There is modestly good news for jobseekers in the February jobs report today from the Bureau of Labor Statistics, with the economy creating 227,000 new jobs and the unemployment rate holding steady at 8.3 percent.
But once again the Obama administration and Democrats in Congress would be well advised to resist the urge to crow too much. Further, they dare not suggest that the economy has reached the point that we can now turn to deficit reduction and austerity.
The yardstick that should be used for measuring how the economy is doing on producing jobs is what it would take to get the employment rate to 5 percent, where it was at the beginning of 2008 and the dawn of the financial crash. A “jobs calculator” developed by the Federal Reserve Bank of Atlanta shows that the economy would have to produce an average of about 400,000 a month in order to lower unemployment to 5 percent by the end of 2014. (To get that figure, we assumed a labor force participation rate of 66 percent, which was the average in the years immediately prior to the crash.)
With February’s jobs numbers (and the January revision of an increase of 284,000 jobs) the economy will have fallen so far this year 283,000 jobs behind where we should be to meet the three-year goal and address this jobs emergency.
By that measure, not only should the Obama administration refrain from patting itself on the back, but Congress—the Republicans in particular—should be hanging their heads in shame.
This week, both houses of Congress had opportunities to act boldly to address the jobs crisis by making progress on a comprehensive transportation bill that would put millions of people to work on the infrastructure we need for an efficient, energy-saving economy. The Senate is acting, but one cannot call the two-year, $109 billion transportation plan moving through that chamber bold. But it is at least more than the House, where House Speaker John Boehner gave up trying to persuade his conservative colleagues to come to their senses and coalesce around what has traditionally been a bipartisan enterprise.
The White House initially proposed a five-year plan that would enable state transportation departments to launch long-range projects to upgrade roads, repair bridges and improve public transportation options. The speculators driving up the price of oil in reaction to the conservatives beating war drums add another layer of urgency to the passage of this legislation. Yet, on Thursday, both Sen. Barbara Boxer, D-Calif., and Sen. James Inhofe, R-Okla., co-sponsors of the transportation bill, both had to fend off a challenge from Sen. Bob Corker, R-Tenn., that would have derailed the bill if a majority in the Senate accepted Corker’s contention that the revenues Boxer and Inhofe agreed would cover the cost of the legislation were not good enough. This legislation also had to survive efforts Thursday to attach approval of the controversial Keystone XL pipeline to it and, more controversially earlier this week, an amendment that would have allowed businesses controlled by religious organizations to bar medical treatments from insurance coverage based on the business owner’s “conscience.”
The utter collapse of the House attempt to pass a five-year bill is yet another graphic demonstration of how extreme and out of touch the conservatives in the House have become. The Club for Growth and other conservative groups were pressuring House conservatives to not support any significant spending beyond what could be supported by the federal gasoline tax. That tax has not been increased from 18.4 cents a gallon since 1993—it would have to have been 29.6 cents today to have kept pace with inflation—and the one-two punch of a slower economy and more fuel-efficient vehicles mean the gasoline tax doesn’t bring in the same volume of revenue it used to. Meanwhile, other House conservatives sought to laden the bill with ideological amendments related to issues ranging from the Keystone pipeline to contraception—poison pills for Democrats and the few Republicans who were serious about passing a real transportation bill. The fact that the House bill died in a Tea-Party traffic crash is just as well: its provisions would have ended traditional support for public transportation systems and designated money for school transportation safety, and would have made it much harder for citizens to prevent transportation projects from doing environmental damage to their communities.
What the House did do this week was pass something that Republicans called a “JOBS” bill, recasting legislation that lifts some regulations from startup businesses as the Jumpstart Our Business Startups Act. It is plausible that these new businesses would choose to use money saved from not having to comply with certain Securities and Exchange Commission requirements to boost their payrolls, but in a direct sense, as the Christian Science Monitor noted, “none of these provisions puts a shovel in an unemployed construction worker’s hand.”
House Democratic Leader Nancy Pelosi put it in perspective: “It’s so meager,” The Huffington Post quoted Pelosi as saying during a briefing before the House vote. “Trumpet – tun ta ta ta – here comes the little king!”
There is an even greater danger lurking on the jobs front horizon, and that is the upcoming budget debate.
“Clearly, the Obama stimulus program not only stopped the recession, and prevented a dangerous depression, but that fiscal stimulus (with help from Fed policy) has finally started to move the economy to steady, although still inadequate levels of job growth,” Roger Hickey, co-director of the Campaign for America’s Future, points out in his statement today. “But in a week or two, Republican House Budget Committee Chair Paul Ryan will soon introduce a budget that would seriously harm the struggling recovery by slashing federal spending. This kind of fiscal austerity, like the similar spending cuts now being imposed in Europe, could strangle the recovery and throw the U.S. (and the world) back into recession.”
Spending cuts at the state and local level continue to dilute the impact of private sector job growth, and threaten the underpinnings of our economic future. When states and localities cannot keep basic services functioning, the federal government must stand in the gap. And the federal government has the particular capacity to do so at a time of record-low interest rates and low inflation. But Republicans this week signaled that they will seek significant additional spending cuts beyond the too austere budget caps the White House and Congress agreed to last year.
Accepting those cuts would choke the recovery, taking demand out of the economy just as its is struggling to get on its feet. As Hickey said, “Americans should be wary of politicians telling us that the economy is recovering enough to turn immediately to cutting public spending – and that is exactly what the budget produced by Republican House Budget Chair Paul Ryan would do.”
Conservatives are refusing to learn the lessons of austerity in Europe. Conservative leaders there pursued the “cut and grow” bumper-sticker formula repeated by congressional conservatives. And as Nicholas Kristof wrote this week in the New York Times, in Greece and much of the rest of Europe, “austerity in the middle of recession has made matters worse — just as John Maynard Keynes predicted.”
While Republican presidential candidates accuse President Obama of turning the United States into a version of Greece, it is actually conservative dogma that will surely turn America into today’s Greece, a country where “schools, hospitals and social services are devastated,” the government has no resources with which to support private sector growth, and where desperate job-seekers leave the country if they can.
The February jobs report, though mediocre when measured against the need, does vindicate the Obama administration’s refusal to fully embrace the conservative’s austerity program. It is now as important as ever for the administration, and its allies in Congress, to keep the foot on the jobs accelerator, and fight off conservative attempts to co-opt the word “jobs” while they block the actions that are needed to create those jobs.
Updated at 9:13 a.m. with jobs report data and reaction from CAF co-director Roger Hickey.