The BLS payroll jobs data contradict the hype from business organizations, such as the US Chamber of Commerce, and from "studies" financed by outsourcing corporations that offshore jobs outsourcing is good for America. Large corporations, which have individually dismissed thousands of their US employees and replaced them with foreigners, claim that jobs outsourcing allows them to save money that can be used to hire more Americans. The corporations and the business organizations are very successful in placing this disinformation in the media. The lie is repeated everywhere and has become a mantra among no-think economists and politicians. However, no sign of these jobs can be found in the payroll jobs data. But there is abundant evidence of the lost American jobs.

Information technology workers and computer software engineers have been especially heavily hit by offshore jobs outsourcing. During the past five years (Jan 01 - Jan 06), the information sector of the US economy lost 645,000 jobs or 17.4% of its work force. Computer systems design and related lost 116,000 jobs or 8.7% of its work force. Clearly, jobs outsourcing is not creating jobs in computer engineering and information technology. Indeed, jobs outsourcing is not even creating jobs in related fields.

For the past five years US job growth was limited to these four areas: education and health services, state and local government, leisure and hospitality, financial services. There was no US job growth outside these four areas of domestic nontradable services.

Oracle, for example, which has been handing out thousands of pink slips, has recently announced two thousand more jobs being moved to India. How is Oracle's move of US jobs to India creating jobs in the US for waitresses and bartenders, hospital orderlies, state and local government and credit agencies, the only areas of job growth?

Engineering jobs in general are in decline, because the manufacturing sectors that employ engineers are in decline. During the last five years, the US work force lost 1.2 million jobs in the manufacture of machinery, computers, electronics, semiconductors, communication equipment, electrical equipment, motor vehicles and transportation equipment. The BLS payroll job numbers show a total of 70,000 jobs created in all fields of architecture and engineering, including clerical personal, over the past five years. That comes to a mere 14,000 jobs per year (including clerical workers). What is the annual graduating class in engineering and architecture? How is there a shortage of engineers when more graduate than can be employed?

Of course, many new graduates take jobs opened by retirements. We would have to know the retirement rates to get a solid handle on the fate of new graduates. But it cannot be very pleasant, with declining employment in the manufacturing sectors that employ engineers and a minimum of 65,000 H-1B visas annually for foreigners plus an indeterminate number of L-1 visas.

It is not only the Bush regime that bases its policies on lies. Not content with outsourcing Americans' jobs, corporations want to fill the remaining jobs in America with foreigners on work visas. Business organizations lie about a shortage of engineers, scientists and even nurses. Business organizations have successfully used pubic relations firms and bought-and-paid-for "economic studies" to convince policymakers that American business cannot function without H-1B visas that permit the importation of indentured employees from abroad who are paid less than the going US salaries. The so-called shortage is, in fact, a replacement of American employees with foreign employees, with the soon-to-be-discharged American employee first required to train his replacement.

It is amazing to see free-market economists rush to the defense of H-1B visas. The visas are nothing but a subsidy to US companies at the expense of US citizens.

Keep in mind this subsidy to US corporations for employing foreign workers in place of Americans as we examine the Labor Department's projections of the ten fastest growing US occupations over the 2004-2014 decade.

All of the occupations with the largest projected employment growth (in terms of the number of jobs) over the next decade are in nontradable domestic services. The top ten sources of the most jobs in "superpower" America are: retail salespersons, registered nurses, postsecondary teachers, customer service representatives, janitors and cleaners, waiters and waitresses, food preparation (includes fast food), home health aides, nursing aides, orderlies and attendants, general and operations managers. Note than none of this projected employment growth will contribute one nickel toward producing goods and services that could be exported to help close the massive US trade deficit. Note, also, that few of these jobs classifications require a college education.

Among the fastest growing occupations (in terms of rate of growth), seven of the ten are in health care and social assistance. The three remaining fields are: network systems and data analysis with 126,000 jobs projected or 12,600 per year; computer software engineering applications with 222,000 jobs projected or 22,200 per year, and computer software engineering systems software with 146,000 jobs projected or 14,600 per year.

Assuming these projections are realized, how many of the computer engineering and network systems jobs will go to Americans? Not many, considering the 65,000 H-1B visas each year (650,000 over the decade) and the loss during the past five years of 761,000 jobs in the information sector and computer systems design and related.

Judging from its ten-year jobs projections, the US Department of Labor does not expect to see any significant high-tech job growth in the US. The knowledge jobs are being outsourced even more rapidly than the manufacturing jobs were. The so-called "new economy" was just another hoax perpetrated on the American people.

