Today a number of bloggers sat down with the vice president's economic adviser Jared Bernstein to talk policy on the one-year anniversary of the American Recovery and Reinvestment Act. Bernstein, who was a senior economist at the Economic Policy Institute prior to joining the administration, represents a progressive voice in the White House economic team."This act, in the sense of recovery, really did bring us back from the brink," Bernstein said. "Year two has to be about making the investments to set this business cycle expansion, this new nascent expansion, up to be a very different one from the last one, one that brings the middle class along with it."
Bernstein mentioned investments in clean energy manufacturing, infrastructure, education, broadband, health care, and information technology as keys to this effort.
Given forecasts that even with a new jobs bill unemployment will still hover around 10 percent at the end of this year, I asked Bernstein why further policy efforts aren't being proposed to deal with the problem. Whether or not Congress will pass such efforts, doesn't it behoove the White House to describe policies that might lower the unemployment rate faster?
"The president has been extremely forceful in stressing steps that need to be taken moving forward with the Congress to get that unemployment rate going down," Bernstein said:
It's not acceptable, which is exactly why we're advocating the steps I just mentioned. In a world of budget constraints, in a world of political constraints, in a world where there still is a great deal of recovery act to spend out. ... You can never forget the tide that we're pushing against here. The depth of the recession that met us at the door. In my lifetime, as someone who's followed these numbers and trends closely, I've never seen employment contracting over 2 million jobs in one quarter. Turning back that tide is going to take some time. This is an economy that hemorrhaged over 8 million jobs, and there is no conceivable government program that could fill that hole. There is a program, and it is this one, that has helped to offset some of that, and we'd like to do more.
The mention of political constraints was telling. While an ideal policy might do a better job fighting unemployment, skittish Democrats in Congress -- particularly the Senate -- have been their own worst enemies by refusing to adopt bolder policies. Obstructionist Republicans and the difficulties of moving vast sums of money through the economy have also slowed jobs-building efforts.
Bernstein seemed frustrated -- and rightfully so -- that media coverage of the stimulus has focused on relatively minor reporting problems and partisan bickering rather than the program's success in easing the recession and creating jobs. He argued for more focus on the real impact of the bill, like this highway project that was praised by Republican Rep. Cathy McMorris Rodgers despite the fact she voted against the bill or the teachers who remain in their classrooms thanks to stimulus funding.
And, despite concerns from the bloggers that the administration's budget had bought too much into conservative framing about short-term deficits, Bernstein defended the White House's Keynesian approach.
"In the short term, temporary programs targeted at lowering the unemployment rate are actually much better for your budget deficit than doing nothing; in other words, the budget deficit would be far deeper if we simply allowed the unemployment rate to go higher and the economy to remain in recession," he said.
-- Tim Fernholz
