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flashback to dec. 2008.
http://www.thenation.com/blogs/thebeat/441630
America already has double-digit unemployment. In fact, the real unemployment rate, as opposed to the official rate, is well over 15 percent.
That's because the official unemployment rate -- which as of Friday stood at at 9.4 percent, following another leap in jobless claims for May -- is not, as economist John Williams has noted, "figured in the way that that the average person thinks of unemployment, meaning figured the way it was estimated back during the Great Depression."
What happens when we include people who have stopped looking for work because they do not believe there are jobs to be found, along with part-time workers who would like to be working full-time? Then, we start looking not at the unsettling 10 percent figure but the far more frightening 20 percent number.
As economist Howard Rosen told NPR after official unemployment topped 8 percent in February: "Today we learned that there are 12.5 million people who are unemployed, and we have another 8.6 million people who are working part-time because they cannot find full-time jobs. Now, you're talking about 20 million people in this country who are either unemployed or underemployed. I don't want to freak out people, but the unemployed number, we start talking about 15, 16 percent." Since February, of course, the official unemployment rate has ed dramatically, as has the real rate.
These are the numbers that make an urgent social and economic case for the additional stimulus that my wise colleagues and other concerned commentators are suggesting.
But it is the smaller official rate that makes the political case for both more stimulus and a radical rethink of the Obama administration's ill-thought auto bankruptcy and bailout scheme.
When the federal government actually acknowledges that the country has a double-digit unemployment rate, when a figure that is above 10 percent becomes that official number -- something that the trend lines suggest could happen this summer -- the country reaches an emotional and political tipping point.
"Ten is a tangible, very clear reminder that this is a severe recession," explains Ohio State University economics professor Bruce Weinberg. "Ten becomes something psychological. People will say: 'Whoa, we've got a double-digit unemployment rate.'"
Politically, it is the point at which people start looking for someone to blame. Obama and his people will blame the president's predecessor. This is appropriate, as George Bush's economic and regulatory policies were incredibly unsound and destructive.
The problem, of course, is that the blame game gets harder when it becomes possible to link a sitting president's actions to soaring unemployment figures.
States that have been especially hard hit by the current recession -- Michigan, Ohio, Indiana, among others -- and urban areas that have been devastated by it (according to the Labor Department, 93 metropolitan areas registering an unemployment rate of at least 10 percent in April) now face the prospect of significant additional job losses in the coming months as a result of the administration's auto bailout scheme.
As the bankruptcy and bailout projects for Chrysler and General Motors now stand, the companies plan to shutter 25 factories and warehouses across the United States (14 factories and three warehouses for GM, eight factories for Chrysler). That will eliminate the jobs of roughly 30,000 auto workers.
Additionally, the companies plan to shutter roughly 3,000 car dealerships could cost as many as 150,000 additional jobs.
Thus, the administration-backed "restructuring" of the auto companies -- which is to be supported with as much as $65 billion from the U.S. Treasury -- will add significantly to unemployment rates at precisely the time when it hurts the most. A "bailout" that promotes plant and dealership closings and mass layoffs may play well on Wall Street -- where job cutting and offshoring tends to be rewarded, while job creation and long-term planning tends to be punished -- but it is not the right plan for a country (or a president) that would prefer to avoid the highest unemployment rates in decades.
This is something those members of his team who recognize that they were given power with a mandate for change, not putting a "D" label on bad trade and fiscal policies, should be thinking about.
Blaming Bush is legitimate -- as is blaming Bill Clinton, who gave us the job-killing North American Free Trade Agreement and permanent normalization of trade relations with China.
But there comes a time when a president "owns" his recession.
If the country is socked with a double-digit unemployment rate, and if the actions of the administration that is in charge are seen as feeding the increase in joblessness, that's the political point of no return.
Voters, especially in Great Lakes battleground states where Democrats picked up lots of House seats and electoral votes in 2006 and 2008, will start looking for alternatives. And even Republicans who have not come up with much more than a monosyllabic message -- "no" -- could start to look wise, if not particularly articulate.
Obama and his political aides ought to be smart enough to recognize this fact. Unfortunately, they don't seem to be calling the shots.
The current "deciders" appear to be members of Obama's economic team -- led by the likes of Larry Summers, Tim Geithner and rest of the "public servants" formerly known as Wall Street insiders. Their bad calls, especially on the auto bailout, could give America a "jobless recovery" and a politically-vulnerable president.
flashback to dec. 2008.
Politically, Obama is fine so long as the economy recovers by 2011. It's the House & Senate democrats up for re-election in 2010 who might need to start worrying about that unemployment rate.
When Bush 1 left office, the unemploment rate was at 7.4. When Clinton left office, it was down to 4. When W left office, it was back up over 7 again.Blaming Bush is legitimate -- as is blaming Bill Clinton, who gave us the job-killing North American Free Trade Agreement and permanent normalization of trade relations with China.
But there comes a time when a president "owns" his recession.
I don't recall either Bush owning much of anything.
Do you recall Bush I getting voted out after 1 term? Voter backlash against W giving Obama and the dems a big victory last November ring a bell? Sure looks like the voters held those two guys accountable for something.
oh no. didn'y you hear? apparently the makeup of this board has already predicted the future democrat sweep of the 2010 elections. yeah. i'm amazed at that assessment as well.
I concur. republicans will pick up a few.
I recall back in 1990 or so people thinking Bush was a lock to win. There was even an SNL skit about democratic nominees nominating each other so that they wouldn't be the one to get blown out in 92. Then Ross Perot came along.
but I was referring to them owning up the recessions/problems during their tenure themselves.
I agree with CG, Obama is safe for now because a lot can happen in a year and a half. However, the House and Senate are screwed in my opinion. I don't think there is enough time to turn things around.
I blame GWB ty second term for much of economy's problems. I blame Obama for making it even worse.
If the economy continues to plunge over the next two years, I don't see a 2nd term for Obama. He'll just be a modern-day Jimmy Carter.
I blame the people of the United States who continued to spend money long after they were way over their heads in debt. I blame large corporations for continuing to loan money, and spend money. I blame the government for bailing out failing corporations. I blame Congress more than the president for our economic troubles.
Then you must hate the economic policies of the Obama administration.
I concur but only if the republicans can come up with a worthy candidate and if Palin is anywhere on the ticket they are doomed.
Palin is one of those people that I wish would just go away.
I dont see a Republican candidate currently out there that can beat Obama.
....but I guess you never know...
Did you see Obama coming?
At the 1988 DNC, Bill Clinton gave an opening night speech that was booed by many of the attendees and many thought would ruin his career. 4 years later he is the POTUS.
At the 2004 DNC, Barak Obama (relatively unknown at the time), gives the keynote speech. 4 years later he is the POTUS.
I did. Earlier than I thought but if you watched him speak at the DNC you would have seen him coming.
The problem the republicans have is they need to make up their minds whether or not they want to hang out with the evangelicals or the libertarians. Until they do that they're not capable of winning a presidential election.
I think Newt is going to make a run at it but he has too much baggage. Everyone will be reminded of how he lost majority leader.
All true, but when you have a prez pushing deregulation, ala lax oversight on the lending industry, at the same time he is promoting activities that need to be heavily regulated, ala pusing the housing for all Americans program started in the late 70's, you can see that he was not innocent in the matter...
I don't think he has broad appeal.
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