It is as predictable as the planetary orbits. The U. S. Labor Department releases its monthly report showing that the unemployment rate has ticked up a tenth of one percent and the congressional communication offices whir into action, or at least the Republican offices.
Everywhere, Republican congressional offices released statements condemning the president and his party for killing jobs or at least not creating them. Were a Republican the president, Democratic offices would be doing it.
Reps. Rick Crawford of Jonesboro and Steve Womack of Rogers were the first to get their statements on the wire. All are variations of the same theme. Crawford said the president and the Democratic Senate refused to take steps to put people to work. Womack said government regulations and the big national debt were stifling job creation. He blamed President Obama and the Democrats. Rep. Tim Griffin of Little Rock was on the radio mourning the president’s refusal to do anything about jobs. Sen. John Boozman said, “The president and his allies in Congress have refused to provide the help” that jobless Americans need.
But there was one shocker. U. S. Sen. Mark Pryor defended the president, saying that it was unfair for Republicans to blame Obama for not creating jobs when they had blocked all his proposals to stimulate job creation. He named three or four of them.
Obama has been abysmally unpopular in Arkansas since long before he even won the Democratic nomination for president in 2008, and Democratic officeholders in Arkansas have been loathe to defend him on anything or to have the slightest association with him. What possessed Pryor to suddenly engage in such candor? We have no idea. Perhaps it was the memory of his colleague, Sen. Blanche Lincoln, who ran away from Obama in 2010 and still got clobbered.
What is missing in all the monthly lamentations about unemployed people—and it is a tragedy worth mourning—is any hint of the significant history of the problem or a recognition of the grave economic dynamics that are at work. You can’t make political hay from them, so it is better to stick to a few simple talking points: too much regulation, high taxes and debt. We had fuller employment when regulation was much stiffer and taxes much higher (the 1960s and 1990s) and when the debt was a bigger share of GDP (world wars).
A little history: The unemployment rate in June was 9.2 percent. Job creation has been slow for five months. But remember that the U. S. economy was losing an average of 775,000 jobs a month when Obama took office and the jobless rate crested at 10.1 percent in October 2009. It was in double digits only one month.
It is helpful to remember that during the Ronald Reagan recession that followed his big tax cuts in 1981, the unemployment rate shot to 10.8 percent and stayed above 10 percent for 10 consecutive months. Multiple tax increases and a government spending binge, along with depressed borrowing rates, brought unemployment down and produced fairly robust job growth during Reagan’s last four years.
We have rock-bottom interest rates now, but it is a negligible factor because no business needs to borrow or invest with its own surplus capital because there is no demand. All the Obama proposals to bolster demand but two—lower payroll taxes and extended unemployment insurance—have been stymied in Congress: first, alternative-energy incentives (Japan, Germany, France and China are creating millions of renewable-energy jobs, but the U.S. virtually none), then airport, highway, small-business research incentives and more. We have to note that Republicans are not entirely to blame. Southern and Western Democrats, including our own with the exception of Vic Snyder, blocked the energy bill at the behest of the petroleum and coal industries.
But all those pale beside the housing crisis, the deepest in 75 years. The U.S. economy follows the housing market. We are reaping the harvest of 10 years of folly—relaxed regulation and self-control in commercial and investment banking, the subprime lending fury, the development of mortgage securities that relieved lenders of risk—and we are not close to the end. Foreclosures continue apace, home values continue to decline and homebuilding is a distant prospect.
Blame for the bubble and collapse is plentiful and extends to two presidents (but not Obama) and both parties. The failure to make more than feeble steps to do something about the mortgage crisis can be apportioned in a bipartisan way, too. The Republican Congress refused to consider serious steps to provide mortgage relief to millions of underwater homebuyers, and President Obama, guided by treasury and central bank advisers sympathetic to the financial industry, made feeble and ineffective efforts to get banks to reformulate troubled mortgages. Banks make money on foreclosures, not on renegotiating amortization terms.
If we must wait until all the underwater mortgages shake out and the housing market recovers, and that seems to be the political reality, the economy is going to limp along for years, not months. The suffering of American families will know no surcease.
But that seems immaterial. What counts is who gets assigned the blame. That will be Barack Obama. As Senator Pryor says, that is unfair, but it is how this game is played.
