Amid reports that the official unemployment rate has gone over 10% (to 10.2%) and with the real figures even worse (17.5% underemployment), President Obama has called for bold new action, to go where no one has ever gone before. He’s calling for a summit on unemployment to be held next month, yes, in December when the figures will be even worse. It’s like the response of student government on the middle school level: got a problem, appoint a committee.
The trouble is Obama has been clueless on the economy since taking over the presidency. Contrary to his campaign pledge to bring new faces to his government and hence to his economic team (remember that campaign whopper of a lie about "bringing new faces to Washington because real change cannot happen with the same old people") Obama’s chief economic advisor is that very old face, Larry Summers. Yup, the guy that Harvard fired for being unable to run the world’s best university. Or how about Timothy Geithner, who W. had picked as head of the New York Fed and who did absolutely nothing but aid and abet the great economic collapse that we are in? Both old faces, both top economic advisors to Obama and both likely to be chairing the unemployment "summit" in DC in December. Doesn’t that inspire confidence in you?
Obama has a thing about summits and White House conferences. Remember the one earlier this year that he held on health care reform? Yeah, the one that Obama failed to invite a single speaker in favor of single payer? The one that came up with the compromise of the "public option" that Obama then ditched while pressing for "insurance reform"? Maybe Obama will invite Nobel Prize winning economists Joe Stiglitz and Paul Krugman to the White House summit in December but don’t count on it since both are not favorites of Summers (or Obama either). These are the guys who told him almost a year ago that his economic stimulus plan was too little, too late. Guess what, they were right, Obama and Summers and Geithner were wrong.
Meanwhile, the Washington Post, in an article on the proposed unemployment summit, attributes the following quotation to the President:
"We all know there are limits to what government can and should do even during such difficult times," Obama said at the White House before leaving on a nine-day trip to Asia.
http://www.washingtonpost.com/wp-dyn/content/article/2009/11/12/AR2009111210563.html
With that kind of forceful statement and leadership, it appears that Obama has given up studying the Lincoln presidency and now instead is emulating the presidency of Herbert Hoover. Hoover too was a bright guy (a Stanford trained engineer with far more experience in the world than Obama has) who didn’t seem to get the need for strong action when unemployment lines were growing.
Obama has yet to put together a plan to attack the unemployment situation, something that FDR did in the first few days of his administration with huge public works programs. Obama’s hometown newspaper, the Chicago Tribune, today described how bad the situation is:
Not only is the 10.2 percent unemployment rate among the highest of past recessions, but structural problems suggest many of the jobs people have lost are gone permanently. They are not expected to return, even as businesses become more profitable.
Gluskin Sheff economist David Rosenberg estimates that the unemployment rate is going to 12 or 13 percent, and the number, alone, is not as disconcerting as Rosenberg’s long-term concerns over the record 6.2 million permanent jobs cuts during this recession. Unlike the past, when companies laid off people during downturns and then brought them back to work as sales picked up, now many jobs presumably have just vanished. Companies, with the aid of technology, have learned to do more with less and factories have closed.
http://newsblogs.chicagotribune.com/marksjarvis_on_money/2009/11/obamas-unemployment-challenge.html
David Rosenberg is the same economist, by the way, who got it right way back in 2004 when he warned that lax mortgage spending was going to threaten the entire economy. Expect him not to get an invite to the White House unemployment summit too. Rosenberg notes that a record 5.6 million people have been unemployed for more than 6 months:
Rosenberg notes that this is unusual, with the lengthy unemployment period normally affecting about two million people in past recessions. In other words, about 36 percent of the people out of jobs have been out for six months or more. “Both the median 18.7 weeks and the average 26.9 weeks duration of unemployment have risen to an all-time high,” he said.
It gets worse. Although 11 million full-time jobs have been lost, many people have been shifted through no choice of their own to part-time work amid cutbacks. So the unemployment rate doesn’t reflect the full story. Now, Rosenberg notes, “a record 9.3 million Americans are working part-time because they have no choice. In past recessions, that number rarely got much above six million.”
Nor does Rosenberg believe, unlike the economists Obama relies on, that the unemployment rate has reached its crest. He sees it reaching 12 or 13% and says that the economists saying otherwise are the "same consensus community that predicted at the beginning of 2008 that the jobless rate would peak out below 6 percent this cycle.” People like Summers and Geithner who have Obama’s ear.