If offshore jobs outsourcing is good for US employment, why won't the US Department of Commerce release the 200-page, $335,000 study of the impact of the offshoring of US high-tech jobs? Republican political appointees reduced the 200-page report to 12 pages of public relations hype and refuse to allow the Technology Administration experts who wrote the report to testify before Congress. Democrats on the House Science Committee are unable to pry the study out of the hands of Commerce Secretary Carlos Gutierrez. Obviously, the facts don't fit the Bush regime's globalization hype.

The only thing America has left is finance, and now that is moving abroad. On February 22 CNNMoney.com reported that America's large financial institutions are moving "large portions of their investment banking operations abroad." No longer limited to back-office work, offshoring is now killing American jobs in research and analytic operations, foreign exchange trades and highly complicated credit derivatives contracts. Deal-making responsibility itself may eventually move abroad. Deloitte Touche says that the financial services industry will move 20 percent of its total costs base offshore by the end of 2010. As the costs are lower in India, that will represent more than 20 percent of the business. A job on Wall St is a declining option for bright young persons with high stress tolerance.

The BLS payroll data that we have been examining tracks employment by industry classification. This is not the same thing as occupational classification. For example, companies in almost every industry and area of business employ people in computer-related occupations. A recent study from the Association for Computing Machinery claims:
"Despite all the publicity in the United States about jobs being lost to India and China, the size of the IT employment market in the United States today is higher than it was at the height of the dot.com boom. Information technology appears as though it will be a
growth area at least for the coming decade."

We can check this claim by turning to the BLS Occupational Employment Statistics. We will look at "computer and mathematical employment" and "architecture and engineering employment."

Computer and mathematical employment includes such fields as "software engineers applications," "software engineers systems software," "computer programers," "network systems and data communications," and "mathematicians." Has this occupation been a source of job growth?

In November of 2000 this occupation employed 2,932,810 people. In November of 2004 (the latest data available), this occupation employed 2,932,790, or 20 people fewer. Employment in this field has been stagnant for the past four years.

During these four years, there have been employment shifts within the various fields of this occupation. For example, employment of computer programmers declined by 134,630, while employment of software engineers applications rose by 65,080, and employment of software engineers systems software rose by 59,600. (These shifts might merely reflect change in job or occupation title from programmer to software engineer.)

These figures do not tell us whether any gain in software engineering jobs went to Americans. According to Professor Norm Matloff, in 2002 there were 463,000 computer-related H-1B visa holders in the US.
Similarly, the 134,630 lost computer programming jobs (if not merely a job title change) may have been outsourced offshore to foreign affiliates.

Architecture and engineering employment includes all the architecture and engineering fields except software engineering. The total employment of architects and engineers in the US declined by 120,700 between November 1999 and November 2004. Employment declined by 189,940 between November 2000 and November 2004, and by 103,390 between November 2001 and November 2004.

There are variations among fields. Between November 2000 and November 2004, for example, US employment of electrical engineers fell by 15,280. Employment of computer hardware engineers rose by 15,990 (possibly these are job title reclassifications). Overall, however, over 100,000 engineering jobs were lost. We do not know how many of the lost jobs were outsourced offshore to foreign affiliates or how many of any increase in computer hardware jobs went to foreign holders of H-1B or L-1 visas.

Clearly, engineering and computer-related employment in the US has not been growing, whether measured by industry or by occupation.
Moreover, with a half million or more foreigners in the US on work visas, the overall employment numbers do not represent employment of Americans. Perhaps what corporations and "studies" mean when they claim offshore outsourcing increases US employment is that the contacts companies make abroad allow them to bring in more foreigners on work visas to displace their American employees.

American employees have been abandoned by American corporations and by their representatives in Congress. America remains a land of opportunity--but for foreigners--not for the native born. A country whose work force is concentrated in domestic nontradable services has no need for scientists and engineers and no need for universities.
Even the projected jobs in nursing and school teachers can be filled by foreigners on H-1B visas.

In the US the myth has been firmly established that the jobs that the US is outsourcing offshore are being replaced with better jobs.
There is no sign of these jobs in the payroll jobs data or in the occupational statistics. Myself and others have pointed out that when a country loses entry level jobs, it has no one to promote to senior level jobs. We have also pointed out that when manufacturing leaves, so does engineering, design, research and development, and innovation itself.

On February 16 the New York Times reported on a new study presented to the National Academies that concludes that outsourcing is climbing the skills ladder. A survey of 200 multinational corporations representing 15 industries in the US and Europe found that 38 percent planned to change substantially the worldwide distribution of their research and development work, sending it to India and China. According to the New York Times, "More companies in the survey said they planned to decrease research and development employment in the United States and Europe than planned to increase employment."

