The President’s Jobs Initiative Doesn’t Measure Up

Barack Obama is trying once again for balance. On the one hand, he wants enough government spending to offset the timid spending of consumers and businesses. Otherwise, the jobs and wage recession could drag on for years. On the other hand, he doesn’t want to set off more alarm bells about the budget deficit. Otherwise, conservative Democrats might join forces with Republicans to block heath care. So what does he do? A little bit more stimulus spending, but stimulus spending that doesn’t look like more stimulus because it’s not really adding to the deficit. It’s coming out of savings from money already authorized to be spent on the bank bailout. Hmmm?

No president in modern times walks a tightrope as exquisitely as this one. His balance is a thing of beauty. But when it comes to this economy right now — an economy fundamentally out of balance — we need a federal government that moves boldly and swiftly to counter-balance the huge recessionary forces still at large.

States and cities, for example, are estimated to be $350 billion hole this year and next. They can’t run deficits so they’re wildly cutting spending, cutting jobs, cutting contracts, and raising taxes and fees. That’s a huge anti-stimulus package roughly as big as the remaining direct spending in the old federal stimulus package. Which means, Obama’s “new” stimulus, announced today, is about all we have, and it’s not nearly enough.

The word in Washington is we’re out of the woods. The rate of unemployment dipped from 10.2 percent in September to 10 percent in October. In our nation’s capital, a one-month trend marks a turnaround. Don’t believe it for a moment. The real story of October was the increasing number of Americans who dropped out of the labor force, too discouraged even to look for work.

Main Street is hurting worse than ever. Ten percent unemployment translates into roughly 18 percent of our workforce unemployed or underemployed. Housing markets are in terrible shape: One quarter of homeowners are paying more each month than their houses are worth; the rates of tardy mortgage payments continue to rise. Thirty percent of American households contain someone who has lost a job and can’t find another, and yet almost all households are dependent on more than one wage earner in order to make ends meet. A quarter of all American children are now dependent on food stamps.

There is no reason to tolerate this degree of misery. We know exactly what to do. The government has the fiscal tools to do it. Start by bailing out state and local governments (if Congress would prefer to call it a loan and require payback over the next five years, fine). Renew unemployment and COBRA benefits. Increase federal spending on infrastructure. If we have to, hire people directly. The package should be $400 billion over two years.

We don’t know exactly how much the President is proposing to spend, but sources tell me it’s in the range of $70 billion, redirected from the $200 billion in TARP savings. The President’s small, calibrated attempt to balance a stimulus with deficit reduction will in fact make the deficit worse over the long haul. It postpones the day when we’re back to near full employment, when almost all Americans who need a job get paychecks on which they pay taxes. This isn’t really balance at all. It prolongs the economic imbalance.

Originally published at Robert Reich’s Blog and reproduced here with the author’s permission.  

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3 Responses to "The President’s Jobs Initiative Doesn’t Measure Up"

  1. Guest   December 9, 2009 at 12:55 pm

    Obama is all about balance…walking the tight rope to “manage” all the intertwined issues. Healthcare reform efforts obviously are impacting economic policy. I’m not seeing the light at the end of the tunnel, and I keep hearing rumblings of a train. But, like most Americans, I am short sighted. It’s about now; jobs NOW! Where are the jobs? I mean good paying, raise a family, middle-class, I can send kids to college, and retire at a decent age (67ish) jobs! We are pissed at the financial industry excesses and “too big too fail” status. Without jobs, good jobs, this anger grows more intense. I am personnally much more acutely aware of my governmental representation (Senate and House) actions/positions than ever before. I plan on holding them accountable, and in particular…if stone walling (partisan politics) prevails. It need not take catastrophic circumstances for real positive change to take place in Washington. The price paid by main street America for partisan politics is far too great in dire times.

  2. Howard   December 9, 2009 at 9:05 pm

    How does 18% unemployed/underemployed translate to 30% of households with “someone who is unemployed”?Enough propping up of the public sector. They need some serious wage and benefit cutbacks, and probably fewer jobs. We’re not a communist country. Are we?Propose a policy to increase manufacturing and construction jobs, without creating another credit bubble. Can’t do it? Then we are in deep doodoo.

  3. Howard   December 11, 2009 at 7:13 pm

    To my point, check out this article: 19% of Federal employees make over $100,000 a year excluding bonus, overtime, or benefits, up from 14% before the recession started. Average Federal employee salary is 178% of average private salary!!!