President Obama's jobs speech was the right narrative and the right tone. It suggested a president who was a capable leader in a crisis, who gets America's pain. He also boxes in the Republicans -- and by offering a plan that includes elements that many Republicans support, he makes it much harder for them to oppose it.
Progressive critics who were waiting for President Obama to sound a more urgent note on jobs were happy to treat the speech with generosity. The Times' Paul Krugman called it "significantly bolder and better than I expected." http://www.nytimes.com/2011/09/09/opinion/setting-their-hair-on-fire.html
Demos President Miles Rapaport called the speech "the narrative we've been waiting for," adding the caveat:
The overarching question I asked myself after the President's speech concluded was 'Can he, will he, hold this theme?' Can he keep his focus clearly on investing in the future, and not sink back into the deficit and austerity culture where the opponents of government want to drag both him and us?
AFL-CIO President Richard Trumka called on Americans to urge Congress to pass the bill but added:
The plan announced by President Obama to create jobs is only the opening bid in a national conversation we've needed to have for a long time. In the coming weeks and months, we expect to see more proposals from the president and Congress to put America back to work.
And this has it exactly right. For the question remains whether the medicine is strong enough to lift the economy out of a prolonged deflation.
The White House emphasized that the proposal was even larger than the number leaked last week -- some $450 billion compared to the $300 billion originally leaked to the press, though that figure is slippery. It includes some $167 billion that would merely extend current forms of government stimulus -- unemployment compensation and the partial payroll tax holiday.
It counts other outlays that are due to be enacted anyway, such as the reauthorization of the transportation bill. In addition, some of the spending, such as the proposed infrastructure bank, would not bear fruit until after 2012.
So a more reasonable figure is about $200 billion in real new spending in the next year, in a roughly $15 trillion economy. Most expert commentators concluded that this could reduce unemployment by about one percentage point from what it would otherwise be. That's not nothing, but it is not enough, especially with the economy heading back in the direction of recession.
EPI put out a good quick summary of the likely effects of the program, if all of it is enacted.
But although Republican leaders indicated that they might go along with some of it, they made clear that they will oppose much of the bill unless the new outlays are offset with other cuts (which of course defeats the whole purpose). House Majority Leader Eric Cantor said that while he liked some of Obama's proposals, his intent was to "peel off those parts and vote down the rest."
So economically, Obama is left with a plan that will help, but not enough. And politically, he has set the stage for clarifying his differences with Republicans on terms that should favor Democrats. That's a good first step, even a potential political turning point. Now the president has to take several more.
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