The study and discussion it provoked came to untenable remedies. Many believe that a primary reason for the shift of R&D to India and China is the erosion of scientific prowess in the US due to lack of math and science proficiency of American students and their reluctance to pursue careers in science and engineering. This belief begs the question why students would chase after careers that are being outsourced abroad.

The main author of the study, Georgia Tech professor Marie Thursby, believes that American science and engineering depend on having "an environment that fosters the development of a high-quality work force and productive collaboration between corporations and universities."
The Dean of Engineering at the University of California, Berkeley, thinks the answer is to recruit the top people in China and India and bring them to Berkeley. No one seems to understand that research, development, design, and innovation take place in countries where things are made. The loss of manufacturing means ultimately the loss of engineering and science. The newest plants embody the latest technology. If these plants are abroad, that is where the cutting edge resides.

The United States is the first country in history to destroy the prospects and living standards of its labor force. It is amazing to watch freedom-loving libertarians and free-market economists serve as full time apologists for the dismantling of the ladders of upward mobility that made the America of old an opportunity society.

America has begun a polarization into rich and poor. The resulting political instability and social strife will be terrible.

Paul Craig Roberts was Assistant Secretary of the Treasury in the Reagan administration. He was Associate Editor of the Wall Street Journal editorial page and Contributing Editor of National Review. He is coauthor of The Tyranny of Good Intentions.He can be reached at:

COPYRIGHT CREATORS SYNDICATE, INC.

Builders also reported a few hiccups. Upscale Toll Brothers Inc. said signed contracts in the November-January period fell 21 percent from a year ago, and KB Home reported more buyers backing out of contracts.

Still, the prospect of a housing slowdown appears less frightening than it did a few months ago, according to those who track the industry. There seems to be little concern that a much-touted housing bubble will lead to a collapse in sales and prices.

New Federal Reserve Chairman Ben Bernanke said last month housing would enter a moderate slowdown but not a crash.

William Mack, a housing analyst for Standard & Poor's, predicted "a soft landing. The overall market is just taking a step back."

Explanations for the recent cooling-off vary. Many people bought homes during the past five years and are staying put. Some analysts blame a decline in consumer confidence. And interest rates have been rising, especially for adjustable mortgages that allowed people to buy more expensive homes than they could have afforded with a 30-year loan.

"We started to see the strain in July and August, and by the fourth quarter the market definitely had slowed," said Layne Marceau, president of the Northern California region for Shea Homes, one of the nation's largest private builders.

Rising prices and interest rates pushed more buyers out of the market. When prices finally did cool, sellers couldn't command a high enough price on their old house to buy the new one, said Marceau, who believes the slowdown is temporary.

Builders don't like to cut prices _ it angers customers who paid more _ but last week, Centex Corp. advertised $25,000 off on select homes in the Dallas area after making a successful similar offer in California. Around the country, builders are throwing in incentives ranging from financing help to free upgrades like swimming pools and granite countertops. Some equal 10 percent of the home's list price.

The median price of an existing single-family home has declined since peaking at $219,700 in July to $210,500 in January, according to the National Association of Realtors. Few analysts expect a sharp drop in national averages, although they say there could be further declines in some areas that have been among the hottest markets in recent years.

David Seiders, chief economist for the National Association of Home Builders, said California, Las Vegas, Florida and the Washington, D.C., area "have the largest potential for a price slowdown."

The rising prices in those markets were fed by speculators who bought homes intending to "flip" or sell them for a quick profit, Seiders said. "The biggest fear I have is investor-owned units coming back on the market in large numbers," he said.

Analysts said markets in Florida and the Carolinas seemed to be holding up well. Hovnanian Enterprises Inc. reported last week that home contracts jumped 61 percent in the Southeast but fell nearly 11 percent in the Southwest and 37 percent in the West during the November-January period. The builder's profit was flat with a year earlier.

The slowdown that is showing up in national statistics hasn't reached all parts of the country.

"I've never seen a market as good as this," Mike Mishler said as he took a break from making finishing touches on a $1.6 million lakeside home near Dallas. "Maybe it will slow down in a couple years, but right now we have lots of California folks coming in, and empty-nest people looking for new homes."

Mishler, president of the local builders association, says Texas markets are holding up because they are affordable _ the median price in Dallas is $145,000 compared to the national average of $213,000. But even in Dallas, the inventory of unsold homes rose to a record in the fourth quarter.

By price, the middle and upper ends of the new-home market did best in with solid increases in everything above $200,000, reflecting strongest markets were in high-priced areas along both coasts. That pattern mostly continued in January, although there was a dip in the $400,000 to $750,000 segment compared to January 2005.

Housing has played a major role in the economic recovery since 2001, so even slower growth in home sales and prices could have major repercussions.

