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*persistent high unemployment may mirror Jimmy Carter and shape perception of Obama administration.
*expert economists agree the stimulus package wasn't sufficient and more direct help from the Federal government is needed.

We remain only eleven months after Obama's inauguration, and while we find ourselves in a much better position than we were during Obama's first few weeks in office, there is widespread discontent at the state of the economy as perceived by the common man.

We've freed ourselves from the recession, but the pain felt at home-still without real income except for an unemployment check makes it difficult to look at stock market numbers and agree with Robert Gibbs and Tim Geithner that the economy is getting better.

The erosion of patience is understandable when the ambitious promises behind much of the measures passed this year turned out to be overly optimistic.

Surely, there is no doubt that the real economy is improving, that there is more money being pumped into the economy by consumers in almost all sectors relative to this same time last year when we were in dire straits. The housing market in October saw a ten point one percent increase in home sales and car sales have come back strong even after the government's Cash for Clunker's program ceased to exist.

As extraordinary and confidence inspiring signs that these are, the administration's initial goal with the stimulus program was to avoid the jobs market slipping into ten plus percent unemployment rate territory; a big point of sale for the stimulus program. However optimistic you may want to be about what the stimulus has done for the economy, in this respect, it has been an utter failure.

It has also failed to spur consistent increases in retail sales, instead resulting in seesawing months were there is alternating growth and contraction. Retail sales tend to be important because growth in retail jobs fueled a lot of the job growth in years past.

What is the most worrying and most alarming is to see that this far through the stimulus package and being at the point where the economy is showing some strength (2.8% GDP growth revised in the third quarter), the job market is STILL shedding jobs. We have a long way to go before the unemployment rate gets back to normal. The longer that takes, the longer it will take for consumer spending to pick up. The longer that takes, the longer it will take for robust economic recovery to take hold.

If we all really wanted to be honest with ourselves, we can't say we didn't know that the unemployment rate would still reach ten percent. Expert economists, Paul Krugman and Mark Zandi both had testified to the congress and made it known to the president that the stimulus bill needed to be bigger. They warned that if the goal was to keep the jobs market in check, barring a bigger stimulus bill, the congress would need to come back to consider a second round of stimulus. Failure to do this would result in high unemployment for several years to come.

Zandi and Krugman both also predicted then and still do now that job growth will be stunted if there's no more stimulus, and thus real GDP growth will be flat because of stagnating consumer spending. So far they have consistently been proven right. Despite all this, there is seemingly little more focus from the administration except to hold a so called 'jobs' summit, giving Americans little reassurance that the economy will begin show visible signs of a recovery.

It is apparent that the Wall Street and bank bailout in combination with the stimulus package has left the country with no appetite to digest further government spending to save the economy, especially when it seems like the returns on our investments are either lost or too slowly materializing. The administration's handling of the TARP program ended too similar to George Bush and former Treasury Secretary, Henry Paulson; mismanaged and riddled with loopholes that gave banks the upper hand on important issues to taxpayers such as bonuses.

Because of this, the Obama administration is going to have a very tough time finding the votes to get any type of necessary second stimulus passed.

While it is of utmost importance that the Obama administration get to health care and reshaping one sixth of the country's economy as soon as possible, it is of even greater importance to the overall economy and even for Obama's re-election for the labor markets to recover.

Obama has already spent most of his political capital on health care. It seems like critics who claim the order of Obama's priorities are a mistake might have a point. Health care truly could've waited a few months, but those already unemployed for almost two years truly have no more time that they can spare.

If the state of the job market remains the same, regardless of what Obama accomplishes on health care, his presidency may mirror Jimmy Carter's and be defined majorly on persistently high unemployment and perhaps threaten chances of democrat's and his own re-election.

Those who worry about deficits and debt have legitimate reasons to worry, big deficits and debts are definitely not sustainable for long periods of time. However, most economists including Mark Zandi and Paul Krugman point towards the United States having an eighty percent debt to GDP ratio in 1950, they point to Italy and Belgium's around ninety percent debt to GDP during World War II, and they point to the ease they all had in getting out of the debt. Krugman correctly argues that the key to these types of debts aren't paying them off, but managing them and letting economic growth handle the rest.

Projected growth in the economy for the next several years dwarf the debt levels that economists believe are needed to really get the labor market back on track. America and congress simply need to get past the flawed notion that government stimulus and Keynesian economics doesn't work, when clearly, history proves otherwise.

There is some good news for the Obama administration. The recent jobs reports are showing that the job markets have slowed job loss and may within a relatively short amount of time begin adding jobs again, albeit at a likely slow pace.

It's unfortunate to say that at this point there is no honeymoon to protect the president. Patience has worn out with independents and patience is wearing thin even with the most loyal supporters. Despite what opposition may come, Obama really needs to take the reigns and really put the foot to the gas on the jobs situation at the risk of undermining his and the democratic party's agenda.

