Jobs Summit: The White House Is Stuck
Today's White House Jobs Summit is a translucent exercise in public relations. Recognizing it as such is almost enough to negate its substantive impact. Almost.
True: employers simply are not confident enough to begin to thicken payrolls again, taking comfort in marginal profitability after years of productivity gains. The administration's economic team has concluded that the best anxiolytic for their shyness is to boost their confidence in the economic system. Any quick fixes; one-off shots of money, major surgical interventions -- and these shy creatures will retreat into the comfort of their corporate headquarters. The left, broadly, wants to forget about the deficit for a while, to target structural unemployment first, and to focus on redistributing the wealth from Wall Street to Main Street. The president's most trenchant critics denounce his seeming crouch before the predatory tiger of Wall Street and the Big Banks, both of whom have managed to squeeze profit out of this economy.
Progressives want more spending, more of an industrial policy fortified by investments intended to create infrastructure that guarantees livable wages, primarily, a deficit-deepening jobs bill (designed to fulfill progressive ends -- environmental restoration, child care, urban blight clearing) to stimulate demand, and they want the government to bail out ailing state and local economies, which are poised to be more than $180 billion in the red by the end of the year. A representative example of this plan can be found on the Economic Policy Institute's website.
There are two other broad sets of proposals. The "sensible" center worries about deficits, but they also fault the administration for failing to push for trade agreements, for failing to communicate about their economic vision with small businesses, for engaging in populist anti-business rhetoric, and, principally, for prioritizing economic interventions that breed instability, like health reform and climate change amelioration.
Here is what the White House thinks about that: though they agree that the destitute condition of state and local governments is tantamount to what Robert Reich has called an "anti-stimulus" package (states take federal money in, then raise taxes or cut spending to compensate for the effects on their tax base), they worry about extreme moral hazard and have told governors that they should not expect direct fiscal assistance from the federal government. Congress, however, is softening to this idea. At the very least, the White House might be coaxed to support legislation that would extend stimulus spending on K-12 education, protect state-level unemployment programs, and boost law enforcement and basic services. The White House is also making noises about finding ways to directly bolster the confidence of small businesses. They're open to a variety of different tax increases. One popular idea on the left would impose a sloped financial services transaction tax.
Obama doesn't want to increase the deficit. He is worried that the specter of permanent deficits will, as Robert Samuelson puts it, "ultimately rattle investors and lead to large, self-defeating increases in interest rates." Businesses won't grow without confidence. The left really hates this stubborness about deficit spending; nothing, they contend, is better evidence that the president remains hostage to conventional, if-well-meaning financial-industry-economic wisdom. Politically, the argument suggests that the anxiety that conventional political hacks attribute to deficit spending is actually anxiety about the effects of a lack of services and stability; more spending = more stability = more stuff = less anxiety.
Then comes along the economic conservative, who will propose some variant of tax cuts, less regulation, limited government. Here, corporate confidence is shattered because the president and his congressional allies are crowding out private enterprise. As the Club for Growth's Chris Chocola put it today, "We already had a large and successful jobs summit in this country: it was called the 1980s." The White House is liable to ignore this point of view.
Then comes along the economic conservative, who will propose some variant of tax cuts, less regulation, limited government. Here, corporate confidence is shattered because the president and his congressional allies are crowding out private enterprise. As the Club for Growth's Chris Chocola put it today, "We already had a large and successful jobs summit in this country: it was called the 1980s." The White House is liable to ignore this point of view.
Really: the White House does not seem to believe that (a) anything sensible to meanginfully reduce the unemployment rate can be proposed, completed and paid for -- and executed -- by next November. Nothing, in any event, that wouldn't jeopardize recovery in the long-term. This frustrates people in the party to no end, as well it might. As Obama said Tuesday, "If I were basing my decisions on polls, then the banking system might have collapsed and you probably wouldn't have GM or Chrysler, and it's not clear that the economy would be growing again."