Today President Obama will travel to Illinois to turn attention back to jobs and the economy. He does so amid an economy that is still in trouble.
Mass unemployment continues its devastating toll. Over 22 million people are in need of full-time work. Wages for workers are stagnant at best. In impoverished urban areas, up to half of young African-American men and women go jobless. The core of the Obama coalition – the young, people of color, single women – have been hit the hardest.
The economy is inching along barely above stall speed, with growth less than 2 percent and consumer inflation at about 1 percent. We’re closer to a return to a recession than to robust growth. About 200,000 net jobs have been created a month this year, but at that rate it will take us about 7 more years to return to normal levels of unemployment. No wonder a majority of Americans think the country is still in recession.
The old destabilizing imbalances are back. Inequality is on the rise even though the economy is growing. In the first years coming out of the recession, the top 1 percent pocketed all of the rewards of growth, while 99 percent actually lost ground.
The International Labor Organization reports the U.S. is one of only three industrial nations where income inequality grew during the recession and has continued to grow in the recovery.
The jobs being created pay less with fewer benefits and less security than the jobs that were lost. Most of the new jobs are in restaurants, retail trade and temps. Manufacturing remains moribund, despite all the bravado about “insourcing.” And government at all levels remains a drag on the faltering recovery, still cutting spending and jobs.
Amid unending revelations of their nefarious conspiracies, the big banks are more concentrated than ever. Officially declared too big to prosecute, they are too big to fail, too big to jail and too big to manage. The combined balance sheets of the five biggest banks are now about the same as the U.S. annual groos domestic product. They are becoming too big to save.
America’s trade imbalances are back up to over $1 billion a day. The explosion in natural gas will help reduce energy sector deficits. But the trade deficit with China has reached new heights, setting new records for the most extreme bilateral trading deficit in history.
Making the economy work for working people requires bold reforms, a change in course. But, the president faces a Tea Party dominated Congress intent on obstructing virtually anything he proposes, while continuing to push its purblind assault on government services and entrenched defense of corporate subsidy and tax breaks.
As a result, the president has tended to propose modest measures – a little infrastructure investment, a little green manufacturing, a hike in the minimum wage. And even these modest measures are dead on arrival in the Republican House. One test of his speech is whether he is prepared to abandon his defensive crouch, and level with Americans about what it would take to put the country back on track.
What would it take to make this economy work for working people once more? It would require the president to challenge the shibboleths and inertia now dominating policy and lay out a new course. Here are signposts for that course:
An end to austerity and a return to jobs and growth
America’s deficits are down by more than half as a portion of the economy. They are coming down faster than anytime since the demobilization after World War II, exceeding all prudent speed limits. The conservative heads of the International Monetary Fund and the Federal Reserve, the finance ministers of the 20 biggest economies all agree that governments must turn back to focusing on jobs and away from austerity.
For the U.S., this would mean building on the president’s jobs plan with a major drive to rebuild the country’s decrepit and increasingly dangerous infrastructure, a commitment to educating the next generation – from pre-K to affordable college, targeted jobs and training programs for the communities savaged by the greatest unemployment.
Balanced trade and a strategy for manufacturing
The old trade imbalances have disemboweled American manufacturing and cost millions of good jobs here at home. A new course would abandon the corporate trade regime and commit to balancing our trade, seek to capture a lead in the green industrial revolution that is sweeping the world, and to invest in the research and development that will help create the industries of the future.
Catastrophic climate changes are already spawning costly calamity. Meeting this challenge will drive innovation, technology, transformation, jobs and economic growth over the next decades. We must insure this country is a leader, not a laggard in this transformation
Good jobs will require direct intervention to rewrite the rules. Raise the minimum wage and index it to inflation. Enforce pay equity and raise women’s wages to equal levels with men. Require paid family leave and paid vacations, joining the rest of the industrial world in these simple measures. Empower workers to organize and bargain for a fair share of the profits and productivity they help to create. Curb perverse executive compensation schemes that give corporate CEOs’ million dollar personal incentives to cook the books, loot their own companies and ship jobs and profits abroad. Pass immigration reform to bring millions out of the shadows so they don’t undermine wages for all.
The rich rigged the rules to enable them to capture virtually all of the rewards of growth. It is time to get their thumbs off the scale.
Make banking boring
Finance must once again serve the real economy rather than pirate it. That requires closing the revolving door between Wall Street and Treasury. Breaking up the big banks, splitting speculative investment banking from commercial transactions backed by government guarantees are sensible next steps.
The President’s Challenge
The president isn’t likely to advocate an agenda this bold. But he does have to level with the American people. He has to make it clear that he understands this “recovery” isn’t working for working people. He must show how his “middle-out economics” differs from the course we are on, and how it includes those locked out of the middle class in the heart of his own political base – women, young people, people of color.
What the president proposes today won’t be passed into law. Republicans have already made that clear. That leaves him free to define clearly for Americans the choices that have to be made, the values that must guide those choices, and the stake we all have going forward. This is the time to show Americans there is a way out of the mess we are in – and to show them exactly who is standing in the way.