions (R., Ala.,) who opposed the Senate bill, said the legislation would hurt American workers. “There’s something odd about House leaders like Nancy Pelosi protesting on the Mall to get jobs for illegal aliens and pushing legislation to reduce job opportunities for U.S. citizens,” he said in a statement.

Several speakers thanked the Obama administration for permitting the protest on the National Mall despite an ongoing government shutdown. A National Park Service spokesman said the event was allowed under a rule permitting events where people are exercising their First Amendment rights.

Several Republican members of Congress have accused the administration of hypocrisy for allowing this protest but resisting access for National World War II memorial, which is closed to tourists during the government shutdown. Typical was this tweet from the Twitter account of Rep. Darrell Issa (R., Calif.): “@NatlParkService denies veterans access to WWII Memorial but Oks immigration rally on the National Mall???”

Veterans who asserted similar First Amendment rights have been given access to the war memorial, the parks spokesman said.

Following the rally, the White House issued a statement urging House Republicans to pass the immigration bill congressional Democrats introduced last week. “It is time for House Republicans to put politics aside and join Democrats to fix our broken immigration system and make the economy stronger,” the statement read.

Laura Meckler and Miriam Jordan contributed to this article.

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All regions selected private-sector jobs last month, ADP, says

Workers added to private enterprises in all regions of the United States in September, according to a survey by payrolls posted Wednesday.

The South Atlantic region the largest number of private jobs added to the 38,000 in September after payroll processor Automatic Data Processing in conjunction with Moody's analytics. New England added to the fewest number of jobs on 4,000.

The regional employment report released Wednesday ADP added that widely followed ADP National Census of employment geographic detail. Last week, ADP said that the United States in September added 166,000 private sector of jobs.

Because the Government delayed shut-down in the Ministry of labourwages and payrolls report, the ADP number is estimated for more jobs one of the few private sources last month.

"United States belonged to the State, Florida, Texas, South Carolina, US States Washington, North Carolina, Indiana, Ohio and Utah to the most powerful last month," the ADP report said.

The ADP report of regional title employment within nine regions, by the U.S. Census Bureau, defines as well as by the position of the in 29 States and Washington, D.C. employment by the State probably will work, not the worker's place of residence.

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Economists React: Yellen ‘What We Really Need in a Fed Chair’

Economists and others weigh in on the coming nomination of Janet Yellen to be chairwoman of the Federal Reserve. Check back for updates.

–I think the best words I can think of to describe Janet is as “a real mensch”, that is, she is a person with genuine integrity and humanity. That is what we really need in a Fed chair, for every decision she makes, one way or another, affects real people, and there will always be some who will feel disappointed in the policy chosen. She is the kind of genuine and persuasive person who will be able to make good policies happen. –Robert Shiller, Yale University

–The new chair’s most important challenge, in my view, is to lead the Fed toward a more predictable, less interventionist, more rules-based monetary policy of the kind that worked well when tried, as in the 1980s, 1990s and until recently. The sooner the Fed gets back to such a policy, the sooner the U.S. economy will begin performing well as it did in those earlier decades, which have been called the Great Moderation or the Long Boom… So, although Janet Yellen has been rationalizing the recent departure from rules-based policy, she wants to get back to rules-based policy. In fact, she has been the most vocal advocate of such a return of any Board member including the current Chair. The sorely needed “great unwinding” will of course be difficult. The question is when and whether she will be able to pull it off. I wish her the very best. –John Taylor, Stanford University

–Yellen will bring continuity with respect to the policies that the FOMC has adopted under Bernanke. The idea of Yellen as an agent of continuity will come as a surprise to many in the market and, likely, to more than a few on the FOMC. She is clearly perceived as being more dovish than the Chairman—by a wide margin. Even some members of the Committee do not see her as an agent of continuity. That is a tension and an immediate challenge she will have to deal with. –Larry Meyer, Macroeconomic Advisers

–President Obama has made a great decision in choosing Janet Yellen to chair the Federal Reserve. The image above, by the way, is one of the illustrations in the next edition of my favorite textbook (which is now in production). When supervising the artist, I had to guess who the next Fed chair would be. As you can see, I guessed right.. –Greg Mankiw, Harvard University

