Analysis: Mix of measures more likely in Obama jobs plan

WASHINGTON Fri Sep 2, 2011 7:43pm EDT

A woman exits a job fair at the Phoenix Workforce Connection as others wait to enter in Phoenix, Arizona August 30, 2011. REUTERS/Joshua Lott

A woman exits a job fair at the Phoenix Workforce Connection as others wait to enter in Phoenix, Arizona August 30, 2011.

Credit: Reuters/Joshua Lott

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WASHINGTON (Reuters) - Poor U.S. jobs figures on Friday put President Barack Obama on the spot to create a viable jobs plan in a speech to Congress next week that may help determine whether he wins re-election or not.

With no jobs created in August, Obama is under pressure to lay out a bold, long-term strategy to invest in measures that would jump-start economic growth. A successful approach would give him a 2012 campaign platform against Republicans, who accuse him of being a job killer.

But political appetite for expensive government spending measures is limited, and analysts say he may go with a mix of bold and less risky measures, with some that have decent chances of congressional approval and others that do not.

"I think he's going to probably try to thread the needle -- have a few things that are very practical and necessary for the economy over the next 12-18 months," said Mark Zandi, the chief economist at Moody's Analytics and a former adviser to 2008 Republican presidential candidate John McCain.

"Anything he says, it's going to be hard for him to get a lot of people really excited about."

Obama is likely to propose a mix of tax breaks, help for homeowners and some spending on public works.

Zandi said an infrastructure bank and corporate tax reform could also feature in the speech.

Friday's Labor Department report showed the first time in nearly a year that the economy had failed to create jobs. The data raised the stakes even higher for Obama, whose proposals -- and the reception they get -- could define his campaign to retain the White House in 2012.

"It will cause more attention and focus on the president's forthcoming proposals, but the report also highlights the difficulty in crafting any short-run policy to move the unemployment rate down," said Alex Brill, a former economic adviser to Republican President George W. Bush.

Gene Sperling, Obama's top economic adviser, said Friday's figures did not change the president's general view about the economy or what he intends to propose.

"He will be very specific about what we can do that can have a meaningful impact on job growth and the economy right away," Sperling told Reuters Insider television, noting that "self-inflicted wounds" from the divisive debate over raising the U.S. debt ceiling had contributed to the tough conditions.

"The economic case is quite compelling that we need to do something that can have a definitive and meaningful impact on projected economic growth over the next 12 to 18 months and on ... job growth. And the president felt very strongly about that even before the job growth number today."


Despite his strong feelings, and even with the jobs report as an impetus, Obama's biggest challenge will be getting the Republican-controlled House of Representatives to support any of the measures he proposes.

The deficit debate and even a squabble this week over what date the president would address Congress have highlighted the partisan tensions that have made it nearly impossible for the White House to realize its policy priorities.

"The reality of the situation is, there's not much they can do in the very short term because anything significant is going to require congressional approval," said Steven Ricchiuto, chief economist at Mizuho Securities USA.

"In order to do something very constructive, they have to change the debate in Washington, and I don't know whether this president has the clout to change that debate."

Obama put a stop on Friday to new rules that would have limited smog pollution, unexpectedly reversing course on a key policy measure after businesses argued it would kill jobs and cost them billions of dollars.

Whether he can change the debate or not, Obama is not the only U.S. leader under pressure.

Lawmakers in Congress also face public ire as they face re-election next year.

"It puts more pressure on Congress to do something," said Heather Boushey from the Center for American Progress, referring to the Labor Department figures.

"Since the beginning of 2011 Congress has pretty much expressed a complete unwillingness to do anything on jobs."

Republican and Democratic lawmakers would disagree with that contention, but both sides know that their records will be judged by voters in 2012. If Republicans refuse to support any of the "bipartisan" proposals the White House says Obama will put forward, the president will no doubt remind voters of that throughout his re-election campaign.

(Editing by Mohammad Zargham)

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Comments (4)
Innocentious wrote:
Hmmmm, besides direct spending the U.S. Government has very few tools at its side to create Jobs however lets for the sake of argument say that the US Government directly does intervene and shores up the Jobs that are needed right now. Currently our unemployment figure stands at 9.1% and 14 Million people are unemployed. So say we wanted to have unemployment down to 5% the Government simply has to hire those people, and lets say they do so at the Median income level of $52,000.00 That means that we would have to hire 6.3 Million. This would cost $328 Billion in order to accomplish if the Government did so directly.

However there is a problem with this figure. The problem is these are not the burly men of the 1930′s willing to go out and work hard in order to make a living. Where all you needed was a pick axe, a shovel, and a will to make things happen. There are no projects to tell them to go and simply create a road from point at to point b, no schools to simply say go and build, no shovel ready projects to keep them gainfully employed for the amount of time needed.

So how do employ these people in a manner that makes sense? This is the main problem. we are talking about one in twenty people needed to go and create something of value for both themselves and others while at the same time not simply creating a charity program.

