Pitiful Job Numbers—Oh, What a Surprise!
Anyone who is surprised by the dreary June jobs report released earlier this month hasn’t been paying attention to what is and is not going on with regards to economic policymaking. No doubt we’ll hear from Romney, Boehner, Cantor, and McConnell about how this report, along with the last one, again shows that President Obama doesn’t know what it takes to create jobs, doesn’t know how the economy works, blah, blah, blah. Of course, suffice it to say that these four musketeers, along with most other Congressional Republicans, are themselves economic illiterates whose stale and tired mantra of reduced government spending and reduced taxes would make things worse instead of better. (And no, Romney’s business success doesn’t at all suggest any above average capability for managing a nation’s economy.) Here’s what should be done. Enact another round of short run stimulus, aimed at (1) stopping the hemorrhaging of jobs in the state and local government sector, primarily in education and public safety and (2) maintaining, improving, and modernizing the nation’s woeful infrastructure. These are the most effective policies to increase aggregate demand and stimulate faster job growth. Other things that might help, but not as much, are extending the payroll tax cut, the expensing of investment spending, and the extension of unemployment benefits.
So who’s going to have the good sense to put together and propose something like this? Uh, I don’t really, uh, oh? Well gee whiz, President Obama did last September. It was called the American Jobs Act and he’s urged Congress time and time again to pass it but to no avail. Why? Because according to the four musketeers and their compatriots, increased government spending is the problem not the solution; fiscal austerity is the answer, not fiscal stimulus. Read my lips. They are wrong, wrong, wrong!!! The economy is stumbling, interest rates are at or near zero, inflation is below target, and consumers are still deleveraging. It’s the President who has it right—fiscal stimulus is what’s needed now, especially in light of the Fed’s timidity in pursuing more aggressive monetary policy. Yes, there are structural problems. Yes, there’s a long run deficit problem. No, these are not reasons to reject another round of fiscal stimulus—that makes no sense!
What the President needs to do in response to the hammering he’s taking over the jobs numbers is to indict explicitly the Congressional Republicans’ refusal to take up and pass the jobs bill. Their intransigence on this, as on the first stimulus package, is nonsensical and unconscionable. They should be held accountable for it.