–As Federal Reserve Chairman, we would expect Janet Yellen to approach the daunting task of winding down an era of ultra-loose monetary policies in a similar fashion as her predecessor—with caution… AYellen-run Fed would likely place significant weight on the 2nd part of the Fed’s dual mandate, full employment, even at the cost of a temporary rise in inflation. We maintain our belief that rate hikes are unlikely to come before 2015. –Russ Koesterich, BlackRock Investment Institute

–One very important thing she’s brought to the table is the absence of rose-colored glasses. Most macroeconomists have consistently proclaimed the economy on the mend too soon—they saw “green shoots” where there were none. Particularly if you look at Yellen’s “optimal control” analysis—running simulations of different economic paths to determine the one that most effectively reduces unemployment without generating too much inflation—you’ll see her going beyond the analytics of established, though not always reliable, “rules” regarding how the Fed should set rates. I have faith that should she become chairwomen, Yellen will be less likely than most to let up on monetary stimulus too soon. –Jared Bernstein, Center on Budget and Policy Priorities

–The outlook for monetary policy will be little changed when Janet Yellen replaces Ben Bernanke as Fed Chair at the end of January. At this stage, Yellen is unquestionably the best candidate. But there is a slightly bigger risk that under her stewardship, the Fed will fail to tighten monetary policy in time once the recovery gathers momentum, eventually triggering an unwanted surge in inflation… Yellen will still hold just one of the 12 policy votes. In that regard, the balance of the FOMC is likely to be more affected by the annual voting rotation of the regional Fed Presidents and the filling of the vacant positions on the Board of Governors, including who will replace her as Vice Chair. –Paul Dales, Capital Economics

–[Yellen] will serve as a force for continuity will serve as a force for continuity in Fed policies. Indeed, many of the policy innovations over recent years, such as the economic and interest rates forecasts and the statement of longer-run goals and policy strategy, were advocated by Yellen. She was the least likely of all the Chairperson candidates to rock the boat. The question from a monetary policy perspective is the degree of her reputed dovishness. Both her and Bernanke have been staunch supporters of very aggressive monetary stimulus in recent years, even as many of those who voted with the majority were apparently less enthusiastic about those policy moves. But whereas Bernanke had dovishness thrust upon him in the aftermath of the Great Recession, Yellen, while perhaps not born a dove, at least had long-held views biasing her toward activist policy to counteract the weakness in the labor market… Does this imply that we should worry about an inflation problem with Yellen as Chair? We think not. –Michael Feroli, J.P. Morgan Chase

–Reports of Janet Yellen’s forthcoming nomination will be greeted well by market agents. It should be. They will assume a continuation of the Bernanke policy. They will also assume gradualism when it comes to Fed tapering which is now likely to be delayed because of the budget, debt-limit fight’s damage to the US economy. The US economic recovery is losing steam daily. –David R. Kotok, Cumberland Advisors

–Yellen is deeply committed to both sides of the dual mandate: in the 1990s she pressed Alan Greenspan to adopt a formal inflation target – not the act of a serial dove. Her speeches show a practical policymaker’s view of the inflation process, with a focus on wage inflation and unit labor costs along with inflation expectations. Today wage inflation and unit labor costs are very subdued and inflation expectations are within the normal channel, providing the scope for accommodative policy. –Krishna Guha, ISI

–[Yellen] knows that the economy needs a boost. It certainly does. I cannot find a measure of real activity (such as employment or production) that is anywhere close to its potential. This is not the time to worry about inflation. I would be an inflation hawk if I thought that we were heading above two or three percent, but we’re not. That said, I’m not jumping for joy, simply because the choice of the Fed chair doesn’t make much difference to the overall economy. –Bill Conerly, Conerly Consulting

–Yellen is quite simply more qualified for the job than any of her predecessors. She’s an imaginative and technically adept economist possessed of a brilliant and precise mind. As a researcher, she has made fundamental contributions to our understanding of unemployment and the importance of smoothing out the ups and downs of the economy… Tonight, I feel reassured that my daughter’s economic future is in good hands. I also plan to tell her that she, too, can grow up to become the most powerful economist in the world. It’s a potent stimulus. –Justin Wolfers, University of Michigan