Asha Bangalore, an economist for The Northern Trust Co. in Chicago, estimates housing created 43 percent of all new jobs from late 2001 until mid-2005. That included the obvious, such as jobs in construction and mortgage services, but also retail and service jobs that were created because consumers tapped their rising home equity to buy more things.

"The housing slowdown that we are seeing is very modest, not alarming, but I think the ripple effects are going to be enormous because of the employment factor," she said.

For now, home builders are busy finishing the houses that customers ordered last year. In a sense, their 2006 results are already on the books, and they expect another good year.

"This will either be our most profitable or our second-most profitable year in the company's history," Joel Rassman, chief financial officer of Horsham, Penn.-based Toll Brothers, told investors this week. Its profits rose about 50 percent in 2004 and nearly doubled last year.

Investors, however, have been bidding down the stocks of home builders since July, prompting executives to complain that their companies are undervalued despite record earnings. The nine largest publicly traded builders have seen their shares fall 14 to 44 percent since their peaks, with Toll Brothers and Hovnanian the biggest losers.

Alex Barron, an analyst in San Francisco for JMP Securities, said builder stocks have been trading at relatively low multiples of their earnings since the late 1990s because investors always believed the strong housing market was too good to last.

"Investors kept saying, 'Next year housing will go down,'" Barron said. "I guess they're finally right."

Frank Monroe is one pissed-off federal bankruptcy judge. Just before Christmas, Judge Monroe was forced to deny Guillermo Sosa, an Austin, Texas, house painter, and his wife, Melba Nelly Sosa, emergency bankruptcy protection to avoid foreclosure on their mobile home. While sympathetic to the Sosas, Judge Monroe's hands were tied by the new bankruptcy law. The so-called Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA) required that the Sosas receive consumer credit counseling before filing for bankruptcy. Unaware of this stipulation, they had failed to do so, making them ineligible.

In his angry ruling [PDF], Monroe wrote that "the parties pushing the passage of the Act had their own agenda … to make more money off the backs of the consumers in this country. … To call BAPCPA a 'consumer protection' act is the grossest of misnomers."

The BAPCPA went into effect on Oct. 17, 2005. Banks and other lenders promised it would stop deadbeats from abusing the bankruptcy system, save billions, and lower interest rates for responsible borrowers. House Judiciary Committee Chairman James Sensenbrenner, R-Wis., predicted the bill would recoup "billions … in losses associated with profligate and abusive bankruptcy filings."

That did not happen. On the contrary, Bankrate data found that the average credit card interest rate actually rose 1 percent in the six months following the passage of the Bankruptcy Act.

Panicked debtors trying to beat the Oct. 17 deadline filed more than 2 million bankruptcy petitions in 2005, 32 percent more than in 2004. Some 500,000 people filed for bankruptcy in the two weeks alone before the Act took effect. This uptick in filings cost Bank of America $320 million, JP Morgan Chase predicted their credit card defaults would top $2.3 billion and Discover Card lost $180 million. On the other hand, credit card companies will undoubtedly make up this loss, and more, in the long run.

Who are the "deadbeats" Congress is trying to weed out?

Leslie Linfield of the Institute for Financial Literacy says, "Almost half [of bankruptcy filers] have incomes below $20,000 a year, and almost 40 percent indicate that their indebtedness is due to illness or injury." The other half may be workers pushed into an economic corner. A 2006 Federal Reserve study found that real median income dropped 6 percent from 2001 to 2004, while average family income fell by 2.3 percent. The gap between stagnant or declining wages and the rising cost of living is partly being made up by debt. For example, Americans who roll over credit card balances owe anywhere from $5,100 to $14,000, depending upon whose numbers are used. High debt levels are fueled by easy credit that helps lessen the pressures on business to increase wages.

The Bankruptcy Act erected four major hurdles to deter bankruptcy. First, the Act makes it harder for people to qualify for a Chapter 7 bankruptcy that would erase most of their debt. Instead, most debtors have to file for Chapter 13, in which they face a three- to five-year court-ordered repayment plan.

Second, the Act requires more documentation from filers, including pay stubs and tax returns, and subjects them to a means test based partly on their average income over the past six months.

Third, the law muzzles and restrains bankruptcy attorneys -- the bane of the credit industry. Bankruptcy attorneys are labeled as "debt relief agencies," which prohibits them from dispensing certain kinds of financial advice. Other restrictions imposed on attorneys include the responsibility of vouching for the accuracy of information provided by clients. Because of these restraints, lawyers must spend more time on each case and bill more. Houston bankruptcy attorney Jeff Norman estimates that he charges 20 percent to 30 percent more due to the new law.