Meanwhile, an astute editorial in the online Cap Times (Madison, Wisconsin) titled "Unemployment must be top issue for Dems" drives home persuasively the political repercussions of double digit unemployment. President Obama and Congressional Democrats, it argues, are making a huge mistake in treating the unemployment problem as an "afterthought rather than the most serious issue facing the nation." If the Obama administration doesn’t make job creation a priority, it warns, is to risk political disaster in 2010. The 2009 off-year elections were a mixed bag, but where Republicans focused on job creations in Virginia and New Jersey, they won:
"If unemployment continues to rise, it will be the only issue in key congressional districts and states nationwide next year. Nothing else that the President or his congressional allies talk about will matter. For economic, social and political reasons, Democrats need to remake themselves as the party of jobs. If this requires a new stimulus plan with more money for job-creating infrastructure improvements, Democrats should go for it. …If unemployment rises in the mid-teens [as projected above by economist Rosenberg], families and communities across the country will experience a human crisis of daunting proportions. …Obama and his Congressional allies will see their House and Senate majorities slashed if not obliterated by an angry electorate."
http://host.madison.com/ct/news/opinion/editorial/article_78fb6724-9fae-54ef-a1fc-58fa7d049435.html
Another thing that the President should ponder as he apparently ramps up his escalation of the Afghanistan War. Every thousand troops that he sends to that country will cost $1 billion, so the anticipated 30,000 troops to go will cost $30 billion a year. That money would be far better spent on job creation programs at home. As JFK and LBJ found out, you cannot always have guns and butter at the same time. Instead of waiting until December to hold a summit on unemployment, Obama would be better served by calling in Stiglitz, Krugman and key labor leaders and putting together a plan to create new jobs pronto.



18 Comments







Thanks for this. Obama has botched things up staffing his economic team with the people who were wrong. That seems to be a pattern in his Administration. If you want to have no chance of getting into the Administration, all you have to do is be right when it comes to predicting problems He hired the failures to take care of the banking bailout, to advise him on the stimulus, and to advise him on how to get a health care reform through Congress. Seems like he likes team players better than he likes competence, just like Bush. Must be the community organizer background. Keeping the community integrated is more important than getting anything done.
“National disaster? I’ll get right on that… in a year.”
I swear, the guy is trying to make Bush look good.
Obama is all about show.
Think a speech, a group of yes-fucks, a bunch of go-alongs will deal well with the economy? Good fucking luck.
Heh! I been trying to tell the bastard, but He also surrounded Himself with a bunch of people that keep everything from Him.
It’s not all His fault, because Washington works that way, the people there are convinced that the people there know it all. You can bet that the Bush people taught the Obama people how things work.
That’s what has become the downfall of our Government, they no longer represent us, but do what they think is right. Anyone other than a washington type is considered not to know anything.
You’re right, except that Obama bought and drank the koolaid early on.
He chose the people. And this is after he grandstanded on the campaign trail about how important it was to get change by changing the people the president surrounded himself with.
The worst example (worse than keeping on Gates even) would be the Department of Justice. Bush had scandals because he threatened to fire people who didn’t commit crimes for him framing Democrats and his other political enemies. And he did fire them, leaving the people who are so aligned with Bush they would commit crimes for him and did. So now Obama comes into power and it is usual for the new president to replace the old people as Bush and Clinton did. I this case of course with all the scandal it was vital to replace them. Obama didn’t replace them. Even a decent Republican would have / should have done it, just to make sure justice was seen to be done, but Obama didn’t.
Another example was that story during the campaign about how McCain and Obama has agreed upon a list of names they would draw people from regardless of which of them won.
Seems to me that Obama gets on with the Republicans a lot better than he does his base. And he’s gone beyond the norms on this. You can’t even blame Washington because Obama is the trend setter for this stuff, he’s setting the pace.
I have little faith that the Goldman-Sachs Administration is going to do anything to directly and effectively address unemployment and the payrolls that have been plummeting for 22 consecutive months. The only reason anything is taking place is because the refrain “It’s the economy, stupid!” is ringing in the ears of all the various insiders and trigger pullers around Obama and Congressional Democrat leadership figures. Next year is an election year. If people do not perceive “improvement” in the labor conditions and economic reality facing working people, the normal mid-term election losses for an incumbent White House party will be amplified and worsened.
Thanks for all the great comments.
I updated the diary to include a wonderful quotation from Obama (cited in the Washington Post article on his upcoming unemployment summit):
Meanwhile, the Washington Post, in an article on the proposed unemployment summit, attributes the following quotation to the President:
“We all know there are limits to what government can and should do even during such difficult times,” Obama said at the White House before leaving on a nine-day trip to Asia.
That could have come straight out of the mouth of Ronald Reagan (whom Obama himself has repeatedly said he admires) or even Herbert Hoover. Notice Obama didn’t think about the limits to what government could do when it came to the bailout of Wall St. or the billions he gave Goldman Sachs and other banks. That was done immediately (without a summit).
Give the man a break, folks! He’s hiring Czars as fast as he can…
Maybe that’s his plan, Grumpy, if you hire enough czars, the unemployment numbers gotta go down!