I honestly do not have an answer, Once you begin to factor into the equation the amount of additional funds of raw materials and any other items needed to actually employ these people you are talking no longer a third of a Trillion but a solid Trillion a year to keep them employed.

Regulation prevents us from simply throwing this man power at something, like say schooling. We have about 51 Million kids in Public school right now, and around 3.2 Million teachers. What if instead of an infrastructure revitalization we did something crazy like threw man power at education instead? Relaxed regulation to the point where so long as you have one certified teacher in the class room you could then have another person who receives on the job training to be an educator while at the same time giving more direct contact to the students and assisting them in the learning environment.

Heck we could even do a three to one ratio at that point adding on the entire 6.1 Million unemployed. This would take our Student to Teacher ratio drop from an average of 16 students per teacher to 5.5 Students per teacher. Giving each student MAJOR one on one time with teachers. All at a low expense cost, after all the best form of education are two people sitting on a log together with one explaining how things work and the other trying to do it.

Anyway, I know it is a stupid idea, but it would accomplish the desired goal of creating ‘shovel ready’ jobs, it would be at a minimum of cost ( assuming a 8% Federal tax rate ) it really only comes to just over $300 Billion ( about $25 Billion will be taxed right back into Federal Coffers ) Cost in materials needed would be limited in needing to employ these individuals. Half the funds could be garnered from small cuts to a majority of programs in the short term ( like Social security, Medicare and the Military ) The rest can be deficit spending for now, so say you draw 33 Billion from all three of those major institutions and $200 Billion in deficit spending since according to the treasury latest figures our deficit is going to come in almost $200 Billion less than we thought it would should be okay in a short 3 – 4 year time period.

Now let me add finally I am a conservative, I think that this spending is wasteful and unneeded. I feel that rather than forcing the nation to address the real problems it faces, mainly over regulation of industry and refusal to lure industry back to these shores, a rejection of sound fiscal policy and an unwillingness to actually allow for mineral extraction and intelligent choices toward energy policy, this type of stimulus is a dodge and not self sustaining. The fact that this White House simply threw money at the problem rather than thoughtfully examine the situation in which we found ourselves, that the idea that public works projects was the solution rather than looking at the mistakes made under the Roosevelt era and learn from them, passage of legislation that muddied the waters of the health care industry and created a new form of government intrusion into our lives. Lets just say that I am not a fan and think that they have done an abysmal job.

This is Plan B, a horrible plan to make up for the actual changes that need to take place in Washington, but basically the only thing that I can think of that will actually get us down to nominal unemployment. SO Conservatives forgive me for suggesting this, and I agree it is a bit of a dodge, Liberals forgive me for implying that Obama is a failure and really does not have what it takes to get things working. Finally Sorry to the American Public as this probably will not even be read and thought about in any sane or rational sense, however if you think about our infrastructure, there really is not THAT much additional that can be done that will actually profit us and there really are not that many people available to do those jobs and lets face it the capital cost is not ONLY manpower in that regard. This makes sense, it is easy to do, and more money will go directly towards lowering unemployment while at the same time creating opportunity toward the people working and the kids under them. One final thought, close to $100 Billion would automatically come out of the cost for maintaining the unemployed as well so really you are only looking at an additional $100 Billion in cost to make this happen. About $35 Billion would come off the Food Stamp payroll alone and close to $65 Billion would be taken off the various programs for the unemployed and other institutional costs that we are already paying, so in the end it REALLY does not cost that much, is fast to implement, and easy to do.

Sep 03, 2011 11:05am EDT  --  Report as abuse
Barack will give the same old tired speech. I can only hope that the teleprompter goes out, so that he’ll actually have to think on his feet and show the American people exactly how smart and articulate he is. That should lower his approval rating even more.

Sep 04, 2011 10:31am EDT  --  Report as abuse
sjydog wrote:
This is extremely biased reporting. You quote, unchallenged, the comment from a liberal “think tank” (oxi-moronic, to be sure) that, “Since the beginning of 2011 Congress has pretty much expressed a complete unwillingness to do anything on jobs.” First, the budget that grown-ups in the House presented (which itself was a jobs initiative) was hooted by the Senate’s child-like “leadership”. I could go on with other examples, but you don’t want to hear it because for some odd reason, you think it’s good for this country to be lead by people who could not get a job in the private sector. Doesn’t it (yet!) strike any of you as odd that someone who has never had a real job has no idea how to create any? You STILL seem to cling to the notion that Obama is somehow qualified to be CEO of this country when he never had a paid executive position anywhere? Isn’t that just silly? (If anyone wants to reference Harvard Law Review, first show his transcript, then we can talk.) Some liberals like to say that certain conservatives (Palin, Perry – even Bachmann, despite her advanced law degree) aren’t very smart. I see it slightly differently. To me, the ’12 election is akin to a national IQ test. If a majority of this country’s voters don’t realize that they are being sold a second-rate smoke-and-mirrors act by this administration, they are less intelligent than I think. But I recall how the populace responded in ’80 and have faith.

Sep 04, 2011 8:19pm EDT  --  Report as abuse
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