The nation’s employers added no new jobs in August, according to the Labor Department, adding pressure on President Obama to deliver a far-reaching speech next Thursday on a strategy to deal with persistent joblessness. However, all of the preliminary indicators, including White House leaks, suggest a very modest speech filled with cautious proposals that cost little if any new money and appeal to the prejudices of the business elite.
According to these leaks and other published reports, the plan will be heavy on items that Republicans might support, such as a payroll tax cut and a tax credit for businesses that create new jobs, as well as items that cost no new money, such as a national program modeled on Georgia Works, which induces jobless workers to take temporary private-sector jobs for no wages, if they include training. (This morning, the AFL-CIO sent a letter to Labor Secretary Hilda Solis, pointing out that this violates the federal minimum-wage law.)
In the August report, the number of long-term unemployed was basically unchanged at 6 million; likewise the nominal unemployment rate of 9.1 percent, and the expanded rate of 16.1 percent which counts people who want but can’t find full-time jobs. The job-creation numbers for June and July were revised downward by another 37,000 jobs.
The economy is clearly faltering back into recession, pummeled by falling wages, sagging housing prices, and a financial sector that likes to make its outsized profits by trading, not lending. The economy grew at a rate of just 0.7 percent in the first six months of this year, the slowest since it officially exited the recession in 2009.
“It is my intention,” President Obama said in a statement, “to lay out a series of bipartisan proposals that the Congress can take immediately to continue to rebuild the American economy by strengthening small businesses, helping Americans get back to work and putting more money in the paychecks of the middle class and working Americans, while still reducing our deficit and getting our fiscal house in order.”
But anybody who thinks that any bipartisanship is possible from the current Republicans is just delusional. When the August numbers appeared, the Republican talking points immediately began branding Obama, “President Zero.” Nice, bipartisan touch, that.
Obama would be far better advised to declare that the obstacle to measures that will heal the economy is wall-to-wall Republican obstructionism, and to put forward a plan that Republicans won’t pass—and then base his campaign on it. A good model of such a plan was just released by the Economic Policy Institute (I serve on their board).
The EPI plan would create 10 million to 12 million jobs. EPI supports a temporary payroll tax holiday and tax credits for firms that add jobs or increase wages—but also calls for direct federal job creation repairing infrastructure and promoting energy efficiency, as well as an extension of unemployment insurance, trade reforms, more expansive monetary policy, and mortgage relief. The price tag of several hundred billion dollars, which could be gotten from tax reform, would bring immediate Republican scorn—and signal to voters that the president is serious.
The latest employment report calls the question. Either Obama will continue letting Republicans call the tune, and kill his own capacity to achieve anything of significance—or he will make clear to voters the difference between him and his opposition. The early signs are not auspicious—and the stakes only grow.