Jobs, Mortgages, Food Stamps -- Where Is The President?

Where is President Obama?

Obama has been talking about a lot of things, lately. Like long-term structural changes to our health insurance markets, and cap and trade bills to address global issues of climate change. And of course there was the TARP bailout for the financial sector, the stimulus package, cash for clunkers, a whole raft of other things. Every so often there has been a White House summit: in fact, there have been eleven of them not counting the beer summit. Not to mention all the international summits and meetings, and let's not forget the Olympics.

Now, after eleven other summits, we are told it is time to have a summit to focus specifically on jobs. You think??

The administration and its cheerleaders insist that the first year has been a rousing success. Jacob Weisberg, over on Slate, cites pending health care legislation, the stimulus, and the reshaping of America's image abroad. The health care bill is important just because it will be passed; it doesn't matter if the bill isn't actually very good. On the stimulus, Weisberg quotes a McCain economic advisor as saying that without it unemployment would be over 11%. And on foreign policy ... well, he doesn't mention the Nobel Prize, but that's the basic idea.

All of which might be cause for celebration of the situation were less dire. But it is dire, and getting worse. Sunday's New York Times leads with a story about dramatic increases in the numbers of Americans who have to rely on food stamps. One in eight Americans uses food stamps today ... and one in four American children. In 2008 14.4% of American households experienced "food insecurity." That's 49 million people, among whom about a third experienced "very low food security." And that was when unemployment was at 7.2%, not 10.2%. But 10.2% is only the formal unemployment rate. If you include not only those collecting benefits but also those who are "discouraged" (no longer seeking work), those who are forced into part-time employment but want full-time employment, and so on, you get an effective unemployment rate of just over 17%.

The bailout was supposed to get credit flowing again, which was supposed to get small businesses back on their feet, which would then stimulate employment. It didn't work, because that's not what the banks chose to do with the money. Then there was the $787 billion stimulus; that was supposed to create jobs. It hasn't worked, either. Perhaps that shouldn't be surprising, as Obama's senior economic advisor seems to think that job-creation is a secondary concern to increasing GDP. "The primary objective of our policy," says Larry Summers, "is having more work done, more product produced and more people earning more income. It may be desirable to have a given amount of work shared among more people. But that's not as desirable as expanding the total amount of work." (Jared Bernstein, Vice President Biden's senior economic advisor, takes a different view.) Nonetheless, the administration claims that stimulus "created or saved" a million jobs. Even taking the administration's number at face value that clocks in at an average cost of $787,000 per job ... and almost no one takes the administration's number at face value, given its non-existent congressional districts and broad counterfactual assumptions.

The administration's mortgage program has been a near-total failure; no more than a few thousand mortgages have seen permanent modifications, while more than 14% of mortgages nationwide are either in foreclosure or delinquency, a number that climbs to one in four in places like Florida and Southern California. (What mortgage modifications there have been were directed at interest rather than principal and consequently do nothing to help people whose mortgages are underwater, which is a whole different problem.) The Treasury Department has just announced new efforts that will "include increased pressure on mortgage companies to accelerate loan modifications by highlighting firms that are lagging in that area" and providing cash incentives of $1,000 initially followed by $1,000 annually for up to three years for each mortgage that lenders permanently modify to lower monthly payments. It's almost funny, in a very black humor sort of way.

Today the mortgage problem and the unemployment problem are no longer separate issues. The Congressional Oversight Panel has concluded that today foreclosures have moved beyond the subprime mortgage market and are threatening homeowners who hold conventional, fixed-rate mortgages and put down solid down payments. The reason? Jobs. No jobs, no paychecks, no mortgage payments. In the words of one industry executive, "The subprime problem has regrettably morphed into an unemployment problem."

The problem all along has been that this administration tries to do everything indirectly, whether it's job creation, easing the credit crunch, or rescuing homeowners. Pour money into the banks and hope they start lending. Offer incentives to the banks holding the mortgages to refinance the interest payments. Hope that spreading money to states will stimulate demand which will then result in the creation of jobs. None of it has worked.

We've seen this indirect approach to job creation before: it was called the "trickle down" theory when Reagan sold it to us. Before that, Herbert Hoover had tried an indirect approach, too, the Reconstruction Finance Corporation was created to loan money to corporations in the hope that they would use it to create jobs. That didn't work well, either. You want people to have jobs? Create jobs, either by hiring people, or by providing money that private firms or local governments can only use to hire people. You want to save people's mortgages? Take over their mortgages. That was the New Deal approach. The WPA employed 2 million people on average, for a total of 8 million jobs at a total cost of $11 billion. The Public Works Administration spent $4.5 billion on construction projects that not only provided employment, they created an enormous amount of lasting value in the form of long-term investment in our national infrastructure. As for mortgages, 1/5 of all farm mortgages were held by the Farm Credit Administration, 1/6 of all home mortgages were held by the Home Owners' Loan Corp.