Maybe Obama’s new campaign slogan will be “A Czar in every pot”.
I still say Americans are sissies.
CEO murdered by mob of sacked Indian workers
He needs a Summit for this?
Americans get antsy for all kinds of reasons, this is a Microwave Society -
Watch and Listen Closely I agree 100%
I noticed that PAUL KRUGMAN has suggested some re-warmed approaches to Obama on the economy in todays NYT:
The key here is that he directs Obama down the path to buying jobs much more directly by the Federal Government. As an aside, he also talks about civilian work service programs like the WPA and CCC, but he doesn’t take it far because he thinks, unfortunately correctly, that this is a bridge too far in the current political climate. However, I can think of no other jobs program that will get sufficiently quick results by the time of the 2010 elections. If unemployment is 10.2 percent or even higher next summer, the Democrats will be in a world of hurt and deservedly so. I was talking to one of my neighbors who has a small grading business the other day. He literally has no business, nothing coming in after 20 years of constant work. I tried to console him by saying surely the stimulus will start working soon. He said, maybe so, but my question is whether I’ll still have a business by then. I think we need to do things like Krugman says for the long-term, but in the interim we need something like the WPA to bridge the gap, which in my estimate will be about 3 to 4 years. I noticed that Obama is flirting with the idea of taking some of the TARP money and paying down the debt. That will really help my neighbor, won’t it?
My father’s business has already been sacrificed at the alter in this recession. It was directly related to commercial construction (large scale), and had been a very profitable business for at least the last 25-years. Literally in a matter of months, their surpluses were being burned through hoping the pipeline would pick-up again after the initial credit-shock, and it was finally put under by ridiculous demands of general contractors (who were panicking) for massive collateral backed performance bonds. He sold at a fire-sale price, and even the much larger firm that took it over is really feeling the hurt of this extended total collapse of economic development.
The one major criticism I have of Krugman of late is that while I completely agree that Fed rates should remain low, they should remain so ONLY SO LONG AS we get exceptional controls on investment banking, because at the moment all that cheap money isn’t being pushed into the real economy like Krugman rightly points out is necessary and helpful, it’s just being soaked up by speculators and funding a growing carry trade.
If those controls don’t come, and fast, then rates should go up to prevent useless asset bubbles from expanding, and the hit to national liquidity should be taken up by expanded fiscal, rather than monetary policy.
Krugman has no credibily either, I faxed Him the same things I sent to Obama, and never got an answer from Him either.
If I hear one more bastard talk taxes to create jobs I’ll explode. If Companies have business to hire they will. Thay may not like taxes, but they have little to do with whether companies hire or not.
You want to create jobs, pick a program fund it, and enlist the private sector to work to create the machinery to do it. When there is an objective, and things needed to make it happen, companies and people will get busy to get it done.
I have suggested several before. Get off foreign oil with existing fuels, it’s is costing us trillions over ten years to continue burning foreign oil. Neither the people or the Government want to do what it will take.
Quit burning Coal for power, We have water power available to almost create free electricity if we started using it. The Mississippi in it’s running water has enough energy to do it by itself.
Three fix our infrasructure, they talk about it but do little. If they do do a project they give the contract to huge construction firms, who charge way more than is needed, and hire mostly illeagls to do it. Use more shovels and less backhoes.
All these things would have cost less than what they already have spent, and really put the Country back to work.
Like with the getting off oil millions of jobs, none exportable jobs that would be long term, would be needed to make it happen. From laborers to Engineers and manufacturing jobs to make all the equipment needed. The Automakers would have a gold mine in making new cars and conversions for the old ones. The whole Country would rather fight than switch, and likes sending trillions to the foreign countries for their oil.
Not only would these things save trillions, but would be good for the Enviorment, and put all that economic activeity in our own Country.
If the Country was back working all our other problems would have a chance of being solved.
Remember that Krugman is an economist, if economists were worth their salt, we would have no problems because they would have advised us how not to have had them.
The U.S. infrastructure needs $2.2T to just get it up to a standard where maintenance is a small percentage of Fedreal and State budgets.
And if there is an issue with there being enough ‘educated’ people for the jobs that ARE available, then it would seem obvious that using those unemployed to address the infrastructure repairs needed is a ‘no-brainer’.
See here. And then contrast that with what is being spent on Iraq and Afghanistan (we won’t mention the corruption of money that leads the U.S. to fund it’s ‘enemies’.)
You appear to be a person that can add. If so You know that 2.2 trillion is cheap as to what has been spent on the wars.
Most people believe what the politicians sight as just the supplementalas appoved for the wars, but fail to add what has been fed through the regular defense budget, dept. of States budget, and several dozen other dept. programs.
We should be living in a country whose streets are paved with gold, was it not for what this country has wasted on the defense budget through the years.