After months and months of telling viewers that deficit spending is the MOST important economic issue, the media has just realized that people aren't buying it and that the jobless recovery is a better way to blame Obama. And to be sure, the
June 5, 2011

After months and months of telling viewers that deficit spending is the MOST important economic issue, the media has just realized that people aren't buying it and that the jobless recovery is a better way to blame Obama. And to be sure, the Obama White House seems to be their own worst enemy, by not focusing on job stimulus and grabbing the framing away from the Republicans.

Let's be clear: Austan Goolsbee is partially right when he says that the jobs must come from the private sector. But what he leaves out is no company will simply hire people absent an increase of demand for whatever service or product they offer. Why cut into their profit margin unnecessarily like that? And demand doesn't increase unless there are people looking to purchase those services (tellingly, one of those services that are seeing an increase in demand are for legal assistance for the rising number of divorces and bankruptcies people are going through). And people don't demand additional goods and services if they are struggling financially--be it unemployed or underemployed. And hence, a vicious cycle: in order to get customers, we need to have a thriving middle class with low unemployment. But we won't have that unless we get people working. And that's where the government has to come in. By directing federal dollars towards infrastructure projects, the government hires companies, who must hire people, thus injecting much needed demand and money into the economy. But unfortunately, we've seen little movement from either the White House or Congress to invest federal dollars as such.

No, where we are is still buying into the whole GOP framing, as demonstrated by US Chamber of Commerce's Martin Regalia, insisting that deficit spending is the #2 priority behind extending the debt ceiling. See how the media still gives equal weight to the same talking points that have not done a single thing to improve the economy or employment rate? Even with Chrystia Freeland and Paul Krugman pointing out that this insistence that the government "get out of the way" and not suppress economic recovery with pesky regulations (presumably those few set to avoid another financial meltdown or ecological disaster), Regalia holds on to these GOP arguments and prevents any real discussion of solutions from happening.

But then again, that may be *exactly* the GOP's (and by extension, the Chamber of Commerce) intent:

Fortunately for Republicans, our broken political system doesn’t function like most democracies, so they are relieved of this tough choice and direct accountability. Thanks to divided government, and more importantly the filibuster, even in the minority, Republicans still have sufficient power to hold basically everything hostage to demand spending cuts. They are able to win the cuts while forcing the Democrats who control the White House to share the political blame for unpopular moves.

This strategy is on the verge of working out great for the Republicans again

Republicans are about to push President Obama to reach a “compromise” on spending cuts so he will share the blame. Cuts that are not only likely to be unpopular, but as David Dayen points out, highly anti-stimulative. The CBO’s baseline assumptions are already very dark.

CBO projects that the unemployment rate will gradually fall in the near term, to 9.2 percent in the fourth quarter of 2011, 8.2 percent in the fourth quarter of 2012, and 7.4 percent at the end of 2013. Only by 2016, in CBO’s forecast, does it reach 5.3 percent, close to the agency’s estimate of the natural rate of unemployment (the rate of unemployment arising from all sources except fluctuations in aggregate demand, which CBO now estimates to be 5.2 percent).

These employment assumptions are based on basically consistent spending levels. If Republicans manage to push for immediate cuts, further reducing aggregate demand, the likely result is higher than projected unemployment in 2012. Slow growth and high unemployment is almost always devastating to incumbent presidents, which, in this case, would be a huge political win for Republicans.

I can fully appreciate how the Republican Party’s seemingly bipolar behavior on deficits and spending cuts is such a smart policy and political win-win for the party. What I fail to understand is why Democrats are so willing to play into their rhetorical trap, or Democrats’ stubborn refusal to even consider changing the absurd rules that make this strategy possible.

But it's more than just political calculus, as Robert Reich points out:

(T)here’s a third reason for Washington’s inaction [besides Republican political machinations and Democratic Party spin]. It’s not being talked about — which is itself evidence of the problem.

The unemployed are politically invisible. They don’t make major campaign donations. They don’t lobby Congress. There’s no National Association of Unemployed People.

Their ranks are filled with women who had been public employees, single mothers, minorities, young people trying to enter the labor force, and middle-aged men who have been out of work for longer than six months. You couldn’t find a collection of people with less political clout.

And until such time that we can come together to make our collective voices heard, I don't know that it will ever pierce through the insularity of the Beltway bubble.

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