Last month, the U.S. unemployment rate surged to 9.8% as 260,000 people lost their jobs. Although the stock market and corporate profits appear to be recovering from last year’s financial catastrophe, work is harder to find. President Barack Obama and Congress need to act now to get people working again and help soften epic unemployment in years to come.
The current job prospects are dim. Without additional economic stimulus, the Congressional Budget Office projects that unemployment will average 10.2% in 2010, and 9.1% in 2011. That means things are going to be as bad as they are today for nearly two more years. That’s an eternity in economic time. Two years ago there were banks called Washington Mutual, IndyMac, Lehman Brothers, Bear Stearns and Wachovia. Two years of nearly double-digit unemployment means a massive increase in poverty, and the eradication of economic opportunities for an entire generation that grows up without access to basic needs.
Unemployment holds greater significance than any other economic statistic. As the editors of The Nation write, “Except for a military threat, no issue confronting a president is more serious than widespread unemployment.”
The official unemployment rate also drastically underrepresents the scope of economic suffering. As The Nation’s editors explain, over 15 million Americans cannot find any work at all. Another 9 million people are settling for part-time work because they can’t find a full-time job. When you include people who have simply given up looking for a job after months without success, 17% of the country is either out of work or underemployed. That’s roughly equal to the entire rural population of the U.S.
It’s important to note that today’s hefty percentage of joblessness is not a result of Obama’s economic stimulus package. As economist Dean Baker emphasizes for AlterNet, we’d be staring at 11% or 12% unemployment without that effort. New America Media correspondent Suzanne Menneh details a great stimulus package success story. The Mosaic Youth Theater in Detroit gives at-risk youth the opportunity to do constructive, creative work putting on dramatic productions, and has had a dramatic impact on its performers drop-out rate. The theater was facing heavy recession-induced cutbacks before Obama’s stimulus plan was enacted, but with a $50,000 grant, the theater can continue to employ teachers and directors.
The problem, Banker argues, is that the stimulus was too small. The president’s economic advisers expected the recession to be milder than it has been, and then scaled down the package when political pressure was applied.
While political realities do place limits on Obama’s options to create more jobs, voters are not going to find fault with the president for fighting joblessness. One of the easiest ways to boost employment, Baker notes, is to offer employers a tax credit for hiring more people.
Writing for The American Prospect, Tim Fernholz emphasizes another straightforward way to stymie layoffs. State budgets are incredibly strapped right now. The loss of tax revenue from plummeting home values and lost income has left local governments with few choices. To get the bottom line to work, states are slashing some of the most critical positions in society: Teachers, cops and firefighters are being laid off. Putting together a fresh package of aid to states can save these jobs, and as Fernholz notes, good luck to the politician running on an anti-teacher, anti-firefighter platform.
But unemployment is not the only front in the economic battle. As layoffs mount, credit card bills get higher, mortgage payments get harder to meet and many cash-strapped households turn to predatory payday loans to make ends meet. As the current wave of foreclosures demonstrates, consumer protection in the realm of finance has been absolutely dismal for decades. But despite the obvious shortcomings of the existing regulatory framework, the Obama administration’s push for better consumer protection is morphing into all-out legislative war between the bank lobby and anybody interested in the public good.
Art Levine explains the situation in a post for In These Times‘ Working blog. Financial firms spent a massive $223 million lobbying the government against new regulations in the first half of 2009 alone. The Chamber of Commerce, the top lobbing group for U.S. corporate executives, is spending $2 million on ads smearing Obama’s plan to create a new Consumer Financial Protection Agency (CFPA). The new regulator would do just what its name implies: make sure banks can’t gouge you on credit cards, mortgages, debit cards and payday loans. But the Chamber’s new ads make the ridiculous claim that the new regulator will destroy local businesses like your neighborhood butcher or baker.
The good news, Levine notes, is that Obama isn’t taking the attacks lying down. The President sharply criticized the Chamber in a speech on Friday, and groups like Americans for Financial Reform are pushing to make sure lawmakers look at the issue from the perspective of consumers, not just bank profits. The House Financial Services Committee is scheduled to mark-up the consumer bill on Wednesday. Creating a strong CFPA is absolutely critical to making sure our economy answeres to ordinary people. Levine quotes It Takes a Pillage author Nomi Prins, a former Goldman Sachs managing director, to emphasize that banks will not act in the public good on their own.
“We still have a bizarre and misplaced faith that huge corporations—which are deisgned for the sole purpose of making profits—are somehow able to act ethically and restrain themselves,” Prins says.
Even if your own pocketbook has never taken a pounding from the banking industry, the legitimacy of your government is at stake. As Glenn Greenwald explains for Salon, even after wrecking the global economy, banks have been able to sabotage efforts to avert foreclosure while demanding enormous bailouts at taxpayer expense. The chain of command is clear: The banking industry still showers lawmakers with campaign contributions, while individual bankers can still get the ear of top policymakers charged with major economic decisions. How easy is it for Wall Street bigwigs to influence policy? Laura Flanders of GRITtv highlights an AP report that details Treasury Secretary Timothy Geithner’s phone records. Geithner has spoken with Citigroup CEO Vikram Pandit more times this year than he has with Rep. Barney Frank, D-Mass., the key legislator pushing Geithner’s own financial reform package. And Goldman Sachs CEO Llyod Blankfein has talked to Geithner more times than Sen. Chris Dodd (D-Ct), who is Frank’s regulatory reform counterpart in the Senate.
Many top policy makers, in fact, come to government from high-profile positions on Wall Street. The result has been almost direct control of the legislative branch of our government, and ideological control of the executive branch.
“Earnest, substantive debates over this or that policy are so often purely illusory, as the only factor that really drives outcomes is the question of who owns and thus controls the political system,” Greenwald writes.
The government is supposed to represent all of us, not just the wealthy and not just major corporations. The past two years have made clear to everyone that the government often must take strong actions to limit the damage created by private-sector calamaties. We need another round of economic stimulus to get people working again, and we need a fair set of rules to make sure working people don’t get duped by predatory bankers.
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