– Welcome to the Recovery (New York Times, by Timothy Geithner, August 2, 2010)
– The Jobs Crisis (New York Times, Sep 3, 2011):
The August employment report, released on Friday, is bleak on all counts, but at least it leaves no doubt that the United States is in the grip of a severe and worsening jobs crisis. That should lend a sense of urgency to the speech on jobs that President Obama plans to deliver this week.
The economy added no jobs in August — zero — and the anemic numbers for June and July were revised downward. The unemployment rate is stuck at 9.1 percent, but it would be 16.2 percent if it included the swelling ranks of those who find only part-time work and the millions who have given up looking for jobs that simply do not exist.
In his speech on Thursday, Mr. Obama does not need to alert Americans to the dire situation; they have been telling pollsters for months that job creation — not budget cuts — should be policy makers’ top priority. This is his chance to present a plan big enough to ramp up job growth in the near term, while initiating long-term fixes to improve the economy and sustain employment.
He should not calibrate his policies to fit what he hopes will be acceptable to his Republican opponents. The House Republicans are never going to give Mr. Obama anything, and they are ideologically opposed to the government’s acting on the scale that is needed.
The American people will understand if Mr. Obama makes his case clearly and powerfully. The Republicans will refuse to, and the president should speak candidly about their disregard for workers. (Last week, the Republicans showed their disregard for the presidency by fighting over the timing of the address.)
The first step is to not make matters worse. The main cause of unemployment now is a lack of consumer demand. Americans — unemployed, underemployed, underwater in their debts, and understandably anxious about the future — are unwilling or unable to spend. To counteract that, it is vital to extend federal unemployment benefits and the temporary payroll tax cut for employees beyond year’s end, a move that would put some $160 billion into Americans’ pockets and preserve some 1.5 million jobs.
The next step is to create jobs. The highway trust fund must be reauthorized before it expires at the end of September, a step that would prevent furloughs of current workers and create some 120,000 jobs a year over the next three years via investments in transportation. In addition, a $50 billion school renovation program would employ 500,000 workers, out of 1.5 million unemployed construction workers, and could be easily scaled up.
The federal government must also stop the hemorrhaging of state budgets, which has led to the elimination of nearly 700,000 teaching jobs and other government positions in the last three years. Analysts estimate that for every government job lost, at least one job is lost in the private sector, as laid-off government workers stop spending and private contractors lose work. The fastest way to get aid to states is to increase the federal Medicaid share. The states will then have money to pay employees and contractors.
In August, joblessness was nearly 18 percent among Americans under 24. They need more federal jobs in parks, community centers and on college campuses, as well as in service programs like AmeriCorps.
It is vital that Mr. Obama push for mortgage relief, to boost consumer spending and help repair household balance sheets.
Mr. Obama cannot order Fannie Mae and Freddie Mac, the government-run mortgage companies, to refinance the mortgages of underwater borrowers in good standing. But he can apply pressure by making it clear that it is profoundly in the public interest that they do so. Mr. Obama should also support principal reductions for troubled borrowers in bankruptcy, in legal settlements, and in other loan modification efforts.
Immediate measures must be accompanied by long-term plans. In particular, Congress should heed Mr. Obama’s call for an infrastructure bank, to combine public and private investment in large-scale projects.
Mr. Obama should explain that the efforts will be paid for, over time, by tax increases and spending cuts that will begin as the economy recovers. For now, they will require more borrowing, which is prudent, given the need and today’s low interest rates.
Republicans will insist that the nation cannot afford to do the things necessary to create jobs. We can’t afford not to. Mr. Obama must be clear about that on Thursday.