There is a definite opportunity for Obama to take this jobs summit and rally support for job stimulus even if it must be done under the guise of something else. This is going to take some incredible maneuvering, creativity, and leadership by the president.

This may turn out to be the administration's biggest flop or it may turn out to be its biggest accomplishment. There is still time to make this a victory, but whether or not the administration begins to see the need to again address the problem instead of giving the situation more time will really determine if they fail or are successful in 2012.

Originally posted to The Art of Politik on Wed Nov 25, 2009 at 02:49 PM PST.

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Comment Preferences

  •  Tip Jar (11+ / 0-)

    "Our sins don't define the whole picture of who we are" Edward M Kennedy

    by r2wildfire on Wed Nov 25, 2009 at 02:49:54 PM PST

  •  yes its all Obama's fault. (14+ / 0-)

    I even blame Obama for the gas that i have.

    Laughter is a force for democracy - John Cleese

    by GlowNZ on Wed Nov 25, 2009 at 02:52:01 PM PST

  •  Oh noes! (5+ / 0-)
    Recommended by:
    DaleA, GlowNZ, Blogvirgin, zapus, JL

    All of a sudden, we learn that unemployment will not recover until a few years after the financial system recovers.  This is totally new information that I have never heard before!!!

    No politician ever lost an election by underestimating the intelligence of the American public. PT Barnum, paraphrased...

    by jarhead5536 on Wed Nov 25, 2009 at 03:01:01 PM PST

  •  On a more serious note... (1+ / 0-)
    Recommended by:
    DaleA

    The President and his staff did make one mistake -- letting some percentage (even 11 or 12 percent) leave their lips or be put on paper as the highest they thought it might go.

    That 8 percent number will be used by David Gregory on Sunday as long as he stays on the air.

    Another reason Gregory has to go!

    •  Well, if they said it... (4+ / 0-)
      Recommended by:
      Odysseus, DaleA, gmb, tnproud2b

      ...they should have worked harder to get a Stimulus Bill passed that would have made it a reality.  So Gregory has to go because the administration failed to live up to its expectations?

      Either the administration severely misread the economic tea leaves when allowing conservadems and Republicans to chip away at the bill, or it was blowing optimistic smoke up our collective asses -- either way, it's not David Gregory's fault.

      •  No, Gregory has to go because just like others in (3+ / 0-)
        Recommended by:
        Blogvirgin, Interceptor7, JL

        the MSM and here at Kos, for that matter, refuse to assign blame where it belongs (Repugs). The economy tanked before he arrived, and it'll be a be a long slog out from here no matter what the size of the ARRA was, or a jobs bill that we'll see come out of Congress this January or February.

        •  I think that there are a few... (1+ / 0-)
          Recommended by:
          i know

          ..conservative Dems in the Senate who can be blamed for the shitty Stimulus Bill.  LOTS of blame to go around.  

          Agreed about Obama having inherited the shitty economy.  Maybe we could start by blaming Summers and Bill Clinton.  Agreed that it's going to be a long, hard slog.

          Disagreed that the size of the ARRA has nothing to do with stemming job losses and turning the economy around QUICKER.  It's now a matter of how long and who suffers for the lack of political will to get it right the first time (and we'll be lucky to get another shot at it).

          The Republicans bear a great deal of responsibility, but they had their Democratic allies and enablers.  

  •  Better Rethink (7+ / 0-)

    Your theory, or rather spin!

    One needs only go to what the 'free market, i.e. trickle down', economy was professed to be since it's push in under reagan and growth of since, the sales pitch of the way the con was going to work.

    Then look around these last couple of years and see how extremely little of that at the top wealth has trickled down into the economy to create a healthy capitalist country!!

    At AFL/CIO Convention:"We've been fighting for reform for so long that if health reform was a person, it would be eligible for Medicare!"

    by jimstaro on Wed Nov 25, 2009 at 03:02:46 PM PST

  •  Moderate Republicans will support the DEMS (1+ / 0-)
    Recommended by:
    Food Gas Lodging

    in 2012.  There are a lot of Colin Powell's in this country.

  •  Not an Attack (6+ / 0-)

    It's not an attack on the Obama admin, this piece is more of an exhortation.

  •  Voters voted for change (4+ / 0-)
    Recommended by:
    DaleA, gmb, tnproud2b, 4kedtongue

    What they got was a continuation of Wall Street's economic policies and Bush/Gates war policies. So far Obama has out Republicaned the Republicans on Education. The banks that were to big to fail are bigger then ever and while Main street tightens it's belt further every week the good times have returned to Wall Street courtesy of the American taxpayer. Stats show the rich are spending again.

    Will Health Care reform finally show us glimmer of the change we where supposed to believe in? We'll see.

  •  Yet another example of why I am losing faith in (0+ / 1-)
    Recommended by:
    Hidden by:
    Bouwerie Boy

    DailyKos!

    More nonsense from the peanut gallery!

