LAMBRO: Surreal world of Obama tax hikes
“On Friday, forecasters expect the U.S. Labor Department to report the economy added 155,000 jobs in December — substantially less than is needed to pull unemployment down to acceptable levels,” economist Peter Morici says.
There has been a precipitous and dangerous decline in the U.S. labor force throughout Mr. Obama’s presidency, the chief reason why the jobless rate has fallen. Heidi Shierholz, an economist with the Economic Policy Institute, finds that job creation is so weak that workers are not being “drawn back into” the market.
If all of these discouraged (and uncounted) workers who have dropped out of the labor force were added to existing job seekers, unemployment would be nearly 10 percent. Throw in 8 million part-time workers who can’t find full-time work, and the jobless rate climbs to 14.4 percent.
This week’s 2 percent jump in the payroll tax will only exacerbate the emerging crisis in the labor market. “Many more households are living paycheck to paycheck than just a few years ago given the very tough economy and the decline in real incomes. This amplifies the negative fallout from the expiration of the payroll tax holiday,” says Mark Zandi, an economist with Moody’s Analytics.
“The still very weak consumer confidence, due in part to lower incomes, also reinforces the negative impact” of the higher payroll tax that will begin hitting workers in their next paycheck, he said.
That by itself will create a major undertow in the economy from here on out. Economists say it could result in the loss of 500,000 to 1 million jobs this year, pushing the jobless rate up by at least 0.4 percentage points, if not more.
Each month, the nightly network news puts on a “things are getting better” pep rally when the monthly jobs report comes out. But here’s what they don’t report: “More than half the jobs created [in November] were in lower-wage industries [in] retail and hospitality” services, writes Chris Kirkham of The Huffington Post.
“[E]veryone wants to make something of them, but the jobs that are being created just aren’t great jobs,” says business economist Kent Smetters of the Wharton School of the University of Pennsylvania.
This is the harsh, human reality the White House and Mr. Obama refuse to acknowledge and the nightly news largely ignored throughout the 2012 presidential election.
Tax the rich. “This is the right thing to do,” the president told Congress on New Year's Day. Not a word was uttered about raising taxes on everyone’s paycheck.
This is the surreality operating within Mr. Obama’s mind where he really believes “the private sector is doing fine.” Remember that one?
Now, his second-term mantra on behalf of raising taxes on a limping, job-challenged economy is “it’s the right thing to do” — even when more than half of the jobs being created in his economy are low-paying ones that won’t feed a family or pay a mortgage.
Donald Lambro is a syndicated columnist and former chief political correspondent for The Washington Times.
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