Unemployment Rate Will Be 7.9 Percent by November 2012, Says White House


A new forecast by the White House indicated that the unemployment rate might be inching down to 7.9 before the end of the year. This drop could occur around the time of the presidential election.  This prediction, however, is predicated on the assumption that some of the president proposals, “which have traditionally earned bipartisan support, will still be enacted.”  It is unlikely that this prediction would come to fruition since there is zero chance that the House of Representatives, which is controlled by Republicans, would pass any laws that would spur job growth -- since that would increase the odds of President Barack Obama getting reelected.

Last September, Obama delivered a speech to Congress in which he put forward new proposals that would jump start job creation. The $447 billion plan sought to renovate 35,000 public schools, which would employ hundreds of thousands of people, invested $50 billion to repair roads and called for providing states with $35 billion in order to “hire tens of thousands” of teachers and stop the firing of 280,000 educators and firefighters. The president’s plan was well received by economists. Marc Zandi, a former adviser to John McCain, determined that the “plan would add 2 percentage points to GDP growth [this] year, add 1.9 million jobs, and cut the unemployment rate by a percentage point.” 

During the 2002 Congressional election, one of the main themes of Republican candidates was as follows: “Where are the jobs.” Two years following their success in recapturing the House of Representatives, what action have Republicans taken to grow jobs? Republicans claimed to have passed 32 bills that dealt with job creation. Many economists that examined their job bills came out unimpressed. They concluded that those bills would not have much effect on job creation. In fact, a senior economist at the Brookings Institution, Gary Burtless, characterized some of those bills as “laughable” as far as their potential to generate jobs.

Robert Draper revealed in a new book that several GOP leaders such as Paul Ryan and current Majority Leader -- the second highest position in the House leadership -- Eric Cantor met during the inaugural festivities so that they could strategize on how to stop Obama from achieving his legislative objectives. Furthermore, Mitch McConnell, the Republican leader in the Senate, declared that his number one priority is to make Obama a “one term president.” Thus, they set out to gum up the legislative process and oppose anything that Obama would propose from day one and they never let up ever since.   

The Great Recession has caused serious budget shortfalls in many states. To balance their budgets, some of those states had to give pink slips to a number of teachers, police officers, and firefighters.  It would have been a sensible policy to provide aid to those states to help them deal with their budgets, particularly since so many Americans are unemployed. But Republicans have steadfastly opposed such initiative because they argued that the government did not create jobs. However, government jobs played an important role in spurring economic growth under both Ronald Reagan and George W. Bush.

The government has the ability to greatly reduce the suffering that the Great Recession has caused.  But the unyielding obstruction of Republicans has impeded its capacity to act more forcefully.   The global economic crisis has created one major advantage to the U.S. But the country has not been able to take advantage of this golden opportunity because of the opposition of Republicans.  The U.S. has been in an enviable position since it could borrow money very cheaply. In fact, the borrowing cost of the country has never been lowered since investors are loaning the U.S. government “free money for the next 10 years.” Therefore, the government should have borrowed money to put millions of people to work repairing the country’s roads and providing substantial aid to the states in order to help them deal with their massive budget deficits. Moreover, a report by the American Society of Civil Engineers noted that it would take “$2.2 trillion over five years” to revitalize the decaying infrastructure of the country. Borrowing at this rate would not always be available. Hence, the money could be used toward this important undertaking.

The government has been presented with a rare opportunity not only to upgrade the aging infrastructure of the nation but also to create millions of jobs, which would have reduced the unemployment rate. Such investment would have benefited the country both short term and long term. It would help short term since it would produce jobs, thereby promoting economic growth.  Additionally, the government would collect more revenue. Those twin factors-more government revenue and stronger economic growth would put the country in a much better economic footing, which in turn would make it easier for the government to deal with the nation’s long term debt.   Because a much-improved economy, however, would have redounded to the benefit of Obama, Republican opposition has handcuffed the government and prevented it from taking those bold steps.

Obama has taken decisive action to keep the country from plunging into a depression and restoring economic growth. Nonetheless, the pace of recovery has been sluggish. The government has the ability to do much more to speed-up the recovery and diminish the suffering that the lingering effects of the Great Recession are still inflicting on millions of Americans across the country.  Republicans have been effective, particularly following their takeover of the House of Representatives, in blocking any major proposals by the president. By creating gridlock in Washington, the government has been handicapped. Action that should be taken has been delayed, if not abandoned, due to implacable opposition. Therefore, the obstruction strategy of the Republicans has been successful. The economy would remain weak; thereby it would be highly unlikely that the White House forecast would come to the fruition. Republicans might fail in their attempt to make Obama a one-term president; but it would not be for a lack of trying.