None of these things ended the Depression or solved the problem of unemployment, but they helped people. That's how you build approval ratings, and how you get political capital: from the bottom up. You establish the fact that you will help people, and then they support you when you tell them to follow your lead. Obama's approval rating is falling off a cliff: 48% overall, and a brutal 39% among White voters. When asked, voters say they would rather see the government cut the deficit. Why not, since most of them are not seeing anything gained by all the enormous spending?

People cannot focus on abstract, distant, complicated issues if they are afraid. It's not a new observation - Aristotle said it. People are afraid, and Obama is not addressing their fears. You can hear it any time you turn off the television. The voices saying: "The Nobel Peace Prize? Climate change? I don't have a job. I can't send my kids to college even if I can figure out what they are going to have to eat at the end of the month ... I voted for you. $2 trillion in bailouts and stimulus packages and 2,000 page health care bills and Asian trips and beer summits with Harvard professors ... I voted for you. Are you kidding me??"

You know what? Those voices have a point. We're the Democratic Party, dammit. Jobs and mortgages are supposed to be what we are about. Sure, there are lots of other things - big, historic, legacy-building, global things - but that's where we start, jobs and mortgages. That's who we are supposed to be.

I don't know whether it is too late, but it is very, very late in the day. Mr. President, where are you?

 

Comments

[D Bruce]

I don't understand why everyone thought the stimulus would work in the first place. It was totally based on the socialist concept that government creates jobs by placing money into circulation. Germany tried the same thing during the depression and it resulted in hyper inflation. This is not trickle down economics, concurrent tax cuts and credit would have been necessary for it to even come close to that and would still fall short. What it was and still is, the basic lack of understanding of capitalism and the current financial system. It is financial spam, throw it and see what sticks. And if that doesn't work, just hold a summit, at least that will make it look like you are doing something. Then after about ten of these worthless boring meetings, just have a beer summit, that way you can at least get a buzz and break the monotony.

[D Bruce]

I don't understand why everyone thought the stimulus would work in the first place. It was totally based on Marxs' concept that government creates jobs by placing money into circulation. Germany tried the same thing during the depression and it resulted in hyper inflation. This is not trickle down economics, concurrent tax cuts and credit would have been necessary for it to even come close to that and would still fall short. What it was and still is, the basic lack of understanding of capitalism and the current financial system. It is financial spam, throw it and see what sticks. And if that doesn't work, just hold a summit, at least that will make it look like you are doing something. Then after about ten of these worthless boring meetings, just have a beer summit, that way you can at least get a buzz and break the monotony.

[D Bruce]

I don't understand why everyone thought the stimulus would work in the first place. It was totally based on the marxist concept that government creates jobs by placing money into circulation. Germany tried the same thing during the depression and it resulted in hyper inflation. This is not trickle down economics, concurrent tax cuts and credit would have been necessary for it to even come close to that and would still fall short. What it was and still is, the basic lack of understanding of capitalism and the current financial system. It is financial spamming, throw it and see what sticks. And if that doesn't work, just hold a summit, at least that will make it look like you are doing something. Then after about ten of these worthless boring meetings, just have a beer summit, that way you can at least get a buzz and break the monotony.

[D Bruce]

I don't understand why everyone thought the stimulus would work in the first place. It was totally based on the marxist concept that government creates jobs by placing money into circulation. Germany tried the same thing during the depression and it resulted in hyper inflation that brought Hitler into power. This is not trickle down economics, concurrent tax cuts and credit would have been necessary for it to even come close to that and would still fall short. What it was and still is, the basic lack of understanding of capitalism and the current financial system. It is financial spamming, throw it and see what sticks. And if that doesn't work, just hold a summit, at least that will make it look like you are doing something. Then after about ten of these worthless boring meetings, just have a beer summit, that way you can at least get a buzz and break the monotony.

[DwayneH]

I don’t think it’s too late, but, I agree that the President must start focusing on job creation. I believe he did a good job getting the economy somewhat stable with the stimulus packages. But now he must use this window of opportunity to enhance job creation, or, all of the work that he has done in his first year in office will be for nothing. Obama’s version of Trickle-Down Economics is great for making sure the Dow stays high, but it does not help poor and middle-class families provide for their children. Give people jobs, and they will repay you with increased spending, taxes, and higher approval ratings.

[Tinsdale]

President Obama and his advisors have fully embraced the economic doctrine of "Feed the horses and the Sparrows will get fed."

[fitzag]

Their is 300 million people in the U.S.A more or less.They could of gave each one of us a million and we could have pay off are houses and credit cards.We could have bought new cars and shop in the stores.This would have given the banks money and the business to stay open.But that would of been welfare and the people would be looking for a hand out,
Instead we had to bail out the free market crooks who got us in this mess,
Blaming the president is what we all do and he carries the blame as does the 535 people who have been elected to serve the people.Start asking them why they aren't doing anything but lining there pockets with the kick backs from all those corpation they help out.
Giving us the money would have been a lot cheaper and would have save billions.Ask the repugs where they been for the last 12 years for the people.
Tell them quit whine and do something.2010 vote them out

[Yellowbird]

Imagine the President calling for "HOUSE PARTIES" to organize for "JOBS".

