If government was willing, the unemployment rate could be as low as 5%

Another month end, another jobs report. On Friday we received the numbers for August and it was both good news and bad news for President Obama. The good news is that the economy added 163,000 jobs in July which was well above analyst expectations. The bad news is that the unemployment rate ticked up from 8.2% to 8.3%. That small of a change in the unemployment rate (in either direction) isn’t really significant, but the unemployment rate could be several whole points lower by now if government did what it always does in a bad economy: spend money.

Yeah, I can hear it now. Conservatives and even centrists are going to say that the federal government is already spending too much money. The problem with that assessment is that it’s applying a macro level focus to a micro level problem. In this scenario, the macro level is the long-term federal debt, which is definitely something we need to tackle, but we should tackle it when the economy is doing well, not when tens of millions of Americans are still out of work. The micro level is the current economy, and right now government could be doing a lot more at that micro level to get the economy going and lower the unemployment rate.

At the very least we could have made sure that public sector employment remained unchanged (or even increased) doing this economic downturn. That’s what we have always done in the past. When the economy is bad, the federal government props up the state and local governments to make sure that teachers, firefighters and police officers keep their jobs. It doesn’t do any of us any good to lay these people off during a bad economy (or a good economy), but that is exactly what we have done.

So far 693,000 public sector jobs have been lost and each month that number keeps climbing. The private sector actually added 172,000 jobs last month, but the public sector shed 9,000 for a net gain of 163,000. This has been going on the entire stretch of the Great Recession. Does this sound like a recipe for improving the economy? Why are we still laying off public sector workers? This should be cause for revolt yet I believe most Americans are completely ignorant to these simple facts.

The government could have cut the unemployment rate to as low as 5 percent by now “if we had spent enough to do it,” said Dean Baker, co-director of the left-leaning Center for Economic and Policy Research. A government stimulus focused on hiring workers to repair infrastructure would be “the quickest way” to ease the jobs crisis, he said.

Baker said congressional Republicans supporting austerity are not the only ones to blame. President Barack Obama has not explained to the country why the economy is in crisis and how another stimulus would help. Baker pointed to President Franklin Delano Roosevelt, who explained the Great Depression and how to get out of it during his fireside chats on the radio.

“I don’t think [Obama’s] really tried to do that, and in some ways he’s actually done the opposite,” Baker said. “Now, everyone’s got a TV, most people have the Internet. I just can’t believe that people would have a more difficult time grasping basic economic principles today than they did in the ’30s.” – The Huffington Post

President Obama definitely deserves some of the blame. Given how big of a problem this is, I don’t think Obama has made it the number one priority during much of his first term. Of course that doesn’t mean Mitt Romney would be a better choice for president, as he would support more of the policies that got us into this economic mess in the first place, including less regulation on companies that caused the global financial crisis. And while Obama deserves some blame, congressional Republicans deserve most of it. A couple of years ago it was a cynical observation to say Republicans were intentionally blocking legislation that would improve the economy, but now it’s obvious. Republicans will do whatever it takes to make Obama a one-term president, including intentionally keeping unemployment high.

By blocking Obama’s jobs proposals, congressional Republicans are sabotaging the economy to win the 2012 election, said Daniel Altman, chief economist at Big Think and adjunct economics professor at New York University’s Stern School of Business. — Altman, who traditionally has hewed to the center in his research and writing, said he recently chose to take sides because “one side is just so wrong.” – The Huffington Post

Regardless of whether you believe the federal government is already spending too much money, can you honestly argue in support of the 693,000 public sector job losses? Everyone (conservative or liberal) should have agreed years ago that spending the money necessary to keep those public sector employees on the payroll was the bare minimum. Even if you don’t support stimulus spending on infrastructure projects, keeping people in the jobs they already had should have been common sense. It turns out it wasn’t.

It also turns out that Republicans in congress believe this is to their political advantage. Republicans say government is the problem, and they are proving it.


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