JONATHAN COHN AUGUST 5, 2011
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The jobs report is out and it exceeded expectations. But that’s only because expectations are low.
The economy added a total of 117,000 jobs last month, which is about 30,000 more than analysts were predicting and, no less important, about 100,000 more than the economy created the previous one. But 117,000 new jobs is more or less what it takes for the economy to keep pace with population growth. So the problem isn’t getting worse but it isn’t really getting better, either. The unemployment rate fell to 9.1 from 9.2 percent, but that's partly a product of so many people dropping out of the labor force because they can't find work. The overall percentage of Americans working actually fell from 58.2 to 58.1 percent, which, as Neil Irwin of the Washington Post notes, is the lowest level since the early 1980s.
Maybe we’ve avoided a double-dip recession, although maybe we haven’t. Either way, the economy remains weak – and way too many people are out of work. That's a real crisis and, sadly, it's a manufactured one.
In a revealing exchange during Wednesday’s White House briefing, ABC’s Jake Tapper asked Press Secretary Jay Carney “Other than calling on Congress to pass things that you’ve been calling on Congress to pass for months, what is he doing to help the economy?” Carney responded, first, by saying that “He is working very closely with his senior economic advisors to come up with new proposals to help advance growth and job creation.” These sorts of exchanges are standard fare in politics, but let’s be clear: The problem isn’t a lack of new ideas for job creation. It’s a lack of action on the old ones.
We should be extending unemployment insurance, renewing the payroll tax holiday, and financing public works with an infrastructure bank. We should also be writing a big, fat check to the states. Talking heads like to say that government can’t create jobs but that is nonsense. It can create them and it can destroy them. Lately state and local government have been doing the latter: This month’s jobs number would be a lot higher if payrolls for state and local governments hadn’t shrunk by 37,000.
Congressional Democrats have championed these ideas, or versions of them, ever since the downturn began. So has Obama, although it’s fair to ask, as Tapper also did, whether the administration could be promoting the ideas more fervently and relentlessly. But the primary obstacle here is the Republican Party, whose members continue to insist that the problem with the economy is too much spending.
Of course, polls suggest the public largely agrees, which is why enacting programs to create jobs has been, and will continue to be, so difficult. But maybe the debt ceiling deal creates a new opening. Many liberals have suggested the best outcome would be for the new super-committee to recommend a “grand bargain” that reduces deficits with a mix of spending cuts and tax increases. But maybe it would be better to leave tax increases out of it, since the Bush tax cuts are set to expire after 2012 anyway, and construct an agreement that matches long-term deficit reduction with short-term deficit spending to boost growth.
No, that’s not really a new idea, either. But it’s a good idea. And that’s really what we need right now.
14 comments
As long as the public continues to think there's too much spending, it will be impossible to win this battle. Maybe it would be best for Republicans to win in 2012, so the public can have the budget slashing they think they want.
- GSpinks
August 5, 2011 at 10:23am
I like the idea of an infrastructure bank and new public-works projects, because that at least accomplishes something concrete. But I'm increasingly against unemployment insurance extension because it's pretty obvious it dissuades people from seeking new jobs or getting re-training. If the government would instead use some of the unemployment insurance money to pay for community college classes or other training (if you don't enroll, you don't get a check), that would be a much better use of the money.
- polcereal
August 5, 2011 at 10:36am
- Great, good ideas. Pass it on to Boehner and McConnell, the Idea Team. And read what the other Jonathan wrote today: "When the only thing you can do about the economy is both unpopular and D.O.A. in Congress, there just aren't a lot of tools available."
- michaelg
August 5, 2011 at 10:38am
http://www.nytimes.com/2011/08/05/us/politics/05poll.html?_r=2&hp sorry to post this link everywhere. but it definitely looks like Obama has an in for drumming up popular support for another round of stimulus. It should, of course, include an increase in the debt limit so we don't have to have that discussion again.
- GSpinks
August 5, 2011 at 11:13am
- Spinks, if Obama is going to have any breathing room for goosing the economy it may not come from inside DC or voter pressure (before next year). Businesses are stuck without demand from more workers who make stuff and build stuff. And the US is a better or easier market to jolt than many places. I expect companies who build things and make stuff will make the case for federal cash to get the ball rolling, they can get it.
- michaelg
August 5, 2011 at 11:30am
michaelg, I totally agree. Republican intransigence is at an all time high. It's up to the people; but Republicans are good at rewriting popular opinion to support their own arguments, which means it's up to the special interests and corporations the Republicans can't steamroll with their propaganda machines.
