Here's the key takeaway from President Obama's jobs talk on Monday: It's too little, too late.
Obama proposed an unspecified amount of new spending on infrastructure projects, more tax breaks for small businesses and a "Cash for Caulkers" program that would offer tax incentives for making homes more energy efficient.
It's wonderful that the president is finally addressing the jobs crisis directly. And the programs he's pushing are pretty smart. But much bolder action is needed.
What's needed are some Big Ideas -- the kind that make people stand up and take notice. The kind that announce to the American people that the government is now coming to their rescue, after having saved Wall Street.
Things like a new federal jobs program, so that the otherwise unemployed continue working on publicly valued projects. Or some massive new financing authorities that would assure a constant, multi-year supply of funding for infrastructure projects, and green jobs. Or a major conservation and revitalization initiative, particularly targeted at urban blight and foreclosed properties. Or a payroll tax holiday. Or a few ambitious public works projects.
Deficit hawks should just chill -- because in the long run the only way the U.S. will reduce the deficit is by growing our way out of it. And in the post-Bubble economy, we're looking at a new growth model in which government investment has to play a major role.
Why the need for something so big? Because the magnitude of the crisis requires it, of course. The pain across the country is extraordinary. And politically, Obama really needs to change people's perceptions and attitudes in a hurry. That's even more important for Congressional Democrats, who are increasingly panicked at the prospect of being thrown out of office in 2010 by voters enraged over the lack of jobs.
In the post-crisis mindset, with unemployment at levels that were unthinkable a year ago, and hundreds of billions being moved here and there for the sake of corporate interests, nothing small is going to register.
And impressions may be the only thing Democrats can in fact change before November 2010 -- because actually lowering unemployment by then simply may not be possible.
The economists I take seriously almost unanimously expect the unemployment rate to get higher, not lower, in the coming months, and not abate much if at all before the elections -- pretty much no matter how much the government tries to do in the interim.
When I met with Larry Mishel, president of the Economic Policy Institute, and Mark Zandi, chief economist at Moody's Economy.com, a few weeks ago, Zandi told me that he's projecting a 10.7 percent average unemployment rate in the third quarter of 2010.
"It's hard to see how we don't hit something close to 11 percent," he said. And that's already assuming Congress takes further action of some kind to stimulate a recovery.
"It's going to be incredibly difficult to change the dial for next year," Zandi said.
Mishel said Zandi's predictions are seriously bad news for congressional Democrats. "If what he's saying is true, they're cooked," Mishel told me.
Ramping up government programs takes time. Even what economists generally agree is the most efficient, fastest-acting way to address the unemployment problem -- increasing aid to state and local governments -- still has a considerable lag time.
"It's very quick. If you want to do something that actually helps right away, it can," Zandi said -- before qualifying what he meant by "right away": "What we're talking about here is really going to hit in late 2010, early 2011."
Mishel said he thinks the benefits of massive federal aid to state and local governments would be felt faster than that. "I'm personally more optimistic," he said. State and local governments, facing staggering revenue shortfalls, are preparing to make massive cutbacks and layoffs even now. A federal commitment to send, say, $150 billion their way could therefore forestall major layoffs that would otherwise start as early as spring, Mishel said.
But Mishel's "optimistic" scenario exposes one of the problems with the aid proposal: it doesn't actually create jobs so much as prevent even more from being lost. "I view it more as defensive stimulus," Zandi said.
And preventing millions of additional layoffs, while important, is not the job creation measure the public is hungering for. Furthermore, it's not even an easy sell, politically, as members of Congress aren't eager to cede money and power and credit to state and local officials, especially if those officials are from the opposite political party.
According to Democratic pollster Stan Greenberg, the signs are clear that jobs will be the single biggest issue in the November 2010 elections. "Unemployment and jobs are the main drivers of the mood," Greenberg told me, pointing to the results of a November Democracy Corps poll. "What happens with unemployment will have the biggest impact in the election. And it's very clear from this that people prioritize efforts to create jobs over everything else -- with great intensity."
Then again, there may be another, even more important message in the poll results.
Asked what upsets them the most about how our leaders are handling the economy, voters' top issue is actually not that "not enough being done to create jobs" -- that comes in sixth. What most upsets them is this: "Big banks and Wall Street getting handouts while nothing is done for working Americans."
It's that contrast that could doom Democrats in 2010 -- and along with them, what's left of the Obama agenda.
Should an angry electorate actually throw out the bums who failed to rise to the challenge of unemployment, however, the bitter irony is that they would most likely end up putting in power people who would do even less about it, rather than more.
As New York Times columnist Paul Krugman warned last month: "The longer high unemployment drags on, the greater the odds that crazy people will win big in the midterm elections -- dooming us to economic policy failure on a truly grand scale."
The White House seems to think that the biggest economic danger ahead is a loss of investor confidence, so Obama is shying away from anything that could be seen as dramatically increasing the deficit. But a much stronger case can be made that a weak labor market is what poses the real danger -- especially if combined with a Republican resurgence fueled by the very people whom Republican policies damage the most.
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