The Lousy Jobs Number & Obama's Original Sin

[kentuck]

http://www.tnr.com/blog/plank/103838/the-lousy-jobs-number-and-obamas-original-sin

<snip>
In any case, it almost doesn’t matter if the underlying reality is better than the recent statistics. Against the backdrop of two or three months of mediocre data, this is a sufficiently grim set of numbers—and has inspired enough hand-wringing in the media—that it will clearly penetrate the consciousness of the average consumer and employer, who was already wavering on whether this recovery had legs. The danger is that the perception becomes self-fulfilling—that anxious consumers stop spending, anxious employers slow their hiring even more, and that the two reinforce one another in a vicious cycle of austerity.

Which, in the end, brings us back to the original sin of the Obama administration. As I report in my recent book on Obama and the economy, the administration’s top economists knew the amount of stimulus they were proposing was much too small to solve the unemployment problem within a few years. One reason they felt okay about this relates to a concept called “escape velocity,” which held that you didn’t need the full amount of stimulus your math suggested (something approaching $2 trillion). If you just provided an initial boost, the economy could take care of the rest on its own: Consumers would start spending, which would raise GDP, lower unemployment, and lead to further spending. And the whole process would accelerate as people gained confidence, leading to a self-sustaining recovery.

<snip>
Update: An administration official writes to ask why I make no mention of the American Jobs Act, the $450 billion-ish stimulus package the president proposed last September. It's a fair question. I think the legislation, which would include another big cut in the payroll tax, extra spending on infrastructure, state aid for paying teachers, cops, and firefighters, and additional unemployment relief, among other good ideas, is absolutely essential. But I'd make two points in response. Substantively, the time to propose such a package was the spring of 2010, when Democrats still controlled the House, had close to a filibuster proof majority in the Senate, and the economy was giving off the first hints of a relapse. (I elaborate on this in my book.) By late 2011, the AJA was still a good idea, but it had virtually no chance of passage, which the White House understood as well as anyone.

Politically, on the other hand, it's still worth flogging the AJA aggressively. As my former colleague Jonathan Chait has pointed out, the worst of all worlds for the administration is for Republicans to block additional stimulus without taking any blame for it. If you're Obama, you have to get at least one victory there--either the stimulus itself, or an issue with which to bash the GOP. The administration finally grasped this last September, after two-and-half years of mostly giving the GOP a pass. But the focus on stimulus has largely given way in recent months to a combination of attacks on Romney's private equity career along with efforts to tout the Obama record (which is not too shabby, I'd be the first to concede, middling recovery aside). If the only thing the administration does in response to these latest jobs numbers is revive it's focus on the American Jobs Act, it would be a politically important turning point, though obviously you'd like to get the actual stimulus, too.

...more

[girl gone mad]

1. Frustrating.

As I report in my recent book on Obama and the economy, the administration’s top economists knew the amount of stimulus they were proposing was much too small to solve the unemployment problem within a few years. One reason they felt okay about this relates to a concept called “escape velocity,” which held that you didn’t need the full amount of stimulus your math suggested (something approaching $2 trillion). If you just provided an initial boost, the economy could take care of the rest on its own...

He's been advised by a clique of soothsayers. It would all be easier to swallow if they also hadn't been so aggressive in attacking the liberals who told him so.

[kentuck]

3. One thing we know for sure...

if there is anything wrong anywhere, the Republicans will blame the Democrats and the President. Either you put the blame on them or they will put it on you. Goody goody politics doesn't work with these people.

The President had a jobs plan but the Republicans in the House refused to vote on it. Whose fault is that? They have blocked this President at every turn. Now they rejoice at the suffering as the unemployment numbers go up, which increases their chances of winning the next election. They are lowlifes and should be treated as such.

[coalition_unwilling]

2. Kentuck, who is Noam Scheiber (the author of the piece)? I ask, b/c

I've never heard of him and don't know his pedigree.

Is he someone with a storied pedeigree or serious policy credentials?

[kentuck]

4. It appears he has been a critic of the President's economic plan for some time.

http://en.wikipedia.org/wiki/Noam_Scheiber

[Egalitarian Thug]

5. The President's original sin was his original appointments.

This half-way-to-nowhere conservalite philosophy has wrought incalculable damage as well as hurting his credibility. He's done better this (election) year, but I have little hope that he has learned or that he will fight for real improvement because the bottom line is that the only way to establish some social equity is for the rich to seriously sacrifice, and he ain't down with that.

