By any measure, today’s monthly jobs report was extremely disappointing. The topline unemployment rate jumped up to 9.8 percent. But this was just the tip of the iceberg. According to the payroll survey, total employment has been essentially flat for six months. The household survey is worse: flat for eight months.
Nor are the details of the report any more reassuring. Essentially, the economy created a puny 10,500 permanent jobs in the private sector, which were offset by 11,000 jobs lost in the government sector. The overall net increase of 39,000 jobs was due entirely to a surge in temporary help service employment.
To be sure, these jobs were certainly welcomed by those who got them. But this is no way to fire up a tepid economy. The economy needs to create about 150,000 jobs a month just to absorb net new entrants into the labor pool.
Obama’s personal metric of failure isn’t getting any prettier, either. The Obama jobs deficit is the difference between the level of employment he promised his policies would achieve and the current level of employment. The Obama jobs deficit now stands at 7.3 million jobs. He asked to be held responsible for results. Well, in the recent midterm elections, voters obliged him — by tossing out his fellow travelers by the score in Washington and by the thousands in state legislatures across the country.
All this stands as stark backdrop to the two great fiscal-policy debates now under way in Washington. On the one hand, we have Speaker Nancy Pelosi and Senate Majority Leader Harry Reid doing everything they can to ensure that the Bush tax cuts expire, which will make taxes go up and employment go down. All the while President Obama is supposedly negotiating with congressional Republicans. Either the president is duplicitous, or he’s irrelevant. Neither bodes well for his agenda over the next two years.
The other great debate involves the Bowles-Simpson deficit reduction plan. Stripped down to its essentials, under this plan Social Security is reformed for the long run but nothing material happens in the short run. Medicare and Medicaid are barely touched. Overall, entitlement spending growth is cut from 6.5 percent annually to 6.2 percent. Meanwhile, Obamacare is protected and spending on balance continues to grow rapidly, except for defense. And, of course, taxes shoot to the highest levels in the nation’s history.
In short, this plan represents a grand compromise between the Left and the far Left, which makes one wonder why guys like Sens. Mike Crapo and Tom Coburn would support it. If you like big government, this is a great plan. If you enjoyed today’s dismal jobs report, this Bowles-Simpson plan is right up your alley.
— J. D. Foster is Norman B. Ture senior fellow in the economics of fiscal policy at the Heritage Foundation.