  •  But there aren't any (3+ / 0-)
    Recommended by:
    Odysseus, i know, 4kedtongue

    GOP solutions to deal with unemployment either.

    Logic enables one to be wrong with authority.

    by Food Gas Lodging on Wed Nov 25, 2009 at 03:27:56 PM PST

  •  Long term unemployment (0+ / 0-)

    I have spammed this comment or a similar one in most unemployment or jobs related diaries I've seen lately because I think it is important for folks to realize that this is a huge long-term issue.  Yes, we need all of the short-term stimulus that we can get for now, but we need longer term solutions too.

    The number of people out of the labor force — meaning that they were neither working nor looking for work and that the government did not consider them unemployed — jumped by 637,000 last month, the Labor Department said. The number of part-time workers who said they wanted full-time work — all counted as fully employed — rose by an additional 621,000. link

    (This story is dated but the point that many unemployed are not counted as unemployed is not).

    ... and we can see that perhaps we have indeed reached a point where our ability to improve output with technology is now increasing at a pace faster than new demand can create a need for new manufacturing jobs.  If this conclusion is correct then not only were the Luddites right in their fears (albeit 200 years too early), but that we need to begin rethinking all of our economic policies, as they are not designed for a world in which technology can displace jobs faster than new innovation and demand can create them. link

    Structural unemployment is one of the five major categories of unemployment distinguished by economists. Structural unemployment is considered[by whom?] to be one of the "permanent" types of unemployment, where improvement is possible only in the long run. link

    About 2.4 million persons were marginally attached to the labor force in October, reflecting an increase of 736,000 from a year earlier. (The data are not sea-sonally adjusted.) These individuals were not in the labor force, wanted and were available for work, and had looked for a job sometime in the prior 12 months. They were not counted as unemployed because they had not searched for work in the 4 weeks preceding the survey. (See table A-13.)

    link


    Neither is it true any longer that the more each individual works, the better off everyone will be. The present crisis has stimulated technological change of an unprecedented scale and speed: `the micro-chip revolution'. The object and indeed the effect of this revolution has been to make rapidly increasing savings in labour, in the industrial, administrative and service sectors. Increasing production is secured in these sectors by decreasing amounts of labour.

    link

    Productivity increased 9.8 percent in the business sector in the third quarter of 2009. This was the largest increase in the series since the second quarter of 1972. Unit labor costs decreased 5.1 percent during the third quarter of 2009 (tables A and 1). link

    I have tried to indicate the direction in which we should advance, the policies we should follow if we are to bring this about. Events could nevertheless take a course which would miss the possible meaning of the current technological revolution. If this happens, I can see no other meaning in that revolution: our societies will continue to disintegrate, to become segmented, to sink into violence, injustice and fear.

    link

  •  Jobs: needed. (0+ / 0-)

    It will be a big issue in 2010 but it's too soon for me to say what the effects will be.

  •  Stop bashing critics (0+ / 0-)

    Seriously.  You know all these "I'm unhappy with Obama" diaries that are cropping up lately?  There's a common thread.  A lot of them are being penned by folks who are out of work, have a spouse out of work, and are in trouble.

    And all they are getting here is crap for giving their honest opinion.  Seriously those of you lucky enough to have kept your jobs through all this truly have no idea how bad the market is, nor how desperate one can feel when it's time to pay for housing and food for your kids, and there's no money and no hope of getting any.  So STFU on the bashing until you have walked a few miles in the other guy's shoes.

    And yes: the diarist is correct.  Unemployment is going to define Obama's presidency.  Nobody's saying he caused the recession: but if he doesn't do something about job creation in this country, he'll be thrown out of office anyway.

    Unemployed people have a lot of time on their hands.  They will vote.  And if in 1 and 3 years they perceive their lot to have been unimproved by this administration, they may very well vote against the Democratic candidates.

    Take them seriously.  20% of the workforce is un- or underemployed.  Even if you assume that they are evenly split between the two parties - that's a potential 10% hit the Dems could take.  (And frankly?  I'd be willing to bet that the jobless are disproportionately Democrats, since the jobless are also more likely to be lower middle class or poor, and more likely to be minorities.)

    Take them seriously.  At best they may not show up next time when you're trying to rally turnout.  At worst they'll show up and vote for change.

    •  These are the words (0+ / 0-)

      of a realist. Strong but honest words.

      On the one hand, the more extreme the GOP becomes and the more they alienate the center, the better the chances democrats will retain control.

      However, that isn't the only thing that needs to be factored into who will win in 2010 and 2012, and that's a big mistake many progressives and democrats are making.

      Historically, high unemployment bears heavily on a presidency. We can't just accept victory in 2012 as a foregone conclusion just because the republican party is in disarray. They have plenty of time to get their act together and if we can't get our economy together, they may very well have the capability of winning.

      "Our sins don't define the whole picture of who we are" Edward M Kennedy

      by r2wildfire on Thu Nov 26, 2009 at 05:23:42 PM PST

      [ Parent ]

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