The Department of Labor reported today a suprising jump in new unemployment claims. For the last week in December, jobless claims rose by 43,000 to 364,000, the highest level since mid-September. While unemployment claims tend to be more volitle around the holiday season, the four-week moving average for claims, which is more stable, also rose to 333,000. The continuing surprising unemployment claims increases and disappointing job creation results continue to cast doubt on claims by the Bush administration that the 2001 and 2003 tax cuts are moving the economy forward and will eventually create move jobs. Analysts predict the economy will add 175,000 jobs in December - slightly more than needed to to keep up with population growth - but it is certainly possible that number may not be met. The Labor Department will release December job numbers tomorrow.

In 2001 Bush appointed a commission to look at social security, and this commission came up with three proposals. One of the proposals, called Option 2, is currently receiving a lot of attention on Capitol Hill, with Bill Frist recently stating that "[It's] on the table, and it makes sense to me." Option 2 would link future social security benefits to increases in inflation over a worker's lifetime, rather than wages. One of the major problems with this proposal is that in our economy wages rise faster than inflation. According to this Washington Post article, the new benefits formula would "stunt the growth of benefits, slowly at first but more quickly by the middle of the century." While the proposal would work towards solving the problem of social security's long term deficit, the program does not show signs of reaching the level of "crisis" that many in the government are claiming. In fact, as Krugman points out in a New York Times column, if these proposals are put in place it "will do nothing about the real fiscal threat and will instead dismantle Social Security, a program that is in much better financial shape than the rest of the federal government." These overhauls would also come with a stinging cost to future retirees. The average middle class worker retiring in 2022 would see a benefits cut of 9.9 percent, while in 2042 benefits would fall by more than a quarter. These cuts would be detrimental considering that over the past 60+ years the social security program has done more to stave off poverty than any other program. In a recently released report, the Center on Budget and Policy Priorites highlighted the fact that other policies embraced by this administration will end up costing the country a lot more than the social security shortfall in the future, particularly the cost of Bush's tax cuts and Medicare prescription drug benefits. The report can be found here.

Retiring Senator Bob Graham has a valid reason for being concerned about social security reform: One dollar out of every 14 dollars in benefits paid by the Social Security Administration goes to a resident of the state he has served for the past eighteen years -- Florida. In a recent article written by Senator Graham he outlines the necessity of a social security safety net, and discusses many of the problems that come with President Bush's ideas for reform, including added risk for people collecting benefits, the embellishment of the crisis facing the system, and the fact that "our grandchilden" could be paying for this overhaul further down the road. To read the article, titled "Save Social Security From the White House," click here.