It's the Economy, Stupid: Version 2011
Within a week, as the news and analysis of Osama bin Laden's demise fades, the American people will focus once again on the issues that matter most to their daily lives. For most Americans, that includes the jobs market and the state of our economy.
But no one is talking about jobs. Except for American voters, that is. Does anyone in Washington care -- or even know, for that matter -- that jobs and the economy are still the most important issues to voters?
The April employment report will be released on Friday. There may be a dip in the current 8.8 percent unemployment rate and a jump in private sector job growth, but we are not likely to see real progress. Keep in mind that our economy needs to add at least 150,000 new jobs every month just to keep pace with new entrants into the job market. While other economic indicators, such as the stock market and GDP growth, are rising, employment is lagging far behind. In fact, job growth after this recession is the weakest on record. Ultimately, job security matters the most to the American people.
We are now more than four months into the new congress, and discounting partisan rhetoric, congress and the administration have paid scant attention to the plight of the unemployed. Leaders of both parties would be wise to heed the vision of Bill Clinton's 1992 presidential campaign that toppled a clueless incumbent: It's the economy, stupid.
Last week, McDonald's announced with much fanfare that, after sifting through more than 1 million applications, it will be hiring 62,000 new workers. As one sly writer noted, a higher percentage of applicants got rejected by McDonald's than by Harvard, though the prestige of flipping Big Macs is not yet on par with a Harvard degree. We will not "win the future" by relying on low-wage service sector jobs to lead employment growth.
Other troubling facts are being overlooked. The outlook for summer jobs for teenagers is the worst on record. The unemployment rate for recent college graduates is 9 percent. Hiring in manufacturing, which has recorded more than 250,000 net new jobs over the past 15 months, has slowed in each of the past two months.
As Congress obsesses about spending cuts, the impact of austerity on jobs has been swept completely under the rug. America's historical experience with austerity -- 1937 in particular --should be alarming. The recent British austerity experiment should be frightening, as well; the consequences have been a political backlash and an economic turn for the worse. Congress is sacrificing a jobs debate for an auction of austerity ideas, which is consuming all of the political oxygen and time in our nation's capital.
Even the tax debate misses the boat. A cut in the corporate tax rate, paid for by eliminating certain deductions and credits, will overwhelmingly benefit Wall Street while actually increasing the tax burden on manufacturers. So says an Ernst and Young analysis of the deficit review commission's proposal on corporate taxes, which certainly seems to be on the table. More money for Wall Street and a $48 billion new tax bill for our factories. Where's the outrage?
Finally, the Federal Reserve seems unlikely to initiate a third round of quantitative easing, which has provided some fuel for our economy at a time when private sector investment has been lagging. Indeed, the Fed seems to have chosen to fight inflation (which, by the way, is still remarkably low) at the expense of job creation. That's precisely the wrong course.
Still, there are some signs that our political leaders understand the importance of jobs. House Democrats have released a "Make It in America" agenda that includes a number of solid (and bipartisan) ideas. President Obama is headed to yet another factory on Friday, this time in Indianapolis. But we're going to need more than slogans and handshakes with blue collar workers to get back to what matters most for American voters.
When will someone show enough courage to throw down the gauntlet on jobs in the way that some Republicans have thrown it down on spending cuts? The squeaky wheel gets the grease. A cliché, yes, but also a truth in this town.
There are, however, some smart policy proposals to consider. Investing in both infrastructure and R&D come to mind, as does legislation to stop China's currency manipulation (which would do wonders for American manufacturing). There is also a consensus that our vocational education system is in need of serious repair, with shop classes disappearing, and shrinking opportunities for the next generation of skilled workers. Last but not least, we need to enforce 'Buy America' laws and other domestic procurement requirements to ensure that tax dollars are directed to America's manufacturers and their workers whenever possible.
One way or another, the economy will catch up with our political leaders. The smart ones will remember the lesson of the 1992 campaign. The not-so-smart ones? When they find themselves looking for a job, they'll wish they'd made a real effort to create them.
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