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A Look at Yellen’s Research: Unemployment, Advertising and Out-of-Wedlock Births

Before and in-between her stints as a policy maker, Janet Yellen was an accomplished academic economist with scores of published articles to her name on a wide range of topics, some of which aren’t what the lay person might expect. Now that President Barack Obama has picked her as his nominee to lead the Federal Reserve, a sample her work provides a window into the kinds of issues that have interested her in the past:

–“What Makes Advertising Profitable?” While a staff researcher at the Federal Reserve, Ms. Yellen published a paper on the economics of advertising. Written with William Adams of the University of Michigan, the paper explores, for instance, how a firm could boost profits by targeting advertising to consumers that meet certain socio-economic criteria. The paper also warns that advertising can hurt social welfare, and raises public policy implications. “Advertising can be used to make the poor desire, and the rich disdain, what the poor ultimately consume, and to make the rich covet what the poor cannot afford,” the authors wrote in the conclusion. “The social consequences of living in such a socially stratified, conspicuous consumption society have not been accounted for in our model.”

–Ms. Yellen has done a lot of work on so-called efficiency wage theory, much of it with her husband, Nobel-prize-winning economist George Akerlof. Efficiency wage theory seeks to answer the question of why involuntary unemployment sometimes persists for long periods – that is, why the labor market doesn’t work like other markets, with wages falling when the supply of labor exceeds the demand, leaving everyone who wants a job employed but paid less. Broadly, the theory contends that firms might pay workers higher wages than the market requires, causing employees to work harder and boost their productivity. Paying higher wages also may benefit the employer by reducing turnover and training costs. While those employees also benefit, the higher wages mean fewer job seekers are hired overall, causing unemployment to persist. Former Treasury Secretary Lawrence Summers, who in September withdrew his name from consideration for the Fed chairman nomination, also helped develop the theory.

Ms. Yellen and Mr. Akerlof looked at the issue through a sociological lens, building on Mr. Akerlof’s earlier work, as described in this 1985 Wall Street Journal article.

Here’s an article on the topic by Ms. Yellen published in 1984.

–The couple turned their economic minds to social problems beyond unemployment as well. In the mid-1990s, for instance, they explored the causes for the rising rate of out-of-wedlock births in the United States. Their research led them to a theory they called “reproductive technology shock,” arguing that the increased availability of both abortion and contraception in the late 1960s and early 1970s eroded the social norms surrounding sex, pregnancy and marriage, leading to a sharp decline in the stigma of unwed motherhood. They used their findings to push back on the argument being made by some policy makers that welfare was to blame for encouraging unmarried women to have children. Welfare cuts “would have little impact on the number of out-of-wedlock children while impoverishing those already on welfare yet further,” they wrote in their 1996 scholarly paper. Here is a version the couple wrote for online magazine Slate in 1996, when Ms. Yellen was a Fed governor.

Other research into gangs led them to develop an intricate economic model of “crime and punishment” that takes into account the role of community values and the willingness of community members to cooperate with the police. They argue that finding ways to reduce a community’s willingness to tolerate crime can be more effective than harsher prison sentences and bigger police budgets. Fairness also comes into play, they said. “I would go pretty far in saying that people’s perceptions of the fairness of the justice system can have really big effects on the crime rate,” Mr. Akerlof told the Wall Street Journal in 1994. “In our model, if people think that the legal system is not fair, then (they stop cooperating with the authorities and) the crime rate is going to go way up.”

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IMF Fiscal Chief to be Italy’s First Budget Watchdog

His move is unlikely to cause a short-term fall in Italian bond yields. But longer term, Rome’s headhunting of the International Monetary Fund’s top budget expert, Carlo Cottarelli, could yield major sovereign-debt dividends.

The now-former Director of the Fiscal Affairs Department tendered his resignation at the IMF to be a budget watchdog for the Italian government, appointed as the country’s first Commissioner for Public Spending Review.

The position was created in August as part of Rome’s efforts to rein in a bloated budget and massive debt overhang, both of which have pushed borrowing costs up to perilous levels.