Lastly, BAPCPA requires all filers to undergo credit counseling through a Department of Justice (DOJ) approved agency before and after filing for bankruptcy. Credit counseling agencies can provide filers with a counseling certificate after one or two sessions, or they can develop a debt management plan (DMP) based on consolidating credit card balances into a negotiated agreement with creditors. In turn, creditors may lower interest rates and forgive fees.

This is an inherent conflict of interest since the majority of agency revenues come from the 8 percent to 15 percent voluntary Fair Share contribution paid by creditors on each payment they receive. Because of this arrangement, credit counseling agencies are actually soft touch collectors for credit card companies.

The $40 to $100 for a compulsory credit counseling session is a burden on already destitute filers. While creditors believe that debt counseling will push 30 percent to 50 percent of bankruptcy filers into repayment plans, this just isn't happening. A survey by the National Association of Bankruptcy Attorneys (NACBA) of six DOJ approved credit counseling agencies found that 96.7 percent of their 61,335 customers were too insolvent to repay their debts. Rather than being overspending deadbeats, 79 percent were in financial trouble due to job loss, medical bills, death of a spouse or divorce.

Institutional creditors are neither naive nor ill-informed. Armed with sophisticated information systems, most know they can't stop bankruptcies. Insolvent debtors simply cannot repay their debts. The primary goal of BAPCPA is to create a gauntlet of obstacles that will make filing more drawn out and complicated. The intent is to delay Chapter 7 bankruptcy filings for as long as possible, since each month a consumer is not in bankruptcy relief there's a chance they'll pay at least a portion of the payment. Delaying tens of thousands of bankruptcies for a month or two will result in millions for creditors. This partly explains why compulsory credit counseling was included in the law, even though a Visa-funded study found that 74 percent of consumers drop out before finishing their DMP.

Liberal credit policies and minuscule minimum payments on credit card balances kept some cardholders in debt for decades This system ticked along nicely until federal regulatory agencies became concerned about high consumer debt and required that minimum monthly payments be raised from 2 percent to 4 percent. Overnight, monthly payments on a $9,000 (18 percent APR) credit card balance doubled from $180 to $360. This was a tipping point for some consumers with high balances.

Not coincidentally, this change occurred at roughly the same time the new bankruptcy law was passed. With less possibility for a bankruptcy escape, creditors had borrowers just where they wanted them.

Prudent lenders target creditworthy consumers. Conversely, they assume a greater risk when they seek out less creditworthy customers who pay higher interest rates. Higher potential profits have always been associated with greater risks. One problem with the new bankruptcy law is that it shifts the risks from the lender to the borrower without giving the borrower anything in return. For example, the high rates charged in subprime loans are less defensible now that the risk has shifted. The Act also insulates lenders from the risk of lending by not holding them liable for their credit issuance decisions. Lenders want it both ways -- extend subprime credit to borrowers with shaky credit histories and then make it impossible for them to get out of the debt. The Bankruptcy Act is an invitation to exploit the growing subprime market with less risk for lenders.

Poor and moderate-income consumers are being forced into a corner by stagnant salaries, high debt and rising prices. John Rao of the National Consumer Law Center recounts that Congress was warned that bankruptcy filings were a symptom not a disease. Rao is right. Bankruptcy is not a disease, but a symptom of a society racing to the bottom in terms of wages and benefits -- an "ownership society" in which citizens own most of the risks, and a society where conservatism is anything but compassionate.

Not surprisingly, BAPCPA excludes anything relating to Chapter 11 or business bankruptcies, an area where consumers desperately need protection.

Judge Monroe wrote in his ruling that by passing the Bankruptcy Act, Congress ignored the scores of judges, academics and lawyers who spoke out about the flaws of the Act. "It should be obvious to the reader at this point how truly concerned Congress is for the individual consumers of this country," he wrote. "Apparently, it is not individual consumers of this country that make the donations to the members of Congress that allow them to be elected and reelected and reelected and reelected."

In the last week, the Commerce Department reported that January sales of new single-family homes fell 5 percent _ the fourth decline in seven months _ and the backlog of unsold new homes hit a record. And the National Association of Realtors said used home sales slipped 2.8 percent in January, the fourth straight drop and 5 percent below January 2005.

Builders also reported a few hiccups. Upscale Toll Brothers Inc. said signed contracts in the November-January period fell 21 percent from a year ago, and KB Home reported more buyers backing out of contracts.

Still, the prospect of a housing slowdown appears less frightening than it did a few months ago, according to those who track the industry. There seems to be little concern that a much-touted housing bubble will lead to a collapse in sales and prices.

New Federal Reserve Chairman Ben Bernanke said last month housing would enter a moderate slowdown but not a crash.

