President Obama is due to unveil his latest job creation plans later this week. Expect to be underwhelmed...
IT MAY not be too long before US President Barack Obama himself joins the swollen ranks of America's unemployed, writes David Zeiler for Money Morning.
A government report released Friday showed no job growth in August.
President Obama is scheduled to address a joint session of Congress on Thursday with his latest proposals on how to reduce the nation's stubborn 9.1% unemployment rate.
He faces numerous obstacles, including a glum economic outlook that has held employers back from hiring, public dissatisfaction with how he has handled the economy, and an uncooperative mood among congressional Republicans who have spoken openly of making him a one-term president.
At this point everyone in Washington realizes that high unemployment is probably Obama's greatest obstacle to re-election in 2012.
"Our nation faces unprecedented economic challenges, and millions of hardworking Americans continue to look for jobs," President Obama wrote in a letter to congressional leaders requesting time for the speech.
"It is my intention to lay out a series of bipartisan proposals that the Congress can take immediately to continue to rebuild the American economy by strengthening small businesses, helping Americans get back to work, and putting more money in the paychecks of the middle class and working Americans, while still reducing our deficit and getting our fiscal house in order."
The Bureau of Labor Statistics data released Friday was almost uniformly bad, with most categories either holding steady or getting worse.
Although private employers added 17,000 jobs, equal losses in the public sector, mainly from local governments meant that net job growth for August was zero.
With economists forecasting a net gain of 75,000 jobs, the news sent stocks tumbling on Friday, with most indices down about 2%. Even if you add in 45,000 striking Verizon Communications employees, the number still fell well short of expectations.
Economists estimate job growth would need to hit 250,000 per month to bring unemployment down quickly; 125,000 new jobs are needed each month just to keep pace with population growth.
The official unemployment rate remained steady at 9.1%, but theU-6 number, which includes those who have not actively been seeking work, rose to 16.2% from July's 16.1%.
Adding insult to injury, the job growth numbers from the two previous months were revised downward. June's job increase fell from 46,000 to 20,000 and July's fell from 117,000 to 85,000.
"Though much attention is being paid to 'zero job growth' in August, the real news in today's numbers is that job growth is worse than in recent months, and the nation continues to produce far fewer jobs than needed to meaningfully reduce the unemployment rate," Heidi Shierholz, economist at the Economic Policy Institute in Washington, D.C., said in a statement. "In fact, in some ways the report was less than zero in that weekly hours fell, as did hourly earnings."
President Obama's jobs speech could be critical to his re-election effort. With his own economic team projecting that unemployment could remain at 9% through November 2012, he needs to convince American voters that he's at least trying to address the issue.
And that may be a tall order with a recent CNN poll showing 65% of American adults disapprove of how President Obama is handling the economy.
But what can he do that he hasn't tried already? Analysts expect President Obama's jobs speech to contain a few new ideas and several retreads of old ones.
Some possible proposals include:
- School-repair: This plan would set aside tens of billions of Dollars for overdue repairs to public school buildings.
- New Worker Credits: The federal government could offer a tax credit of several thousand Dollars to companies that increase their net number of workers.
- Job Training: The government could offer job-training programs for the long-term unemployed, modeled on a similar program in Georgia.
- Payroll Tax Break: The president has already mentioned his desire to extend through 2012 the reduction on the tax that workers pay into Social Security, which was reduced from 6.2% to 4.2% for 2011.
- Transportation: A White House blog said President Obama would include a renewed call for Congress to pass a transportation bill that will fund such projects as highway construction, bridge repair and mass transit.
The president's greatest challenge may be convincing budget-conscious Republicans in the House of Representatives to agree to anything that might cost money. However, White House press secretary Jay Carney promised last week that proposals in President Obama's jobs speech would be "paid for, absolutely paid for."
In a preview of the battle to come, Republican leaders pounced on Friday's poor job creation numbers.
The bad news shows that the president's "record on job creation and fiscal responsibility is abysmal," Rep. Paul Ryan, R-WI, told USA Today. "Since taking office, the president's policies have made a difficult situation worse."
One Tea Party Republican, Joe Walsh, R-IL, said he wouldn't even attend President Obama's jobs speech, preferring instead to host a small business forum in Illinois.
"I don't see the point of being a prop for another of the president's speeches asking for more failed stimulus spending and more subsidies for his pet projects," Walsh said in a statement.
Ultimately, it may not matter what President Obama says Thursday night with the majority of Republicans so obviously inclined to object to almost anything he proposes as they lay the groundwork for unseating him in 2012.
"[President Obama's jobs speech] can't change the fundamental fact of politics right now, which is that the two parties disagree on the most profound question in Washington," wrote Bloomberg View columnist Ezra Klein. "It's not: How do we fix the economy? It is: Who should win the next election?"
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