Today is Labor Day. Most of us think of it as the last day before we go back to work after summer vacation. But, for many people, there is no back-to-work day, as there is no work. The stunning news this week was that Labor Department statistics show no job increase last month. That does not mean there were no jobs created. It means, with the loss of jobs and the gain of jobs, there was no net job growth.
What can we possibly do about this? I have written about tax cuts and how they are not effective in job creation before. Many of you disagree, but there have been tax cuts in effect since the Bush era and the unemployment rate still hovers around 9 percent. There are also those who think cutting our spending will increase confidence, reduce the debt and deficit and therefore inspire the spending by corporations so they will create jobs. Will that really create jobs? That is anyone’s guess.
I am excited to hear what the president will say on Thursday night. He obviously considers this such an important speech that he asked to address a joint session of Congress. He is going to have to come up with a bold plan to make Congress and the American people pay attention. I am sure he will, even if he gets a lot of negative feedback from the Republicans.
The tea party talks about cutting taxes. Members of the Republican Party talk about cutting spending, but so far only Gov. Mitt Romney on the GOP side is suggesting that things be done in a business-like fashion.
I am not suggesting that Romney is a great candidate, only that he is suggesting less rhetoric and more of a planning process.
President Obama, I am sure, is aware of what happened under Franklin Roosevelt. After the New Deal investment and stimulus programs were cut, the Federal Reserve cut monetary availability. Both of those actions caused a severe rise in unemployment. It was only the draft and World War II that increased production, got factories moving again and employed many young Americans.
The recent stimulus program has been the butt of jokes and rancor. Many of the “shovel-ready” programs were anything but “shovel ready.” It was not as targeted as it should have been, but it got many people working again. It put America more into debt, but it did not cause the huge additions to the deficit that we are now seeing. (Other spending, including tax giveaways, Afghanistan and Iraq, have added to the runaway debt.) People started spending money again, and consumer confidence rose.
This week the Center for Budget and Priorities analyzed the recent Congressional Budget Office report on the American Recovery and Reinvestment Act, or ARRA, and found that the number of people employed because of it was between 1.0 and 2.9 million. These are jobs that would have never been created if it were not for the stimulus program.
According to the center’s analysis, the “CBO also includes new projections of the Recovery Act’s jobs impact through 2012. It finds that in the current quarter (the third quarter of 2011), there are 0.8 million to 2.5 million more people employed because of ARRA.” The CBO’s report indicated that the ARRA succeeded in its primary goal of protecting the economy during the worst of the recession.
Leaks about the president’s job speech say that he will support continuing the payroll tax cuts and extend unemployment benefits. Both of these plans make sense. Cutting taxes to those who can least afford to pay them makes more sense than cutting taxes on the richest Americans who can afford a bit of an increase in taxes. President Obama is also expected to promote investment in infrastructure jobs. Like the New Deal programs under FDR and the Comprehensive Employment and Training Act passed in 1973, which continued under President Reagan, the United States needs government intervention to get America working again.
My hope for Thursday night is that the president is willing to take on his political foes and present a bold plan, a plan that will get Americans back to work and the country’s economy back on track. It would be a fitting Labor Day gift to America.