The Catholic University of America
Jul 17 2012

Pitiful Job Numbers—Oh, What a Surprise!

Posted by Ernest Zampelli at 10:09 AM
1 comments
- Categories: Economy

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.

Comments

Steve McKenna

Steve McKenna wrote on 07/17/12 12:27 PM

The trick is to be able to persuade the public that this is the only sensible solution, and it will seemingly take some rhetorical magic to do that. Paul Krugman has been making this argument for a long time, gaining little traction but with the choir. Obama should be voicing it in connection with his current attacks on Romney's job-outsourcing, job-killing history as a businessman, but it seems that "stimulus" has been successfully quarantined as bad word. Another problem is that making this argument goes against the kind of simplistic economic (non-)thinking the right exploits on the issue: "Gee, when your family is in financial straits, what do you do? Decrease spending and pay down debt! It's a no-brainer!" Indeed. And of course the right is quick to harness stimulus to the specter of intrusive big government. It's often been said that the Republicans would rather see Obama fail than the country succeed, and I think this issue shows, sadly, that it is all too true.

The media too work against intelligent public discourse on the issue: for every economically literate person who comes on the air to advocate this position, there will be trundled out, in the name of "balance", an economic know-nothing to carry the Republican banner, and the pseudo-debate will be treated as if both sides are equally legitimate. I think the only way for Democrats and others to make inroads against that problem is paint the rhetorical deception campaign as the unethical thing it is--that is, shift this pseudo-debate out of an amoral economic register, in which one is unlikely to persuade those with economic interests in the Republican agenda, to one of morality.

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