PLANK JULY 6, 2012
It was this time last month when the president committed his infamous “private sector is doing fine” faux pas. To Barack Obama’s defenders, it was a classic Washington gaffe, in which a public figure utters a true but nonetheless impolitic remark. And, on some level, there was a fair amount of truth to it. Obama’s point was that the real drag on the economy isn’t the private sector, which has steadily added jobs over the last few years, but the public sector, which has continued to shed them at an alarming pace. As long as governors and mayors keep laying off teachers, firefighters, and cops, the president was saying, it's hard to see how the recovery can get its legs. And, unfortunately, Republicans have consistently blocked his proposals for reversing this trend.
As I say, there’s more than a bit of truth to that. Still, if there’s one thing that really jumps out at you in today’s jobs report, it’s that the private sector isn’t doing so hot after all. In June, private employers added a mere 84,000 jobs. They added 105,000 jobs the month before, and 85,000 the month before that. To put this in some context, the economy needs to add about 100,000 to 150,000 new jobs each month just to keep up with population growth; the private sector has averaged 91,000 over the past three months. Which is to say, even if government job losses weren’t weighing us down, we'd still be struggling because the private sector has been pretty damn anemic.
The upshot is that we’re no longer in a world where sending states a few tens of billions of dollars to shore up their finances is going to get the recovery on track. The economy, by which I mean the private sector, is disconcertingly weak, and strengthening it is going to take something on the order of several-hundred-billion dollars.
The good news is that Obama actually has a plan of roughly that magnitude—the $450 billion American Jobs Act he proposed last September, replete with new payroll tax cuts and additional aid for the unemployed. The bad news is that, in the vein of his “private sector is doing fine” comment, we’ve heard remarkably little about this package in recent months. I’m not sure if that’s because Team Obama believes focusing on it would draw attention to how fragile the economy is at an inconvenient time in the political cycle. Or because, after three plus years of intransigence, Obama has calculated that Republicans aren’t going to abruptly drop their deal-breaking opposition. But, regardless, I think it’s the wrong strategy. One theme that runs through numerous White House missteps these last few years is the impulse to game out what the political constraints will allow, then proceed within them, rather than start with the optimal policy and fight for as much as they can get. (The major exception was the Jobs Act … before it was shelved.) But with the unemployment rate stuck above eight percent only four months before Election Day, maybe the latter is worth a shot. Sometimes good policy really is the best politics.
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