William Mack, a housing analyst for Standard & Poor's, predicted "a soft landing. The overall market is just taking a step back."

Explanations for the recent cooling-off vary. Many people bought homes during the past five years and are staying put. Some analysts blame a decline in consumer confidence. And interest rates have been rising, especially for adjustable mortgages that allowed people to buy more expensive homes than they could have afforded with a 30-year loan.

"We started to see the strain in July and August, and by the fourth quarter the market definitely had slowed," said Layne Marceau, president of the Northern California region for Shea Homes, one of the nation's largest private builders.

Rising prices and interest rates pushed more buyers out of the market. When prices finally did cool, sellers couldn't command a high enough price on their old house to buy the new one, said Marceau, who believes the slowdown is temporary.

Builders don't like to cut prices _ it angers customers who paid more _ but last week, Centex Corp. advertised $25,000 off on select homes in the Dallas area after making a successful similar offer in California. Around the country, builders are throwing in incentives ranging from financing help to free upgrades like swimming pools and granite countertops. Some equal 10 percent of the home's list price.

The median price of an existing single-family home has declined since peaking at $219,700 in July to $210,500 in January, according to the National Association of Realtors. Few analysts expect a sharp drop in national averages, although they say there could be further declines in some areas that have been among the hottest markets in recent years.

David Seiders, chief economist for the National Association of Home Builders, said California, Las Vegas, Florida and the Washington, D.C., area "have the largest potential for a price slowdown."

The rising prices in those markets were fed by speculators who bought homes intending to "flip" or sell them for a quick profit, Seiders said. "The biggest fear I have is investor-owned units coming back on the market in large numbers," he said.

Analysts said markets in Florida and the Carolinas seemed to be holding up well. Hovnanian Enterprises Inc. reported last week that home contracts jumped 61 percent in the Southeast but fell nearly 11 percent in the Southwest and 37 percent in the West during the November-January period. The builder's profit was flat with a year earlier.

The slowdown that is showing up in national statistics hasn't reached all parts of the country.

"I've never seen a market as good as this," Mike Mishler said as he took a break from making finishing touches on a $1.6 million lakeside home near Dallas. "Maybe it will slow down in a couple years, but right now we have lots of California folks coming in, and empty-nest people looking for new homes."

Mishler, president of the local builders association, says Texas markets are holding up because they are affordable _ the median price in Dallas is $145,000 compared to the national average of $213,000. But even in Dallas, the inventory of unsold homes rose to a record in the fourth quarter.

By price, the middle and upper ends of the new-home market did best in with solid increases in everything above $200,000, reflecting strongest markets were in high-priced areas along both coasts. That pattern mostly continued in January, although there was a dip in the $400,000 to $750,000 segment compared to January 2005.

Housing has played a major role in the economic recovery since 2001, so even slower growth in home sales and prices could have major repercussions.

Asha Bangalore, an economist for The Northern Trust Co. in Chicago, estimates housing created 43 percent of all new jobs from late 2001 until mid-2005. That included the obvious, such as jobs in construction and mortgage services, but also retail and service jobs that were created because consumers tapped their rising home equity to buy more things.

"The housing slowdown that we are seeing is very modest, not alarming, but I think the ripple effects are going to be enormous because of the employment factor," she said.

For now, home builders are busy finishing the houses that customers ordered last year. In a sense, their 2006 results are already on the books, and they expect another good year.

"This will either be our most profitable or our second-most profitable year in the company's history," Joel Rassman, chief financial officer of Horsham, Penn.-based Toll Brothers, told investors this week. Its profits rose about 50 percent in 2004 and nearly doubled last year.

Investors, however, have been bidding down the stocks of home builders since July, prompting executives to complain that their companies are undervalued despite record earnings. The nine largest publicly traded builders have seen their shares fall 14 to 44 percent since their peaks, with Toll Brothers and Hovnanian the biggest losers.

Alex Barron, an analyst in San Francisco for JMP Securities, said builder stocks have been trading at relatively low multiples of their earnings since the late 1990s because investors always believed the strong housing market was too good to last.

"Investors kept saying, 'Next year housing will go down,'" Barron said. "I guess they're finally right."

"I know that you share the president's and my commitment to maintaining the full faith and credit of the U.S. government," Snow said in his letter to leaders in the House and Senate.

Treasury officials, briefing congressional aides last week, said that the government will run out of maneuvering room to keep from exceeding the current limit sometime during the week of March 20.

Snow in his letter notified lawmakers that Treasury would begin tapping the Civil Service Retirement and Disability Fund, which Treasury officials said would provide a "few billion" dollars in extra borrowing ability.

