Monday, November 16, 2009

Jobs: Off the Chart


The chart plotted out two lines. One projected the unemployment rate through 2014 with a stimulus package; the other projected unemployment across the same period without it.
The first line — the hopeful line, the one that was used to sell $800 billion worth of stimulus — showed the rate of joblessness peaking this fall at 8 percent, and dropping swiftly thereafter. The second line — the no-stimulus scenario — showed unemployment peaking at 9 percent, holding there across 2010, and then declining in 2011 and 2012.
Now reality has produced numbers of its own. In every month since May, the unemployment rate has been roughly a percentage point higher than the chart’s grimmer, stimulus-free scenario. This October, when Obama’s advisers predicted that unemployment would stand at 8 percent with the stimulus and just under 9 percent without it, the actual jobless rate leaped to 10.2 percent.
This dire figure isn’t Barack Obama’s fault. Even in an age of near-trillion-dollar spending sprees, the president of the United States has only limited influence over the unemployment numbers. But the White House spent the winter pretending otherwise. The stimulus bill was framed and sold primarily as a jobs bill, and the Obama administration placed a substantial bet on the promise that the unemployment rate would start dropping before 2010 arrived.
When the stimulus passed with almost no Republican support, Rahm Emanuel, the president’s chief of staff, declared that “the most important number ... is how many jobs it produces, not how many votes it gets.”
He was right. But with unemployment near a 25-year high, that “most important number” isn’t looking very good. The White House is stuck arguing counterfactuals — how much worse the economy would be without the stimulus — and trumpeting obviously inflated estimates of how many jobs have been “created or saved” by federal dollars.
If the midterm elections were held today, the Democrats would probably take an unemployment-driven beating. In Gallup’s generic Congressional ballot, Republicans are up 22 points among independents, and they’ve opened up a rare lead among the voting public as a whole.
“Most of the prior Republican registered-voter leads,” Gallup notes, “occurred in 1994 and 2002.” Both were ugly years for liberalism.
If there’s any comfort for Democratic legislators in this landscape, it’s the possibility that the angst-ridden health care debate may matter less to their re-election prospects than anyone expects. Amid the town-hall tumult in August, Obamacare looked like 2010’s defining issue. But when you talk to Republicans on Capitol Hill today, it sounds as if health care will play a relatively modest role in the campaign they plan to run.
If a bill passes, they’ll attack the Democrats for reorganizing the nation’s health care sector instead of putting Americans back to work. If the legislation fails, they’ll attack the Democrats for trying to reorganize the health care sector instead of putting Americans back to work.
Either way, though, they expect the jobs issue to matter much, much more than the specific details of health care reform.
The Democrats seem to be expecting this as well. Obama is planning an ostentatious “jobs summit” for December, and a “jobs bill” has suddenly materialized on Harry Reid’s to-do list. Nobody in the Democratic Party will call it a second stimulus, but the liberals who have complained that the first $800 billion wasn’t enough may get the second round of pump-priming they’ve been asking for.
They won’t get much else, though. It’s hard to imagine any legislation that might be attacked as “job killing” — like the Employee Free Choice Act, immigration reform or even cap-and-trade — finding traction in Congress next year.
This means that the broader Democratic agenda is essentially a hostage to the unemployment numbers. And Republicans are hoping that if they win enough seats in 2010, Obama will turn into Bill Clinton redux, pursuing compromises on deficits and entitlement reform in lieu of more liberal legislation.
Of course, they haven’t won yet. Even without a second stimulus, there’s still plenty of money from the first one set to wash into the economy before next year’s election (It almost seems as if Nancy Pelosi drew it up that way ...). The Republicans remain broadly unpopular: they're leading the polls more by default than because they inspire any deep affection. And they aren’t exactly overflowing with their own ideas for job creation at the moment.
If unemployment stays high enough, though, they may not need them. All they’ll have to do is tally up the job market’s performance since Barack Obama took office, and then draw a third line, in red, on a certain overly optimistic chart.

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