Mandel Ngan/AFP/Getty Images
President Barack Obama speaks during Labor Day celebrations on Sept. 5, 2011 outside GM's world headquarters in Detroit. Obama was in Detroit to address the annual Labor Day event sponsored by the Metro Detroit Central Labor Council.
President Barack Obama speaks during Labor Day celebrations on Sept. 5, 2011 outside GM's world headquarters in Detroit. Obama was in Detroit to address the annual Labor Day event sponsored by the Metro Detroit Central Labor Council. Mandel Ngan/AFP/Getty Images
Jonathan Chait is a senior editor at The New Republic. He is also the author of The Big Con: Crackpot Economics and the Fleecing of America.
The August jobs report casts in sharper relief the Obama administration's proposal next week to boost the economy. As I've argued before, this is a political move. House Republicans have neither the political nor the ideological incentive to adopt any new expansionary fiscal policy. But to call it political is not to dismiss its importance. Obama's speech, if it succeeds, can help clarify something that Republicans have successfully obscured: Obama is not in charge of the economy. The policies in place represent a compromise between the two parties, and with government jobs steadily shrinking month after month, it can even be said that the Republicans have the larger half of control.
Obama's strategy here seems to reflect the eternal truth that Americans oppose government in the abstract but favor it in the specific. Economic stimulus has been terrible politics since 2009 because people don't buy the idea that the government should lean against the wind — opposition to deficit spending rises when the economy struggles and falls when it expands, which is of course backwards.
Yet the specific elements of stimulus fare better. Temporary middle class tax cuts? Sure! More roads and bridges? Good stuff! The administration's proposal seems to recognize that "stimulus" failed because it easily allowed the debate to be conducted in abstract terms. Next week's speech is a do-over of sorts:
"You won't hear the word 'stimulus' — the 's word' — because that just is politically unappealing right now," Jared Bernstein, who left his post as Vice President Joe Biden's top economist in June, told us on ABC's "Top Line" today. "But you will hear targeted measures, which I think is actually a more apt description of what I think the president will talk about."
"He'll want extend the payroll tax holiday. He'll want to extend unemployment insurance. He'll have some ideas for infrastructure. Maybe something to help repair the schools — that's an idea that a number of us have been pushing – a program called FAST: Fix America's Schools Today, which could get hundreds of thousands of construction workers back to work repairing the backlog of maintenance in the nation's stock of public schools."
Jackie Calmes has more detail:
Mr. Obama is expected to again propose an infrastructure bank to support work on roads, bridges, airports, schools and other public works. Because such a bank would take up to 18 months to get under way, Mr. Obama has indicated he will propose other innovative ways to support such work quickly.
To hold down overall federal costs, and to avoid having to go to Congress, Mr. Obama and his advisers have been looking for ways to divert existing government money to purposes that will create jobs, especially in the hard-hit construction industry. School repairs and retrofitting buildings for energy efficiency will be a focus. And Mr. Obama is expected to argue that to the extent that states and local governments are relieved of school construction costs, they must avoid further layoffs of teachers.
For the long-term unemployed, the White House is considering a program like one in Georgia, which had Republican support there. The idea is to find temporary jobs for people at no expense to employers, providing them with on-the-job training while they receive unemployment compensation or a government stipend, in hopes of ultimately getting hired or finding a similar job elsewhere.
The political struggle here will be between Obama's desire to present these measures as separate ideas, against the Republican desire to lump them together under the rubric of "stimulus." The endgame will involve a debate over the Republican Party's decision to block Obama's plan. How that plan is defined — middle class tax cuts, infrastructure, re-training, or simply "stimulus" — will determine who wins that debate.