Hope I'm wrong.

[Loge23]

6. Sin compounded by the Repubs pitchfork

With a massive propaganda machine worthy of Goebbels, the Repubs have compounded the Original Sin of a weak stimulus by demonizing the public sector - arguable the one employment sector with which the government can affect fiscal policy.
Many Local newspapers and TV news across the country have run "exposes" on "outrageous" public wages and benefits - all of which combined are still a small fraction of corporate profits, bonuses, and - not to mention - payoffs to the legislators that do the bidding of the elites. Many Americans, instead of focusing their righteous anger at conditions towards those who are really responsible, are turning on each other, as if firing even more workers will somehow turn the economy around.
Add this to the masses of laid-off workers that will not be rehired due to the reconditioning of the American worker (no unions, less, if any, benefits, lower wages, more production) and you will understand why Republicans will be popping Champagne corks tonight.
The fact is, the evil forces (yes, I'm calling the Repubs what they truly are: evil fascists) are winning. What they do with the remains of this once-great nation are another matter. People still need to eat, to have shelter, to receive medical care. Roads must be maintained, and infrastructure must be renewed. The right are experimenting poorly and with recklessness.
If they succeed in convincing America that they - in spite of virtually every known fact of their true actions and intents - are the answer to this mess, that they themselves have created; then we, friends, are toast.

[aint_no_life_nowhere]

7. Did anyone listen to Thom Hartmann just now?

He was discussing the jobs numbers with one of the regular reporters who call in to his show. Apparently a very unusual spike in people looking for jobs has occurred. The economy actually created more jobs than in previous months but the sudden spike in job seekers negated the increase.

[kentuck]

8. College graduates?

Last month was graduation month.

[aint_no_life_nowhere]

12. They didn't dwell on the issue and I wasn't paying enough attention to

recall the figures. But this news article in Yahoo also mentions the anomaly and the dramatic spike:

http://finance.yahoo.com/blogs/daniel-gross/may-jobs-report-disappoints-across-board-125911006.html

"... Labor Force Rises. There's an odd wrinkle here. The unemployment rate is derived from the household survey, in which BLS calls people and asks them about their employment status. The rate is calculated by dividing the number of people estimated to be unemployed into the size of the labor force. When the labor force shrinks, the unemployment rate can fall even if the number of people who say they're working doesn't rise. But that's not what happened this month. In May, according to the BLS, the labor force actually grew by 635,000 — which means a lot of people who had been sitting on the sidelines jumped back in. The number of people employed, according to the Household survey, rose by 422,000 in the month. ..."

I'm not versed in economics and therefore not sure what this means, if anything. If 635,000 new people got into the labor force and the net employed number rose by 422,000, is that bad?

[RBInMaine]

9. The amount of stimulus you wanted could not pass the Senate. So blame the fucking stonewalling

fucking ReFUCKlicans like you should.

[kentuck]

10. That's what he is saying.

Read the last paragraph in the post.

Don't shoot the messenger.

[cthulu2016]

11. The fact remains that

the Obama administration did not have a clue. Not one fucking clue.

The fact that if they had a clue they still couldn't have done anything about it (probably true) doesn't change the fact that they did not have a clue.

[orwell]

13. The only ones to blame...

...are the RepubliCons.

They have used the filibuster to block almost every economic measure passed by the Democratic House, which led to the rout of 2010.

The RepubliCon House has blocked all job creation since they took over, which led to the malaise about the President's re-election in 2012.

(I was surprised that they even got 800+ billion stimulus through.)

Why should the Democrats be blamed for something solely caused by the RepubliCons, and why have so many progressives taken the bait by blaming the President?

[doc03]

14. I f the dismal job figures continue I think the election is lost. It doesn't

matter who is at fault the Republicans or the austerity in the EU, If we go into another recession Obama will get the blame.
It's ironic and sad but that is how stupid the American public is.

[kenny blankenship]

15. Moderation and compromise for the sake of compromise are virtues

ONLY if you don't think there's anything particularly wrong with what your opponents want to do.

Changes of Heart alleged to have occurred during an election year are SUSPECT at best.

[MadHound]

16. Yep, the original stimulus wasn't big enough,

And the package was comprised of far too many tax credits and tax cuts(the least stimulative tool in the box). And the sad fact of the matter is that at the time Obama was bending over backwards to play nice when he should have used his then abundant political capital to pass what was needed.