Obama on Lousy Jobs Report
There's not enough bright lipstick in America for this pig. The June Jobs Report was lousy and despite President Obama's best efforts, even the Great Orator couldn't make this ugly data look pretty.
He tried to emphasize the bright spots--private sector payrolls increased by 57,000 in June (a horribly low number) and the private sector has added 2.2 million jobs over the past 16 months. Unfortunately, at the same time government is shedding jobs, to the tune of about 500,000 since September 2008.
The President said that there's a need for bipartisan action to help the private sector and the economy grow. To do so, he said that Congress should do the following RIGHT NOW: extend the payroll tax cut; pass the pending free trade agreements; and create an infrastructure bank to help put Americans back to work. He also underscored the need for a balanced approach to deficit reduction that instills confidence without shortchanging future growth."
These are lovely platitudes, but how's this going to spur job growth NOW, Mr. President? Let's peel back the onion on each of the President's ideas:Extend the payroll tax cut: As a result of the Obama tax cut deal, each worker has seen a reduction of two percentage points in his or her portion of the payroll tax ("FICA" on your pay stub), taking it from 6.2 percent on the first $106,800 of earnings to 4.2 percent. The extra money has been helpful for consumers, but they have not rushed out to spend the extra money and there is no evidence that it would create jobs.
Pass Free-Trade Agreements: There are three pending trade agreements--with South Korea, Colombia and Panama. Silicon Valley would benefit greatly -- it's estimated that the trade agreements could increase US exports by $10-$12 billion a year, with most of the benefits derived from the deal with Korea. If those deals were to pass, it could eventually translate to increased hiring in technology and manufacturing firms.
Infrastructure Bank: The concept is that the government would make a one-time appropriation of $10 billion into a bank that would finance infrastructure projects. (Let's set aside the fact that with the focus on debt reduction and a pull-back in government spending, funding is no lay-up.) The hope is that the $10 billion would fund a total of $320 to $640 billion in infrastructure investment over the next 10 years. According to the Department of Transportation's 2008 numbers, every $1 billion invested in transportation infrastructure creates between 27,800 and 34,800 jobs. Great goal, but it will take a long time to see this plan translate into jobs.
Deficit Reduction: "Balanced approach" notwithstanding, there's little in the debt and deficit reduction conversation that would create jobs. As Felix Salmon noted, when the government spends less money, it means that there were will be fewer, not more jobs created.
Despite the President's best efforts, a more honest appraisal of the jobs report might have gone something like this:
Wow, that employment report was UGLY! Here's the deal: economic growth hasn't been fast enough to encourage employers to hire more people. And because both parties have spent money like drunken sailors here in Washington DC for years, there's nothing left to help boost our anemic growth.