As the count down continues to the beginning of August, our nation and the rest of the world waits to see whether Congressional Republicans and Democrats, working with the Obama Administration, can come together to raise the debt ceiling, allowing the government to borrow to fund its activities. Assuming that Congress resolves that short-term issue, still looming is the much greater and tougher problem of lowering deficits and ultimately reducing the national debt. Democrats as well as Republicans have accepted the idea that debt reduction is a must. The President appointed a bi-partisan commission headed by Democrat Erskine Bowles and former Republican Senator Alan Simpson that studied the problem and made recommendations about how to reduce the debt.
Private bi-partisan groups like that led by former Republican Senator Peter Domenici and economist Alice Rivlin have also studied the debt problem and made recommendations. Not surprisingly, both sets of recommendations follow the same path with some relatively minor differences. They call for changes in Social Security that would gradually lower the outlay, for addressing the rising costs of Medicare and Medicaid, for revising the tax code in a way that would increase revenues without appearing to raise taxes, for reducing or limiting defense spending and for cutting other expenditures. In western New York’s traditionally Republican 26th Congressional District, Democrat, Kathleen C. Hochul won by running against the proposals to change Medicare to a voucher program in the budget and deficit reduction plan presented by House Budget Committee Chairman Paul Ryan and endorsed by virtually every House Republican Congressman. This has led some Republicans to have second thoughts about publicly supporting such changes. Now, both political parties are playing a game that consists of trying to get the other party to put a budget before the American people, knowing that it must address Social Security and Medicare. Then other side can gain political advantage by attacking the proposed budget.
Sadly, none of these commissions, budgets or reports seeks to tackle another very serious problem facing our nation: the problem of chronic unemployment. This is a problem that had been festering for a long time. As I noted in prior HuffPost blogs, a significant portion of unemployment is structural; caused by the transfer of manufacturing and other jobs from the U.S. to countries with lower labor costs and by technological changes that eliminated jobs, making manufacturing and other operations more efficient and the remaining employees more productive. The housing and real estate bubble actually covered up the growing structural unemployment. The uneconomic increase in housing and commercial real estate and the industries that benefitted from that increase added to the number of employees. Jobs also increased as a result of increased consumer spending based on the belief in the wealth created by the rise in home prices. When the bubble burst, it brought on a powerful recession that resulted in reduced consumer purchasing and a concomitant drop in production and services. Companies reduced employment in response. Many economists missed the real story, believing that once the impact of the bubble bursting was over, the economy would recover and employment would resume its earlier levels. But the fact is that without the stimulation of another bubble, employment will never go back to its earlier levels.
As the numbers for this past week show, the situation for the unemployed is dire. Unemployment is back to 9.1%. More than 13.7 million unemployed Americans are still looking for work and 25 million more, an additional 16% of the work force, have part time jobs or want to be working full time. More than 45% of those 13.5 million jobless have been out of work for over 27 weeks. They are losing their skills and confidence as well as becoming less attractive to employers. Many of these same people have lost their homes in foreclosures or have seen their home values drop precipitously, eliminating what little savings they counted on to sustain them during difficult times. The toll on their family lives and children is devastating and the hopelessness of their condition in many cases is becoming unbearable. On top of that, new entrants continue to come into the employment market, many with college or advanced degrees who are already heavily burdened with debt incurred for their educations.
With the unemployment numbers at these levels in today’s economic environment there is only one way to provide enough jobs to make an immediate impact; through government development of large-scale infrastructure programs that address America’s aging infrastructure. But there is no possibility in the current political environment that such programs will be enacted. The Republicans are convinced, and enough Democrats agree with them, that the overriding issue for America is reducing the deficits and the debt. The focus on reducing budget deficits has consumed all the oxygen in the system. Greater government spending programs are anathema.
The Republican plan for creating jobs is to “create confidence” by lower spending and reducing the debt. It is difficult to understand how such a program will either bring jobs back that were lost to lower cost labor markets or bring jobs back that were lost because new technologies made them no longer necessary. Quite the contrary, as we are already seeing, reducing spending by state and city governments is just adding more people to the jobless rolls. Nor is reducing taxes on the wealthy a formula for increasing jobs. No matter what the CEO’s of large corporations may claim, the truth is that businesses will expand to meet increasing customer demands and contract when customers disappear. They will not expand or shrink in response to the budget deficits. The banks today are loaded with funds and looking to lend them to increase their profits but they can’t find enough secure borrowers. Higher gas prices are threatening the future of increased consumer spending. The housing market is a continuing drag on the economy with foreclosures weighing down the market for new homes and sales of existing homes. None of that will change because of lower federal deficits or lower taxes.
The Democrat’s plan is no less compelling. President Obama talks about long-range programs in the fields of medical research, clean energy technology and education that may be valuable in later years but right now do not change the situation. The drastic state of unemployment requires equally dramatic measures, not dreams of a better future.
At the end of the day, the fate of the jobless lies in their own hands. We have seen how a relatively small number of passionate people who formed the Tea Party, have been able to impose their views on the Republican Party and our country. The thirty nine million Americans who are out of work or not working full time, and their families, constitute a potentially much more powerful voting and lobbying force. There is no shortage of people in our nation capable of providing the leadership to pull this force together to press for decent job opportunities. Only then will someone speak for the unemployed.
Mr. Lifton, a business man and political activist is writing a book entitled “Life’s Lessons and Stories from a Member of the “Greatest Generation.’”