09.08.11

Obama’s Futile Jobs Plan

The reported $300 billion jobs plan the president will offer is a pragmatic proposal that may help his reelection chances but won’t boost the economy or create jobs, says Zachary Karabell.

By now, the White House has leaked the most salient aspects of President Obama’s plan to reinvigorate the American jobs market. It is said to amount to $300 billion, give or take, the largest component being an extension of both the current payroll tax break and unemployment insurance benefits. The rest will consist of education grants for retraining, some form of infrastructure spending with yet another call for a public-private partnership in the form of an infrastructure bank, and direct aid to state and local governments to stave off teacher layoffs. The White House also has hinted at some as-yet-undisclosed ideas to be unveiled during his speech to Congress, and has not even officially confirmed any of the above.

Assuming that the outline is correct and that Obama does not at the final hour change course, the plan is at the very least a failure and at worst (or best if you’re a Republican) a beginning of the end for the Obama presidency. For one, the dollar amount is very, very small. The economic output of the United States this year will exceed $15 trillion and yet is failing to provide meaningful employment for millions. Granted, it is also providing meaningful employment for many millions more, but the United States was never a society that assumed success meant that most people were thriving. It is a system and a culture that demand that even the least advantaged have opportunities, and on that score, the perception is that America today does not offer that.

Public perceptions are, of course, fickle and at times grossly off the mark. According to survey after survey, most people don’t know how the U.S. government spends money, and assume that foreign aid is at least 10 times more than it actually is. Still, if you’re running for office, you’d better address those perceptions. Few people today believe that America is “on the right track” (only 18 percent, according to the latest Rasmussen poll, and only 20 percent, according to ABC News/Washington Post). Fewer than half believe that President Obama is doing an adequate job addressing these issues, which is a better ranking than Congress by far, but that’s about the best that can be said for the numbers.

In that context, the plan as it stands is a whimper, if that. More than half consists of extending measures already in place (the payroll tax holiday and unemployment benefits). If those haven’t done much to move the needle in the past two years, it is hard to make an impassioned argument that the third time is a charm. As for teacher layoffs, infrastructure, and some corporate tax breaks to encourage hiring, all of those may be worthy, but their net effect at the level proposed cannot be more than marginal.

We have a problem in the United States, a problem of chronic structural unemployment. And we have the added problem of political cycles of two years. The political cycle demands short-term results, yet the current employment problem cannot be solved that way. The only thing that can be done between now and election time 2012 is put a tad more money in people’s pockets to give the illusion of things getting better. There is no way that millions of new jobs can get created in the coming months, unless Obama and Congress decide to hire workers on government payrolls. Obama can’t do much to create jobs in the coming months, but he could—and this would be radical—admit that and then change the conversation.

The White House has clearly calculated that the odds of getting the Tea Party–infused House of Representatives to pass a major spending bill are slim to none. The Senate is no picnic either, with its filibuster rules precluding swift action. So Obama is steering a course of pragmatism. This has been his inclination all along, to do what is possible and practical. Even this Congress will be hard pressed to reject a payroll tax cut and unemployment benefits in an election year, regardless of the effect of the deficit. So Obama is proposing a plan that has a fair chance of being passed.

But this inclination is not serving the Obama presidency. It may, of course, serve his reelection, but only if the Republicans nominate an unelectable candidate. While it is easy to carp and criticize, easier than it is to govern, the crescendo of concerns and complaints about Obama have reached a pitch across the political spectrum that the White House would be foolish to ignore. Pragmatism ignites no one’s passion, especially when it is ineffectual pragmatism. If these plans really were economy boosting and job creating, that would be one thing. They aren’t, however, and that means that it is pragmatism with little benefit.

Pragmatism ignites no one’s passion, especially when it is ineffectual pragmatism.

Instead, Obama would be well served to take a page from Harry Truman in 1948. Faced with a recalcitrant Congress that would not pass his proposals, he decided to make their intransigence the campaign issue: the “Do Nothing Congress” he labeled them and hounded them. Obama could well propose a massive infrastructure spending bill, and significant works programs along the lines of the New Deal Works Progress Administration (WPA). He could champion tax breaks and lower tax rates for large companies contingent on creative plans to hire on-shore, and he could call for a simplification of the tax code. He could articulate a vision of deficit cutting that includes every aspect of government, but not immediately, and not in a period of weakness when interest rates and debt servicing are at multi-decade lows. He could explain why the Tea Party vision of austerity robs the poor and the working class while doing nothing to unlock the potential of the next American economy. He could take the fight to Congress and then to the public.

He could, and maybe there is an ace and a sleeve and some magic. There is no sign of that. Instead, there is relentless calm and calculation and a narrow definition of what is politically possible. The speech and the plan are an opportunity once again to seize the agenda and fight a fair and passionate fight. It is also a vital fight for Obama, because as long as parts of the economy are stagnant and millions are struggling, that will dominate the agenda unless there is a sense of hope that things are improving. A proposal of $300 billion and payroll taxes—that will not be remembered by future generations as a turning point. It will likely not be remembered at all, except perhaps as a yet another marker of a meandering America that remains extraordinarily affluent but unable to channel its resources to meet the challenges of the day.