Fiddling While the Economy Burns

Isaiah J. Poole

You would think that after the latest dismal jobs report that the Bush administration would stop the spinning. But, no.

For two straight months, the Bureau of of Labor Statistics confirms, the economy has been losing jobs, and most acutely the kinds of jobs, such as in manufacturing and construction, that can sustain a middle-class lifestyle. Before now, Bushonomics only presented a thin facade of working. It now cannot even muster that.

And yet, here is Labor Secretary Elaine S. Chao, shortly after the Friday morning release of the report:

“The unemployment rate for last month dipped to 4.8 percent, but today’s report of negative job growth in February shows that the president’s concerns about the near term challenges to the economy are right on target. It also underscores the importance of keeping taxes low and making the president’s tax cuts permanent, so workers can keep more of their hard earned wages.”

Take Back America: New Power, New Vision for the Economy
Listen to an interview with Jared Bernstein, economist at the Economic Policy Institute, on today’s unemployment report. Then plan to join Bernstein at Take Back America 2008 as he outlines the damage Bush economic policies have done to the country and how progressives must respond.
 
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Mrs. Mitch McConnell, the jobs report underscores no such thing. Here’s what it underscores: First of all, whenever the unemployment rate goes down at the same time that the economy loses jobs, that’s a sure sign that a lot of long-term unemployed people have gotten so frustrated that they’re dropping out of the job market. And in fact, the number of people counted as “not in the labor force” by the BLS jumped 644,000 during February.

This is not a symptom of “near-term challenges.” This is an indicator of fundamental structural problems in the economy that the Bush administration’s throw-tax-cuts-at-the-rich approach have failed to solve. And since it is clear that the Bush tax cuts have failed to strengthen the economy for the middle class, making them permanent—at least for individuals and corporations at the top of the income scale—would be folly.

The Center for Budget and Policy Priorities points out:

Labor market conditions are already harsher, especially for the long-term unemployed, than on the eve of the last recession in March 2001.

  • The unemployment rate is higher (4.8 percent compared with 4.3 percent) and most forecasters expect it to rise further in coming months.
  • The percentage of the unemployed who have been looking for a job for more than half a year and are still out of work — the group that extended unemployment benefits target, because regular benefits end after 26 weeks in most states — is much higher (17.5 percent compared with 11.1 percent in March 2001).
  • Due to these facts, the long-term unemployment rate is nearly twice as high.
  • Labor force participation is lower. Moreover, 4.8 million people who are not in the labor force say they want to work (13 percent more than in 2001). Many of them would presumably be looking seriously for a job if they thought they had better prospects of finding one, in which case the unemployment rate would be higher.


And note that Mrs. McConnell had nothing to say about the millions of people who want to have hard-earned wages but don’t have a job with which to get them. For them, It would have made sense for her to call for extended unemployment insurance benefits for the long-term unemployed. It would also make sense for the federal government to pump additional money into the economy. It could fund public sector projects that need to be done anyway, or it could funnel dollars to state and local governments, which face shortfalls totaling in the billions of dollars and are as a result poised to take actions that will add to the unemployment rolls.

Both of those policy approaches were left out of the stimulus package that Congress passed in February. But it is clear both ideas need to be put back on the table.

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