Mr. Cottarelli took over the helm of the fiscal affairs department on November 1, 2008, just weeks after the U.S. stock market crash wiped out $1.2 trillion in market value and augured a world-wide recession. It was his task to monitor rising debt levels threatening to drown economies across the globe and devise escape policies for governments.

“Under his guidance, the department has also played a central role in the Fund’s very important technical assistance to member countries, currently providing approximately half of the Fund’s technical assistance worldwide,” IMF Managing Director Christine Lagarde said.

It was a daunting job. The IMF had decades of experience advising and bailout out emerging and developing countries. But both the scale of the global crisis and the fact that some of the biggest and most advanced economies in the world were simultaneously being battered by financial and sovereign debt problems meant fund economists were treading new advice-giving ground.

It was only after euro zone governments slammed on the budget brakes that the IMF began to realize that the impact of belt-tightening on growth is far larger in crises than they previously thought. That epiphany translated into a major policy shift for the fund: it now advises credible back-loaded budget cuts that won’t starve growth.

Ms. Lagarde said Mr. Cottarelli will be sorely missed by friends and colleagues at the fund, “but his nomination to a senior government post in Italy is testimony to the superb qualities that have distinguished his tenure.”

Fiscal Affairs Division deputy Sanjeev Gupta has been named acting director interim period while the fund searches for a successor to Mr. Cottarelli.

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What Furloughed Workers Need to Know About Filing for Unemployment Benefits

Are federal workers eligible for unemployment benefits? Yes. Federal employees who are laid off, including those furloughed this week, are eligible to receive unemployment benefits. In general, for workers to be eligible they must have lost their job through no fault of their own, not quit or have been fired, and must have been employed long enough to meet state qualifications.

Bloomberg News

If Congress votes to reimburse federal employees, will they have to repay their unemployment benefits? Most likely, yes. States say they’ll attempt to recoup benefits paid to federal employees if the workers receive back pay once they’re back on the job.  (Congress will decide that when it ends the shutdown.) States would notify workers that they owe the money back. Officials in several states said that if workers don’t voluntarily repay, the state would garnish wages, tax refunds and deny future unemployment benefits to recoup the money.

Where should workers file a claim? In the jurisdiction where they worked. Claims are tied to where their employer is located, not where the worker lives. In the case of federal workers, the location is the assigned “duty station” during the past year. For example, a worker who lives in Illinois but reports to an office in St. Louis would file in Missouri. Contact information for all state unemployment offices can be found here.

How soon can a furloughed federal worker file? It varies by state. Maryland and the district of Columbia began accepting applications Tuesday. The District, however, is requiring workers who did not obtain the proper documents before departing to wait until Friday. Virginia advises that workers should be unemployed for “at least one week” before submitting an application.

How do workers file? Again, it varies widely. The District says it will only accept online applications from federal workers. Conversely, Virginia requires a paper application be faxed or mailed. In California, federal workers can apply by mail, phone or online, but they may have to mail in additional documentation.

How long will it take to receive payment? Likely several weeks. In many states, workers are not eligible for benefits during the first week they’re unemployed. So in Virginia, for example, furloughed workers would need to be unemployed for two weeks before even being qualified and then wait additional time to actually receive a payment.  Other states may allow workers to claim benefits starting on the first day they’re unemployed, but federal workers may not be eligible based on the amount of income they earned Monday and Tuesday. The District is warning that claims processing may take longer than normal because federal agencies aren’t open to provide the necessary documentation.

What documentation do federal workers need? Under normal circumstances federal workers need form “SF-50” to apply for unemployment benefits. But most workers did not receive one when the furloughs began. The Office of Personnel Management advised that “agencies should not prepare an SF-50… at the outset of a shutdown furlough.” As a result, states may require additional documentation such as pay stubs and W-2 tax forms. Typically, information provided by workers is verified with employers, but Maryland and West Virginia said they might skip that step for now.

Will federal workers draw down state benefit coffers? No. They tap a different pool of money through the Unemployment Compensation for Federal Employees program. The funds come from individual federal agencies, not state insurance programs. Still, states administer the payments and state law determines eligibility for benefits.

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