CapitalistMarks

Unemployment. Obama’s Rubicon.

Posted on 14. Sep, 2009 by scott in Social commentary, economic daydreaming, political munglings

Sure health care is important (I agree totally), and the war in Afghanistan is critical (Iraq is winding down), and the search for Osama must go on, and better education in the U.S. is key to our children’s future . . . but the MOST IMPORTANT issue facing the President today is unemployment.

This is his Rubicon.  With everything else on his plate (he is at a smorgasbord as far as that goes) only one thing really matters today.

Unemployment.

It is at near record, post depression, highs (9.7%) with only the early 80’s recession leading (10.1% in 1982).  And the truth is that few economists, and certainly not this one, believe we will stop at 9.7% nor even 10.1%.  Eleven percent would be a good place to stop, and I think we should shout with glee if that were to be the case.  Sadly, 12% or even higher is not out of the question.

Why?

Because our President has his eyes on other things, issues that will (at least in his mind) help him go down in history as a genuine ‘doer.’  And, while he is giving speeches and holding town hall meetings about health care, more loyal Americans are losing their jobs.

What is it going to take for Obama to push these other important (much less so than unemployment) issues to the background and focus on the ONE thing that nearly all of us on Main Street worry about the most . . . our jobs (or the ones we used to have)?

Most of the ‘up front and center’ members of this administration are touting the ‘fact (?)’ that the recession is at (or coming to) an end.  But, they are jumping the gun.  I don’t think we have come close to seeing the end of the financial crisis and unemployment is one of the key reasons why.

Think about this:  with more people out of work consumer spending will continue to drop, that will lead to further cutbacks which will lead to further layoffs which will lead to more consumer debt defaults which will lead to companies going out of business which will lead to commercial rents disappearing which will lead to foreclosures on commercial property AS WELL AS further defaults on home loans!!

All of that means further bad news is coming and the recent run up is just wishful thinking (I am talking here about the stock market).  Until we can get these other ‘forgotten’ financial issues taken care of we simply can’t count on the recession ending (at least not for very long).

At the center of this perfect storm is unemployment.  It is the first and the last thing our economic wizards in the government should be addressing.

Hey, at 9.7% unemployment we even in worse shape that Europe (9.5%) for crying out loud!!

President Obama is right on the bank of his Rubicon and maybe even leaning a bit.  He can choose to cross it with an active engagement of the problem or he can stay where he is and play the passive ‘wait and see’ game (no one ever wins big taking that approach).

He must know how terrible this is.

Since December of 2007 we have lost about 7,000,000 jobs in our economy.  That is a decline of incredibly fast and historic proportions.  But it is even worse than it seems because the relevant statistic is actually the unemployment rate combined with the ‘under employment’ rate (includes those who have taken part-time jobs or have quit looking out of despair).  That rate is an amazingly awful 16.8%!!  In other words roughly 20,000,000 citizens of our country simply can NOT find a decent job!!

Think of everyone in the intermountain west (Utah, Nevada, Idaho, Wyoming and Colorado) being out of work AND then throw New Jersey in just for good measure!!  OUCH!

It really strikes home to those in cities where employment is unbearably high:  Detroit (17.7% –roughly one out of five unemployed), Riverside, California (14.3%) and Las Vegas (13.1% ).

We have to start generating new jobs . . . right now.  Americans need to see sufficient employment growth to cover not just the current unemployed but ALSO the natural growth from the increases in the labor force due to immigration and young people entering the job market.

And the implications of continuing high unemployment are generational not just a current problem.  Among them, a deteriorating labor force (in training, skills and motivation) packed on top of increasingly higher poverty rates and subsequent lower taxes for our government to pay off the incredibly obscene debts that they have recently burdened us with (and will continue to do so for YEARS!).  There is simply no rosy picture that can be painted from the present scenario.  Obama and his minions have to do something NOW!

The only growing segments of our economy (relative to employment) are health care, government and education.  That is bad news because we need health care and government to decline in employment in order to cut costs and reduce deficits.

Obama, do you get this?

Cross the Rubicon, man.

Stop worrying about health care (at least right now) and plain old forget about ‘cap and trade’ in the House’s Environment bill (a real job killer).  Pull out all stops and start spending billions on productive and useful programs that will improve our future by making our nation more competitive and with improved consumer confidence (i.e spending).

Fix our roads, our bridges, our airports our sea-ports, our dams, our electric grid and such.  Pile on with new and better schools, more teachers, better text books, safer playgrounds, improved national parks and access.  Fix our tax system so that it is easier and more fair.  Limit harassment (blackmail) lawsuits.  Lighten up the regulatory restrictions and requirements on small business (the BIGGEST segment of employment in the country).  Eliminate capital gains taxes.  Make investment easier and more profitable and thereby promote private-sector spending to create jobs.  I could go on but your economic geniuses must surely have the brains to get this done.

Unemployment is not just the defining issue of your first term, Mr. President.  It is the defining issue for your ONLY term if you don’t get the job done.

Join in the effort folks.

I suggest you copy this message and send it to your congressmen and then directly to the WhiteHouse.  Send it to your Governor as well.  Send it to your friends and neighbors.

NOTHING in our economy or political system is more important right now.

Urge the President to cross that torrential river of political ‘whitewater’ and get the job done . . . if  not you just might be losing your (if you haven’t already)!

thanks to flickr’s travelingtamas for the photo

Tags: Great depression, great recession, President Obama, unemployment