We Need a Bold Jobs Bill to Stop the Double-Dip
Robert B. Reich
Republicans repeatedly assured the nation that once the debt-limit deal was done -- capping spending, cutting the budget deficit, and getting "98 percent" of what they wanted, according to House Speaker
Guess what? Just the opposite seems to be happening. The stock market has plunged,
They don't obsess about budget deficits 10 years from now or the size of the government. Their worries are based on cold, hard facts.
The first fact is the economy is almost at a standstill.
The second fact is the job situation is growing worse.
Although the recent job report showed 117,000 jobs were added in July, that's nothing to celebrate. At least 125,000 new jobs are needed every month just to keep up with population growth. This means even more people have stopped looking for work.
The real news from the recent job report is the stunning drop in the percent of working-age Americans now in the labor force. The labor participation rate is only 63.9 percent. That's lower than it was at the bottom of the Great Recession -- lower than it's been in almost three decades. Millions of American families that depend on two incomes to pay their bills now have only one. They're not going to spend more to keep the economy going.
The third fact is that the recent budget deal makes it much harder for the president and Democrats to enact a jobs bill that counteracts these trends and boosts the economy.
Because the deal sharply reduces spending,
Meanwhile, the original stimulus is over, as is the Fed's "quantitative easing." The market is now on its own -- without enough rocket power to get out of the continuing gravitational pull of the Great Recession.
Republicans continue to claim the original stimulus didn't work, and that there's no point in another.
But their argument is belied by the
We now know the economy plunged 8.9 percent in the fourth quarter of 2008 -- the steepest quarterly decline in more than half a century. And in 2009, household buying declined almost 2 percent (compared with a previous estimate of 1.2 percent). That's the biggest contraction in almost 60 years.
The original stimulus did work.
It saved 3 million jobs. It was just way too small to offset the drop. With cash-starved state and local governments simultaneously scaling back their own spending, the federal stimulus needed to be even bigger to have any effect.
So we're now poised on the edge of a double-dip -- and the federal government has its hands tied behind its back because of a phony debt crisis and a misleading view that the first stimulus failed.
The only hope is voters will tell their members of
What to do? This isn't rocket science. Re-create the WPA and the
Yes, any such initiatives will require more public spending in the near future. But that spending won't worsen the long-term budget debt if it restores jobs and growth -- thereby reducing nation's debt as a percent of the total economy. People with jobs and businesses with sales pay taxes.
People without jobs and businesses without sales don't.
A jobs bill should be number one on the nation's agenda. It should have been number one all along.
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We Need a Bold Jobs Bill to Stop the Double-Dip | Politics
(c) 2011 Robert B. Reich