- GSpinks
August 5, 2011 at 12:32pm
I think unemployment benefits should be reformed, too. A new paper from Fed. economists found that extended unemployment benefits are pushing up the unemployment rate by as much as .8% We have to be realistic about public sentiment and GOP's hard lines. 1. We need to extend and deepen the payroll tax cut, implement work-sharing as AEI and CEPR endorse, and above all...mortgage modification. 2. Obama should take the advice of Matt Stoller and Brad DeLong on Fannie and Freddie. Obama can do this without the GOP standing in his way, so he should it. It's time to end this "timid incrementalism" as Mr. Vital Center and TAP have called it on housing.
- darklayers
August 5, 2011 at 1:38pm
This improvement in the employment situation will be very worrisome for the Republicans. If it continues, they'll have to develop some new strategies for throwing more people out of work. The unemployment rate simply MUST be kept at 9 percent or higher until November 2012.
- DAVIDDREIER@EARTHLINK.NET-old
August 5, 2011 at 5:07pm
Is it true that Obama refuses to touch? "...$128 billion in unspent stimulus funds, education and training outlays, his $53 billion high-speed rail proposal,..." because it seems to me that there is enough money there for the Infrastructure Bank, which should have been in the original Stimulus bill of 2009. ROFL about mortgage modification since my most recent phone call with Bank of America - all they want is the $1500 handout from Obama's Making Homes Affordable program, NOT to actually lower my interest rate so I can re-invest the money into protecting the value of my house.
- K2K
August 6, 2011 at 10:04am
the reality???? "...against unemployment insurance extension because it's pretty obvious it dissuades people from seeking new jobs or getting re-training ..." When I was on extended unemployment in 2001 after a 25 year career that ended with ageism (at 49), I invested $30,000 of MY RETIREMENT SAVINGS for re-training, in GIS, and then a master's degree to teach social studies in the Bronx (while also trying to find a job and over same time, four small business ideas, after giving up on retraining for desktop publishing). Ageism (and reverse racism) trumped re-training investments of my OWN MONEY. What makes you think there are jobs just waiting for re-trained unemployed people over 50 today? We are garbage to Obama, who only talks about tuition help for young people.
- K2K
August 6, 2011 at 10:12am
The ageism thing is no joke. Yet, there is talk of raising retirement age to 67, raising the age of Medicare eligibility, so forth. Please oh great powerful leaders, give us a break.
- Sophia
August 7, 2011 at 2:27pm
Besides which: how many people are in real good shape even after age 50???? Some of us have worked so hard just trying to survive that by age 50 we're pretty beat up. Meanwhile, corporate profits are rising and rich Americans, who supposedly create jobs, are investing in Swiss francs. I don't believe this s***.
- Sophia
August 7, 2011 at 2:29pm
- Sophia, we can't discount actuarial evidence in forming social policy any more than denying the risk of natural disasters is smart urban planning. It's like, um, science? Some people do not live longer than they did when Social Security was conceived and not all cities need prepare for the 100 year event. Tell me when each person will become ill or die and which city won't see a disaster this century. That way people only need to buy insurance a day before they need it, some won't need a pension at all and we can build creaky structures in the safe cities. Yeah, more people are living longer and even more qualify for care that wasn't anticipated in the funding of Medicare. We can be thoughtful and compassionate but medicine and charity can't be irrational. It is not possible to address these issues fairly if we chose to not include longevity and cost of care.
- michaelg
August 7, 2011 at 4:59pm
As an architect, I would applaud an infrastructure bank and I know a lot of professionals and contractors in the building industry that would applaud such a move. It would put back to work the very skilled labor force that we need to rebuild the crumbling physical state of America. It would also mean that of those 9% that can't find work could find work in the building trades. It doesn't mean that folks like K2K would have to do concrete flatwork but someone who is educated could have a meaningful 2nd career doing project management, construction coordination, etc. The type of work that can't be outsourced to China or India. Retraining people in skilled trades that we've seen disappear over the last 50 some years. Skilled stone masons that can actually do quality brickwork, steel erectors that can actually weld, the list goes on and on. On one of my medium-sized school projects (a $7M renovation and addition to a 1950s school) you have upwards of over 200 tradespersons on a project. That excludes the engineers, general contractor, architects, owner representatives, inspectors, etc. It isn't so much a question of building all new things everywhere, but also repairing and rebuilding our nation from the foundation up. These are actual jobs that produce tangible benefits to the neighborhoods they occur in but also produce the quantifiable growth we need. Not the pretend jobs working in a server farm for Groupon or some other socially worthless social media start-up crap. But hey, until people start realizing that the only way to get back to being a 1st-tier nation and not the 2rd world nation we're slowly becoming is to actually reinvest in the nation. Simply playing lip service to "growth" and "jobs" with tax breaks and deregulation does nothing except accelerate the decline that we appear to be on.
- singlspeed
August 10, 2011 at 5:34pm