Treasury officials also announced that on Friday they had used the $15 billion in the Exchange Stabilization Fund, a reserve that the Treasury secretary has that is normally used to smooth out volatile movements in the value of the dollar in currency markets.

Treasury has also been taking investments out of a $65.3 billion government pension fund known as the G-fund.

Officials have said that once the debt limit is raised, the investments taken out of the pension funds would be replaced and any lost interest payments would be made up. The formal title for the G-fund is the Government Securities Investment Fund of the Federal Employees Retirement System.

Democrats hope to use the upcoming congressional debate over raising the debt limit to highlight what they see as the failings of the administration's economic program with its emphasis on sweeping tax cuts.

An actual default on the debt, a situation when the government misses making payments to current bondholders, is a doomsday scenario considered highly unlikely given what it would do to the government's credit rating.

It is expected that after intense debate, Congress will approve an increase in the current $8.18 trillion debt limit by perhaps $781 billion.

But Rep. Charles Rangel, the top Democrat on the House Ways and Means Committee, said Monday that any further increase in the debt limit should be tied to legislation that would get future deficits under control.

"Simply raising the limit on George W. Bush's credit card and crossing our fingers won't solve anything," Rangel, D-N.Y., said in a statement. "Any long-term debt limit increase must be accompanied by a serious effort to bring our budget back to the balance we achieved under the Clinton administration."

Treasury Department spokesman Tony Fratto said it was critical for Congress to act before leaving for a spring recess on March 17. He said Snow planned a number of meetings with lawmakers this week to discuss the urgency of taking action.

The administration has sent Congress a budget that on paper would cut the deficit in half by 2009, the year President Bush leaves office.

But Democrats contend the administration met its deficit-reduction goal only by leaving out major spending items such as the full costs of the Iraq war. They say the deficit will not improve unless Bush abandons his effort to make his first-term tax cuts permanent.

Sen. Max Baucus, D-Mont., said last week that under President Bush the total of the deficits has increased by $3 trillion, a 40 percent increase from where the national debt - the total of previous deficits - stood when Bush took office in January 2001.

The average diesel fuel price paid by truckers increased 7.4 cents to $2.55 a gallon, up 38 cents from a year earlier and the most expensive since November 14, the EIA said.

The rising pump prices arrived as the busy spring driving season gets under way. They reflect expensive crude oil based on traders concerns about potential disruptions in world crude oil supplies.

U.S. crude oil, which accounts for about half the cost of making gasoline, fell on Monday after OPEC members signaled they would not cut oil production levels when the cartel meets this meek.

Crude for delivery in April fell $1.26 to $62.41 at the New York Mercantile Exchange.

In the EIA's latest weekly survey, the West Coast had the most expensive gasoline, with the price up 3.9 cents at $2.42 a gallon. Los Angeles topped the survey of cities, with gasoline up 5.6 cents at $2.51 a gallon.

The Gulf Coast states had the cheapest gasoline at $2.25 a gallon, up 9.3 cents. Among major cities, Houston had the best deal at the pump, but it was still up 3.5 cents at $2.14 a gallon.

The EIA report also showed prices, rounded to the nearest penny, up 19.1 cents at $2.46 in Chicago; up 4.8 cents at $2.41 in Miami; up 16.2 cents at $2.38 in Cleveland; up 3 cents at $2.30 in New York City; up 5.7 cents at $2.28 in Seattle and up 3.8 cents at $2.21 in Boston.

Truckers on the West Coast paid the most for diesel at $2.71 a gallon, up 8.8 cents from last week. The Gulf Coast states had the cheapest diesel at $2.50 a gallon, up 5.6 cents.

THE CIA CONNECTION: The CIA is investigating "the connection between the agency's No. 3 official and a co-conspirator in the bribery case of former Rep. Randy 'Duke' Cunningham." That official, Executive Director Kyle "Dusty" Foggo, "is a lifelong friend of Poway defense contractor Brent Wilkes," the federal contractor who "gave Cunningham $630,000 in bribes in exchange for federal contracts," according to court documents. (According to the American Prospect, the pair "named their sons after each other and share a private wine locker at Washington’s Capital Grille restaurant.") The CIA "is investigating whether Foggo helped Wilkes gain CIA contracts." According to several CIA officials, "Wilkes has several CIA contracts, ranging from providing CIA agents with bottled water and first-aid kits to performing unspecified work in Iraq." (The CIA budget is secret, so it's impossible to know precisely how much business Wilkes is doing with the agency.) Wilkes has even "set aside an office next to his executive suite where Foggo could work when he leaves the CIA."