I SWEAR, that's his approach. I got my email last night to have a "HOUSE PARTY FOR JOBS".

I told them to take me off the list and I deleted it quickly.

The people INSIDE THE WHITE HOUSE HAVEN'T A CLUE.

[John Robert]

Obama on road to perdition

[UKOH]

The problem is that we genuine progressive Democrats are so few in number that we are on a par, numerically, with the tea baggers! That means that we do not have the numbers to enact a real progressive agenda - witnes the disaster of the health reform plan!

I think it is neither practical nor desirable to institute a "purity test" ala the GOP. The Democratic Party has to be big tent to be electable.

I am a European and have lived in countries like Denmark which really are socialist (although far from being communist, do not confuse the two!). In European terms Obama is a center right politician.

I am tempted to say to Obama: "Mr. Obama I know socialism, socialism is a friend of mine. Mr. Obama you are no socialist!"

[Kassandra]

And he's no friend of MINE either.

[BannedNBoston]

Obama and all his industry insiders (more than Bush ever dreamed) are all trickle down bad economy thieves.

[thekidde]

It is time for a progressive revolution. Republicans and most Democrats are bought and paid for by special interests that are not in the interest of the general population. Rahm Emmanuel is a prime example of a Democrat who is really an oligarch and beholden, along with Obama, to the money lenders. Bernie Saunders is one of the few to tell truth to power and propose for the public welfare. Throw them all out who bow to Wall Street and the corporatists. If they won't be thrown out because they have power, remove them from their earthly shackles.

[Hdaryl01]

Thank you for your article. And, for your courage, as a democrat, to call the democratic President and his administration out, on principle, without being hobbled by blind allegiance to party, as many democrats are in this debate. Your honesty is refreshing.

I believe that you have nailed the real issue:

"I don't know whether it is too late, but it is very, very late in the day. Mr. President, where are you?"

In my experience, what Americans, and American small business needs, and have needed first and foremost is time. Timely response, timely assistance, timely consideration, timely anything. And time has continued to slip away.

The social contract has been broken, in my view irreparably, and the 300 + million of us just don't matter, unless considered in light of our ability to enrich big finance, which does matter-the most.

The Obama administration has continuously demonstrated its priorities, and American citizens, American small businesses don't even register. We are simply viewed of as secondary (at best) importance, or a convenient justification to continue to transfer our wealth to big finance-which has been demonstrated goal and priority #1.

Bear Stearns, Lehman, AIG, Merrill, Wachovia, Citi, BofA, and "big" finance has warranted swift DIRECT action that can happen in hours, at most days. But, over 20% and pushing 25% into Obama's 4 year term, NOTHING DIRECT AND TIMELY, for 300+ million of us-that should be priority #1. After all, we pay the bills, and guarantee the debt......

[Tinsdale]

Thanks for saying what needed to be said. FDR defied the moneyed interests, Obama-not so much.

[Chise67]

I am a big believer in Obama & worked hard for his election. However, I am very concerned that he is trying so hard to be a centrist, that the LOUDER voices of desent from the "conservatives" has pulled him to the right. We have to hold steadfast to the cause & remember history. Jackie Robinson wasn't the best best Afr. Amer. player when he integrated baseball, his DEMEANOR was best suited for the move. How does this relate to Obama? He's already labled a socialist, secret muslim, american "value" hating mole, so he can't just go off all Rambo on a left agenda. And there in lies the problem. Trying to keep the "independent" vote, he's compromising too much. But that's politics though and we all know it who pay attention. Big money put him in office, & he's not going to turn his back on that. But the ultimate cost is to the quickly fading middle class. The stimulus should be for what used to be the backbone of America, manufacturing & construction! WE need to make OUR OWN products, and BUY our own products. When the middle class have it to spend, we spend it! (I.E. cash for clunckers!) It's basic math folks, 2 million people buying cars, or 2 millionaires? And just wait, the health care bill will be a disaster! It's already an abortion issue & an immigration issue, just what the "right" want it to be. Write congress, call your Reps., don't just blog

[capitaldysfunction]

Howard is right, of course.
Obama's economic advisors have cooked up an agenda of sure to fail, no win stimulus packages that are almost certain to bring back a Republican majority. Hundreds of billions for banks that don't lend money. A mortgage crisis that continues. Endless war.
I wonder if Larry Summers will one day reveal in his memoirs that he was trying to stifle Obama's glory? Certainly Howard's contention that the base is shattered by this incompetence is real.
This country just finished eight years with an incompetent as President. There is nothing to suggest that it is not stuck with incompetency for another term as well. What a shame.