Grim news from earlier this month shows that the official unemployment number is now 10.2% and that the far more accurate underemployment number is at 17.5%. Economist David Rosenberg (who correctly forecast the mortgage problem way back in 2004) sees unemployment numbers going to 12 or 13%. Moreover, a record 5.6 million people have been unemployed for over 6 months, notes Rosenberg, with more than 9 million Americans working part-time because no full-time jobs are available. In past recessions, says Rosenberg, the number of part-time workers has rarely got much above 6 million.
What’s the Obama administration’s plan for job creation? Not much as Nobel Prize winning economist Paul Krugman observes:
"We don’t really have a jobs policy, we have a G.D.P. policy. …we need to start doing something more than, and different from, what we’re already doing. And the experience of other countries suggests that it’s time for a policy that explicitly and directly targets job creation."
But Krugman, along with another winner of the Nobel Prize in Economics, Joe Stiglitz, correctly predicted that the Obama economic stimulus plan was too little, too late. Obama would rather listen to losers like Larry Summers who was dismissed from the Presidency of Harvard because he couldn’t run the largely self-running university. Or to Timothy Geithner, whom W. appointed to the New York Fed Presidency and who helped usher in this economic nightmare. In this sense, Obama is looking less and less like the president he admires so much (Lincoln) and more and more like Herbert Hoover. Obama’s even beginning to sound like Hoover.
A few days ago after the horrible unemployment figures came out for October, Obama announced his administration’s plan. He is going to call for a White House summit on unemployment. The summit will be held next month, the administration announced, as Obama himself was off to Japan. Now that’s really decisive leadership!
More than a year has elapsed since Obama was elected in a campaign that largely hinged on the greatest economic crisis the nation has faced since the 1930′s and other than a largely ineffective and inadequate stimulus plan, Obama has done virtually nothing to address the single most important issue that put him in office. Moreover, when describing the forthcoming White House summit, he used these words:
"We all know there are limits to what government can and should do even during such difficult times."
It’s true that he followed this up with some words about the need for job creation but this statement could have been written and delivered by Herbert Hoover. The plain truth is that Obama has been focused on the wrong model (Lincoln) while he should be looking at FDR. Instead, he’s coming off as Hoover to whom he bears lots of similarities. After all, both men were highly educated: Obama with a law degree from Harvard, Hoover with an engineering degree from Stanford. Both men share a cautious, timid approach to government. Both men failed to chose the best people available to be their advisors.
Obama has frequently said that he admires Ronald Reagan, a latter day disciple of Hooverism. But Hoover was a captive to the ideology of his party in the late 20′s and 30′s and was the first modern president to face a major economic downturn. Obama has no such excuses since his own party has plenty of voices for job creation, plenty of economic brainpower to provide the plans, and even the historical precedent of Hoover’s failed policies. But if you "look forward not backward" you miss a lot not only in the law but also in economics and history.
What will be interesting to see in the coming weeks is whether the Democratic Party begins to realize that its stranglehold on power could be swept away in a tidal wave of voter angst in 2010 unless the party comes up with a solution to the economic-unemployment problem. It’s clear that Obama is clueless about the economy and sees its problems largely from a Wall Street-banking industry perspective. Those are the two Obama sectors that received immediate and massive federal aid from Obama WITHOUT having the "need" for a summit. But they are not traditional constituencies of the Democratic Party and it is clear that organized labor’s patience with Obama is beginning to wear thin.
The base of the Democratic Party, especially those of progressives and liberals, must begin to demand changes in both Obama’s plans and his economic team. Getting rid of the ineffective duo of Summers and Geithner would be a great place to start. Putting into effect a massive jobs program (with public works at its heart) would be the logical second step.
If the Democratic Party faces voters in 2010 with unemployment over 10%, it is likely to lose the House, seats in the Senate, and many key governorships. Nor do they have much time to act since any changes will take time to kick in. So,the scheduling of a summit a month from now while the President dallies with photo ops with the Emperor and Empress of Japan looks especially foolish.
FDR understood something that Hoover and Obama do not: to attack a massive problem requires massive measures. If Obama and the Democrats fail to act quickly on this, the most serious problem facing the country, they will go the way of Hoover and they will deserve their rendevous with destiny.