Jobs Report: Beyond the Spin, A Human Catastrophe'
By Isaiah J. Poole
August 5, 2011
http://www.ourfuture.org/blog-entry/2011083105/jobs-report-human-catastrophe
Today's jobs report from the Labor Department should not
be spun as positive, even though at a net increase of
117,000 jobs it is better than the Wall Street
consensus. While the White House may breathe a sign of
relief that the numbers were not lower, one fundamental
reality does not change: The deficit reduction deal has
moved the nation in the wrong direction. We need, as
politically incorrect as it may be to say so, more
spending in the short term to put people back to work,
doing work that must be done to strengthen the economy
in the long run.
The numbers do not change the fundamental point that
Paul Krugman makes in his column today that "it's now
time - long past time - to get serious about the real
crisis the economy faces. The Fed needs to stop making
excuses, while the president needs to come up with real
job-creation proposals."
Consider one crucial measure, the ratio of
employment to population. In June 2007, around 63
percent of adults were employed. In June 2009, the
official end of the recession, that number was down
to 59.4. As of June 2011, two years into the
alleged recovery, the number was: 58.2.
These may sound like dry statistics, but they
reflect a truly terrible reality. Not only are vast
numbers of Americans unemployed or underemployed,
for the first time since the Great Depression many
American workers are facing the prospect of very-
long-term - maybe permanent - unemployment. Among
other things, the rise in long-term unemployment
will reduce future government revenues, so we're
not even acting sensibly in purely fiscal terms.
But, more important, it's a human catastrophe.
Today's jobs report comes on the heels of a global drop
in stock markets-evidence that austerity is not just
failing in the United States; it is failing globally.
Economist Dean Baker pointed this out in his reaction to
Thursday's 512-point drop in the Dow:
The debt problems hitting Ireland and Greece have
spread to two of the four euro zone giants, Italy
and Spain. The prudes at the European Central Bank
are going have to relearn economics very quickly.
Their cult of 2 percent inflation is bringing down
the house. They have come to the point where they
have to choose between abandoning the cult or
ending the euro. Naturally the prospect of the
dissolution of one of the world two main currencies
is going to unnerve the markets.
... Those still believing in the virtues of
government austerity also got a big kick in the
face last week. The UK had its third consecutive
quarter of near zero growth - the apparent fruits
of the austerity path put in place by the new
Conservative government.
The assessment that the debt deal signed by President
Obama-a deal that House Speaker John Boehner said gave
him and conservatives "98 percent of what we
wanted"-will kill job growth is near universal among
economic experts who deal in facts rather than right-
wing fancy. Jim Luke at EconProph notes: "J.P.Morgan
Chase Bank's research department, as representative of
Wall Street as any, says that overall with this deal,
government budget policy in 2012 subtract at least 1.5%
points from GDP growth rate in 2012. Since it takes at
least 2% growth in GDP to keep unemployment stable and
we haven't even had a single quarter of growth at more
than a 4% rate since the end of 2006, things look grim
for employment."
The Economic Policy Institute on Thursday released a
research report that concluded that the spending cuts in
the deal will reduce GDP by $43 billion in 2012,
lowering employment by roughly 323,000 jobs. Add the
impact of failing to extend the payroll tax cut and
emergency unemployment benefits beyond the end of 2011
and EPI calculates additional job losses of about 1.5
million. In other words, EPI concludes, the debt ceiling
deal will result in more jobs lost in 2012, relative to
current budget policy, than have been created since
employment bottomed in early 2010.
President Obama was scheduled to appear at the
Washington Navy Yard today to announce a proposal to
give employers tax breaks to hire the 1 million military
veterans who are currently unemployed.
Think about that for a moment. We have 1 million people
who fought in Iraq and Afghanistan who cannot find work
in this country. And we have to give tax breaks to
employers to encourage them to hire these soldiers who
defended this country? Give me a break.
What the nation needs to hear from President Obama is
how we are going to get the entire country back to work.
The first step is for the president to tell the nation
the truth: The extremists who have taken over the
Republican Party were allowed to drive the nation into
an economic ditch. And while we are in that ditch,
constrained by a deal that prematurely forces cuts in
government discretionary spending, we are not going to
be able to do what we must: Launch a set of immediate
initiatives designed to lower unemployment now and get
the economy moving. That would mean increasing spending
in the short term to build an economy with the capacity
to pay down debt in the long term. (The Campaign for
America's Future spells out the elements of an economic
growth and jobs strategy in this news release.)
The reality is that the deficit reduction deal will add
to a $1.3 trillion gap between the size of our economy
now and what the size of the economy would be if the
economy were growing at the rate it has grown
historically.
The fact that it may be politically unrealistic to
expect that the right policies will get through a tea-
party-besotted Congress does not mean that President
Obama, and progressives, should not be fighting for
these policies-because only by fighting for these
policies will we have any hope of making the politically
unrealistic politically attainable.
One step in that direction is a petition the Campaign
for America's Future is calling for people to sign. Part
of the debt deal is an ill-advised, 12-member
congressional committee that will make recommendations
on about $1.5 trillion in budget cuts. We can insist
that the Democrats on that committee be progressives
like Sen. Bernie Sanders and Reps. Keith Ellison and
Raul Grijalva, who have argued forcefully for a jobs-
first economic policy and for asking millionaires and
billionaires to do their fair share for deficit
reduction.
Yes, 117,000 jobs is better than nothing. But when the
need is for the economy to produce at least three times
that for the next three years to begin to close the jobs
gap, we must demand a change of direction in our
economic policy, seizing the controls back from the
radical right and their appeasers.
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