Coming two months before Election Day, the employment report for August is a problem for President Barack Obama. The economy added 96,000 jobs last month, a slow pace that lowered the monthly average this year to 139,000, versus 153,000 in 2011. Even the decline in the jobless rate, to 8.1 percent from 8.3 percent in July, was a disappointment, because it indicated a shrinking labor force as people gave up looking for work.
But properly understood, the report should not encourage voters to support Mitt Romney. That’s because boosting tepid job growth requires stimulative fiscal policy — including spending to rehire teachers and to rebuild schools, roads and other infrastructure, as well as loan modifications for underwater homeowners. Obama has proposed all of that, while Republicans have blocked such measures and the Republican agenda rejects them.
Republicans are even increasingly adamant that the Federal Reserve should do nothing to try to help the economy, with Rep. Paul Ryan saying Friday that monetary easing by the Fed would be a “bailout of bad fiscal policy.”
Really? The Fed, if it acts, would be trying to compensate for the dearth of fiscal solutions, the result of Republican obstructionism.
The Fed chairman, Ben Bernanke, has been explicit in asserting correctly that the ailing housing market and contractionary fiscal policy are the biggest threats to the economy. He has indicated that congressional action to address those issues would be preferable to more Fed easing. Yet the Republican response is to tell the Fed to back off.
Worse, the Republican agenda misdiagnoses the cause of slow job growth, blaming taxes and regulation, while championing more tax cuts for the rich and deregulation of the banks and other businesses as a cure. Those policies, however, are precisely the ones that were in place as the bubble economy of the Bush years inflated, and then crashed, with disastrous consequences. They are the problem, yet they are all that Romney and his party have to offer.
In the meantime, the pain of unemployed and underemployed Americans is all too real. Good jobs, like teaching, are being lost, while others, like manufacturing, are getting harder to come by as the global economy slows. In their place are jobs in bars and restaurants and other low-wage activities. Even the college-educated are in trouble. In the past year, unemployment among college graduates under age 25 has averaged 8.1 percent, no better than the general population. The situation is worse for high school graduates under age 25, whose jobless rates in the past year have averaged nearly 21 percent.
Tax cuts and deregulation will not help them. Federal spending to create jobs, loan modifications to ease debt burdens and further Fed action would.
The New York Times