Posted on Wednesday, December 8, 2010
The White House had some cause to look forward to Friday’s jobs report: Even the most conservative estimates of November gains were north of 100,000, suggesting the mythical economic “pivot point” towards an accelerated recovery would finally arrive.
But economists, who had collectively settled on an estimate of about 150,000 added jobs for November, missed the mark like a bunch of drunks at a driving range. The sputtering U.S. economy again disappointed, creating a paltry 39,000 new jobs and kicking the top-line unemployment rate up from 9.6 to 9.8 percent.
Friday was yet another Charlie Brown-Lucy-and-the-football moment for President Barack Obama, whose inability to significantly lower unemployment has become the defining struggle of his presidency. It has fueled a political rebellion among the same middle-class and independent voters that swept him into office, a turnabout that cost Democrats the House of Representatives in the midterm elections.
Austan Goolsbee, chairman of Obama’s Council of Economic Advisers, put the best face possible on the ugly news, warning that observers shouldn't “read too much into any one monthly report.” He added that such reports are “volatile” and subject to revisions — as were the October employment gains, which were upgraded Friday from an initial estimate of 150,000 to more than 170,000.
The economy has added 1.2 million new jobs since December 2009, he said.
“Although the overall trajectory of the economy has improved dramatically over the past year, there will surely continue to be bumps in the road ahead such as this,” Goolsbee added.
Other reports had pointed to accelerating growth in recent days, including a robust uptick in holiday retail activity, brisk existing home sales and an ADP report suggested a major hiring spurt in November. But those green shoots wilted in an early December frost, as private payrolls added just 50,000 jobs, a fraction of the number predicted, with retail employment posting a surprisingly anemic gain.
There was some cold comfort Obama and the Democrats, however: The lousy data bolster their case for a $60 billion, one-year extension of long-term unemployment insurance, a measure Senate Republicans have steadfastly blocked.
“Today’s jobs report could not have been worse for unemployed Americans,” said Christine Owens, executive director of the National Employment Law Project, which has pushed for the unemployment extension.
“Job growth stalled out in November, and most disturbingly the unemployment rate has jumped back up. Millions of the unemployed — nearly half — have been looking for work for more than six months. [T]he recession hasn’t ended for workers," she said. "It should be clear as day that the economy is in absolutely no shape to absorb cutbacks in the support that unemployment insurance provides to families, businesses and overall growth.”
Richard Trumka, president of the AFL-CIO, said the languishing jobless rate is once again getting “painfully close to double digits” and predicted “tough times ahead” — a break from recent optimism stoked by positive recent jobs reports
Obama will travel to Winston-Salem, N.C., on Monday to deliver another in a series of speeches on the economy. He is expected to address his call for the GOP to expand tax breaks for students and research as well as the $60 billion extension of the Making Work Pay tax cut and the Earned income Tax Credit for working families.
The administration hopes the dismal report will give them increased leverage in negotiations with Republicans over renewing the long-term unemployment benefits, which expired earlier this week. On Thursday, senior administration officials said they would make an unemployment insurance extension a central demand in talks over the extension of expiring Bush-era tax cuts.
Still, Friday’s report was a bitter disappointment for the president, who has acknowledged that last year's $780 billion stimulus package wasn’t large enough to tamp down unemployment to more moderate levels — blaming, in part, the need to include billions in tax cuts to win votes of Republicans and conservative Democrats.
Administration officials have consistently pointed to the unemployment rate — which is more than 15 percent when discouraged workers who have stopped searching for jobs are factored in — as the biggest political millstone around the president's neck.
During the fall, the White House dismissed the idea that Obama and his team had spent too much time on the sweeping health care reform package, or that the West Wing had bungled its economic message to voters. Officials argued that persistent joblessness, the result of the 2008 financial crisis on President George W. Bush's watch, was unavoidable in the short term.
But most economists say the stimulus, and multiple extensions of unemployment insurance, have helped the White House avoid a complete economic disaster and even higher unemployment. Nevertheless, Republicans — emboldened by their Nov. 2 congressional landslide, triggered by a public backlash against ever-higher deficits and seemingly unprecedented government spending — argue that Obama’s governing philosophies have discouraged businesses to invest and hire.
“Today’s jobs report showing unemployment jumping to 9.8 percent only confirms that President Obama’s agenda of out-of-control spending, higher taxes and bigger government has the economy moving in the wrong direction,” Republican National Committee Chairman Michael Steele said in a statement. “Despite the clear message sent in last month’s elections, Democrats continue to ignore the American people by remaining focused on enacting a host of liberal priorities that will do nothing to create jobs.”
“It's difficult to argue that your economic policies are working when unemployment goes up,” said Julian E. Zelizer. professor of history and public affairs at Princeton University in POLITICO’s Arena. “The administration can talk all it wants about jobs saved, but that won't provide Obama with much political cover.”
Some Republicans used the report to pressure Obama for a permanent extension of the Bush tax cuts for all income groups, including families earning more than $250,000. Opponents argue that the across-the-board extension would add billions to the federal deficit, but the GOP argues that letting the cuts lapse would further stall hiring and add to the jobless rate.
Rep. Darrell Issa (R-Calif.), who has vowed to hold hearings to investigate the stimulus when he takes the gavel as chairman of the House government oversight committee in January.
“You would think that after the November elections, Democrats would have realized how out-of-touch and misdirected their policies have been, but given the political gamesmanship they engaged in with yesterday’s vote that would leave small businesses susceptible to a devastating tax increase, they clearly have not gotten the message," Issa said in a statement. "The only question remains how many more Americans will need to lose their jobs until they do?”
By: Glenn Thrush