THE KATHERINE HARRIS CONNECTION: Defense contractor Mitchell Wade has admitted "to lavishing more than $1 million in cash, cars, a boat, antiques and other bribes on convicted Rep. Randy 'Duke' Cunningham." He also funneled $32,000 in illegal donations to Rep. Katherine Harris (R-FL). Harris initially told Sarasota Herald-Tribune reporter Tom Lyons, along with other journalists, that "she didn't have any idea" why employees from Wade's company, MZM, donated the money. She insisted "all those MZM-connected people -- who didn't live in Florida and whose $2,000 checks arrived in bundles -- just liked her stands on the issues and wanted to see her re-elected." But Wade's plea agreement revealed that he took Harris "to dinner at a Washington, D.C., restaurant, Citronelle, and asked her to help the company get a defense contract." (Talking Points Memo notes "the restaurant's prix-fixe menu starts at $85, well over the Congressional $50 gift limit.") A source told the Washington Post that "Harris made such a request for funding, but it was not granted." Lyons' take: "Let's not make this fuzzy: U.S. Rep. Katherine Harris lied." (More on the Harris connection here.)



THE JOHN DOOLITTLE CONNECTION: Rep. John Doolittle (R-CA) has acknowledged that he "helped steer defense funding, totaling $37 million" to PerfectWave, a company run by Brent Wilkes. PerfectWave "officials and lobbyists helped raise at least $85,000 for Doolittle and his leadership political action committee from 2002 to 2005." Doolittle has "written to U.S. Attorney General Alberto R. Gonzales asking to be investigated." He claims that the criticism is being generated by a conspiracy of "labor union bosses, radical feminists and extreme environmentalists."



THE DUNCAN HUNTER CONNECTION: House Armed Service Committee Chairman Duncan Hunter (R-CA), "perhaps Cunningham's closest friend in Congress," helped companies that have employed Wilkes -- ADCS Inc.and Audre Inc. -- secure over $190 million for a system to "convert printed documents to computer files" that the Department of Defense (DoD) said it didn't need. (This included "a $9.7 million contract for ADCS to digitize historical documents from the Panama Canal Zone that the Pentagon considered insignificant.") A 1994 report from the General Accounting Office noted that the DoD "already had the tools for such work."  The San Diego Tribune notes, "Cunningham, Hunter and their House allies didn’t care. Audre and ADCS were generous with contributions – and ADCS executive Brent Wilkes allegedly was bribing Cunningham." The Tribune concludes, "This isn't governance. This is looting." (Hunter has also "faulted federal prosecutors" for being too tough on Cunningham.)



THE JERRY LEWIS CONNECTION: Wilkes also employed a lobbyist named Bill Lowery, paying him about $200,000 between 1998-2000. What did all that money buy? Access to House Appropriations Committee chairman Jerry Lewis (R-CA). According to a three month investigation by Copley News Service, Lewis "has greenlighted hundreds of millions of dollars in federal project for clients" of Bill Lowrey. Meanwhile, "Lowery, the partners at his firm and their clients have donated 37 percent of the $1.3 million that Lewis' political action committee received in the past six years." Copley reports, "[T]he essential ingredient in the Lew-Lowery relationship is earmarking, the congressional practice in which special projects, sometimes derided as 'pork,' are slipped quietly into the federal budget without public review." Virtually every client who has signed up with Lowery in recent years "cashed in with earmarks." Lowery was also tight with Cunningham, paying the staff's $1,800 bill for its 2001 Christmas party at a fancy Washington, D.C. restaurant.

 

Bush said the 1998 court decision "should not be the end of the story," and said the legislation he offered to Congress was crafted in a way to satisfy the court's concerns.

"By passing this version of the line-item veto, the administration will work with the Congress to reduce wasteful spending, reduce the budget deficit and ensure that taxpayer dollars are spent wisely," he said.

Senate Majority Leader Bill Frist, a Tennessee Republican, said he would introduce the bill.

In striking down the Clinton-era line-item veto by a vote of 6-3, the Supreme Court said Congress was not authorized under the Constitution to hand the president that power.

The White House said its proposal would differ from that 1996 law, which allowed the president to reject specific spending items after a bill was passed by Congress.

Under the Bush proposal, the president would propose getting rid of items he considered wasteful and then send the package back to Congress. Congress would have 10 days to hold an up or down vote on the package of proposed changes.

"With this proposal, I think the responsibilities of the two branches would be well balanced in that the president would have the ability to line out an item, but only with the approval of a majority of Congress," White House budget director Joshua Bolten said.

Democrats, who have criticized Bush's tax cuts as fiscally reckless, said a line-item veto was no panacea for deficits.

"The Bush administration has spent us into record deficits and piled mountains of debt onto our children," House Democratic leader Nancy Pelosi of California said. But she added, "budget experts agree that the line-item veto would do little to control deficits."