The battered, jobless U.S. economy took a turn for the worse - much worse - this past week as President Obama prepared to offer another bag of bromides that looked like the failed remedies he has tried before. As the bedridden, near-comatose economy spiraled into a full-blown crisis for the country and his precarious presidency, hopeful signs of life were hard to find in the flat-lined data on jobs and growth.
The economy is so bad that even the administration admits things will not get better anytime soon as it desperately looks for a lifeline but finds none in a deeply divided Congress that took August off while unemployment lines lengthened and the economy grew weaker.
A recent White House Office of Management and Budget (OMB) report says the 9.1 percent jobless rate likely will persist through 2012, when Mr. Obama will be up for re-election. Meantime, the administration has lowered its economic growth forecasts to a mediocre 1 percent, which may be optimistic. The economy barely grew by 0.8 percent in the first half of the year.
But the unemployment rate is really just a small part of Mr. Obama’s failing economic report card. In addition to the more than 14 million Americans counted as jobless, 8.8 million more need full-time jobs but are forced to accept part-time work, while 2.6 million discouraged workers aren’t counted because they’ve given up looking for a job. All told, more than 25 million Americans can’t find full-time jobs.
The debate over whether the economy was entering yet another recession is beside the point. It feels like a recession, and a majority of Americans think we are in a deep recession because of Mr. Obama’s failed recovery policies.
The Washington Post-ABC News poll reported Tuesday that by better than 2 to 1, “more Americans now say the administration’s economic policies are making the economy worse rather than better.”
More than 6 in 10 disapprove of the way Mr. Obama is handling the economy and jobs, with nearly half of them saying they “strongly” disapprove of the job he is doing.
Democrats are unhappy with the way things are going, too. Those who say things are going in the right direction - Mr. Obama’s all-purpose excuse in his first two years - fell from 60 percent in January to 32 percent now.
Fewer than three-fourths of Democrats approve of the job he is doing.
“We’re not in a recession yet, but we’re right there at the edge,” said Mark Zandi, the widely respected chief economist at Moody’s Analytics, adding that the nose dive in stocks reflects “just how precarious a situation we’re in.”
It should be clear to everyone by now that Mr. Obama doesn’t have any idea what kind of growth rate is needed to get the economy up and running at full throttle. Economist Peter Morici says the economy “must add 13.7 million jobs over the next three years - 381,000 jobs each month - to bring unemployment down to 6 percent.”
The economy needs to grow in the range of 4 percent to 5 percent to drive unemployment down to 6 percent over the next few years.
Friday’s bleak employment report showed the Obama economy added zero net new jobs in August and just 85,000 jobs in July. The economy is barely growing at less than 1 percent, far from the 4 percent to 5 percent economic growth rate that is needed to boost job creation.
But if the OMB’s forecasts are correct, the economy is not going to break out of its severely lethargic spell before the November 2012 elections. And no president since Franklin Delano Roosevelt has won re-election when the unemployment rate was hovering around 9 percent or more.
Since he enacted his failed $825 billion spending stimulus bill in 2009, Mr. Obama has taken several additional steps to get the economy up and running again, including a one-year, 2-percentage-point cut in the Social Security payroll tax. All have met with failure.
Thursday night’s televised address to a joint session of Congress is expected to call for a one-year extension of that tax cut, plus billions of dollars more to repair highways, bridges, schools, rails, airports and other infrastructure projects, and a jobs tax credit to reward employers who hire additional workers.
Mr. Obama has proposed the temporary jobs tax credit before but without any success. Employers aren’t hiring because business is poor, and they can’t afford to enlarge their payroll, or they have little confidence that the economy will improve. The offer of a tax credit is irrelevant in the current economic environment.
Mr. Obama’s economic policy is trapped in an ideological aversion to cutting income tax rates permanently. Businesses need tax cuts to improve their bottom line, invest in expansion and unlock venture capital for risk-taking loans. All of this is missing from Obamanomics, which is all about enlarging government instead of enlarging the private business sector and our shrinking labor force.
Republicans, on the other hand, want to broaden the tax base by getting rid of tax loopholes and cutting the tax rates. That is the huge policy gulf that separates the two parties in Congress. In the end, it probably will take an election to decide which course our country takes to get the economy up and running again. The one we’re on certainly isn’t working.
Donald Lambro is a syndicated columnist and former chief political correspondent for The Washington Times.