Democrats don’t really have a good way to spin the poor May jobs report and the stall speed of the latest attempt at recovery. I thought Alan Krueger, the Chairman of the Council of Economic Advisers, was fairly restrained in his remarks. But Krueger also hints at what the Administration and other Democrats brought up, that we’re living under divided government, and Republicans must shoulder some of the blame for not agreeing to things like the American Jobs Act, to accelerate the pace of recovery.
In a trip to a Honeywell factory in Minnesota Friday, Obama responded to the dismal news with a speech demanding Congress take action on a variety of measures, including infrastructure investments and aid to state and local governments to prevent teachers, firefighters and police from being laid off, that Republicans have thus far opposed [...]
“Look, we can’t fully control everything that happens in other parts of the world — disturbances in the Middle East, what’s going on in Europe,” Obama said, “but there are plenty of things we can control here at home. There are plenty of steps we can take right now to help create jobs and grow this economy.”
White House officials reinforced the message throughout the day. Labor Secretary Hilda Solis appeared on CNBC, warning that “Congress needs to take action” to accelerate job growth. Alan Krueger, chairman of the Council of Economic Advisers, released a statement urging Congress to pass more components of the president’s American Jobs Bill that he announced last year.
There’s no question that we would be in a better place now than we are if the American Jobs Act passed in full. There’s also no question that we PASSED a substantial portion of the American Jobs Act when we passed the payroll tax cut and unemployment insurance extension earlier in the year. Both of those were in the $450 billion AJA, and those two elements totaled around $160 billion (around $28 billion for the initial two-month extension and $130 billion in the year-long extension), the majority of it not paid for. So we did get that pop into the economy, though it obviously wasn’t enough. When Jared Bernstein says that, as a nation we failed to take out “recovery insurance” by letting those other stimulus measures sit, he’s right, but we should acknowledge that 35% of the American Jobs Act, in dollar terms, was passed.
What ended up passing, furthermore, included something from the President’s proposal that has ended up causing hundreds of thousands of long-term jobless to lose unemployment benefits in a bid to reduce the costs of the program on the government.
In addition, it’s not like the President has foregrounded the infrastructure and state fiscal aid pieces of the American Jobs Act much since late last year. He has a “To-Do List” out now for job creation that consists of mainly tax breaks for businesses and expanding home refinancing options. You’ll notice that the aforementioned Jared Bernstein’s to-do list bears no resemblance to this. The American Jobs Act is a memory, there’s an election campaign on, and we’re not going to hear anything else about stimulus or a jobs crisis.
Just to echo Bernstein, we do need fiscal stimulus, we do need to get unemployment benefits back to the long-term jobless, we do need to avoid automatic budget cuts at a time of depressed demand, and most important given the realities of Congress, we do need the Federal Reserve to do their jobs:
The Fed needs to step up. I know…I’ve argued there’s not a lot monetary policy can do on its own right now. My point is that interest rates are already low, investors are pretty flush with cash, and anyway, investment is the one part of GDP that’s been pretty reliably growing. Still, all that said, another round of quantitative easing is called for. After all, the FOMC themselves have been saying that if things get worse, they’ll pull that trigger. Well, things are worse.
This is a light version of what economists say is necessary. Some have argued that the Fed needs to set an expectations game on inflation, accepting a higher target to boost employment growth. Others would say it’s time to give the money printer a run. The point is that the status quo is a miserable failure, and the Fed needs to act as an independent body and follow their mandate.
Basically every policymaker in Washington is failing to serve the American people. We’ll see finger-pointing for the next several months, but that’s the truth of the matter.