JONATHAN COHN AUGUST 5, 2011
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.