As real job growth languishes, those with real power in Congress look elsewhere
By Ezra Klein, Published: May 6
April’s jobs report is probably the best we’ve had since Lehman Brothers collapsed — the impressive numbers we saw in the spring of 2010 were goosed by temporary census hires — but even the best jobs report in years isn’t nearly good enough.
We can add 244,000 jobs a month and not get back to pre-recession unemployment until 2016. We’re still 7 million jobs below where we were in November 2007. We have a long, long way to go. And Congress is following the wrong map.
Lawmakers want to talk high deficits and weak dollars. They want to argue over photographs of Osama bin Laden and funding for Planned Parenthood. But they’ve been studiously avoiding any action on the issue that dominated the 2010 election: jobs.
Over the past week, however, there have been some signs that things might be changing. Senate Republicans released a jobs agenda, and so too did House Democrats. It’s the first time since the election that the two parties have actually laid out their job-creation ideas. And it’s . . . not encouraging.
First, note the authors. House Democrats. Senate Republicans. In other words, the two minorities. House Republicans haven’t proposed a jobs agenda, and neither have Senate Democrats, and nor has the Obama administration. The powerful actors in the political system are arguing about budget deficits. It’s the powerless actors who are talking about jobs.
And even that might be overstating the case. The Senate Republicans’ program has a lot less to do with jobs than with the size of government and the size of deficits. In fact, the first section, “Living Within Our Means,” doesn’t even mention the word “jobs.” It proposes a balanced-budget amendment, a spending cap and “immediate” and “substantial” spending cuts — all of which would cost jobs in the short term, even if you believe they’d help the economy in the long term.
As the International Monetary Fund concluded after looking at an array of similar austerity efforts, “A fiscal consolidation equal to 1 percent of GDP typically reduces GDP by about 0.5 percent within two years and raises the unemployment rate by about 0.3 percentage point.”
There’s much more in the Senate GOP’s plan, of course. They want to cut corporate taxes, get rid of regulations, reform worker re-training programs, ratify three pending free-trade agreements, increase both domestic drilling for oil and loan guarantees for nuclear power plants, and repeal the health-care law and replace it with a handful of tweaks to the existing health-care system.
Some of those items are plausibly related to jobs. Most of them, however, seem curiously distant from the extraordinary condition of the labor market. They’re either GOP perennials or they’re responses to the Obama administration’s agenda. And they’re mostly long-term policies. What about the here and now?
Republicans argue that by reducing “uncertainty” about future deficits and regulations, you free businesses up to invest now. But the uncertainty argument is internally problematic: Their balanced-budget amendment would force massive cuts to federal spending over the next five years — cuts so deep that even the Paul Ryan budget would be ruled unconstitutionally profligate. It repeals the health-care law and begins from scratch. It creates a new regulatory process in which Congress, rather than regulators, plays the lead role on major rules. Even if all goes smoothly, that’s a few years of utter turmoil in federal policy and programs. If uncertainty is the problem, how can more uncertainty be the answer?
The House Democrats’ plan is, at the least, more specifically focused on jobs programs. It makes large infrastructure investments, calls for a national manufacturing strategy, offers a variety of investment-related tax cuts and pumps a lot of money into worker re-training.
It also relies on some unfortunately protectionist rhetoric — the name, “Make it in America,” suggests our problem is competition abroad rather than a financial crisis here at home — and it includes, like the GOP plan, some seemingly random elements, including protection for derivative end-users and a new task force to protect the Internet. Notably, it includes some points of agreement with the Republican plan, like corporate tax reform.
What’s perhaps most frustrating about these two plans, however, is how clearly they suggest a compromise that should, but won’t, happen. The Democrats believe we need much more short-term stimulus and worker support. The Republicans believe we need long-term deficit reduction. Those two goals, as economists have been pointing out for the past two years, are actually complementary.
We could have a single bill that supports the economy and the jobless now and cuts back on spending and raises taxes later. In one fell swoop, we could address weak demand, eroding skills and concerns over future deficits. We could help workers while reassuring investors, accelerating the economy in 2012 and slashing the deficit in 2014. But we won’t.
The only people in Washington who seem to care about jobs anymore are those who can’t do anything about them.
DO SOMETHING!
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