The New ‘Realities’ Dictate a New Direction


By William Spriggs


This week, the Center for American Progress (CAP), a think-tank closely associated with President Obama’s Administration since it was the home of many key White House officials like Gene Sperling and Melody Barnes, changed course on backing a “grand bargain” with Republicans on cutting Social Security and Medicare benefits and raising taxes on high income earners to balance the budget in the long run.

After taking a position favoring a debate on shrinking government back in 2009, CAP now sees four years later, that the job crisis remains while the federal deficit and the size of government has plummeted. But, let’s hope this change in heart has a similar effect on the Obama administration.

Five years after the onset of the Great Recession, there are still 2.4 million fewer payroll positions in America than in January 2008. At the rate of job creation last month, it would take more than thirteen months to get back to the pre-recession level of employment-meaning a net job growth of zero jobs over an almost six-and-a-half year period. The result is a backlog of Americans looking for jobs-officially 11.7 million. The brunt of the difficulty in the labor market has fallen on young workers who are suffering from the lowest levels of employment on record; fewer than 38 percent of 18 and 19-year-olds have jobs.

Here are the “new realities” that moved CAP: Last month the Congressional Budget Office projected that the federal deficit will be 4.0 percent of the nation’s output (the Gross Domestic Product measuring the value of all goods and services produced), less than half where it stood in 2009. By 2015, the deficit will shrink almost another half, to 2.1 percent of GDP.

The Washington consensus backed by the administration and Republicans in Congress was a view that the federal deficit had to be brought under control and the federal debt stabilized to promote a robust recovery. Well, we have been in “recovery” since 2009, but we have not recovered. There are still 12 million Americans chasing four million job openings, according to the latest Bureau of Labor Statistics figures, who are not feeling recovered.

Republicans have continued to hold up the discussion on creating jobs in favor of discussing shrinking government. Today, we are 2.4 million jobs short of a recovery because, in large part, we are down 735,000 workers in the public sector since January 2009; almost half of those being local education workers-cutting more than 300,000 teachers from our children’s classrooms. So, cutting government has meant less than stellar job growth by cutting government employment, cutting investment in our children and then ignoring a discussion on how to take on the crisis of employment that 18 and 19-year-olds are facing.

Further, the ramifications of shrinking public sector employment came home to roost in another way this week, when private sector sub-contractor Edward Swanson leaked the lax oversight of private sector contractors given access to America’s personal information through an NSA secret surveillance program. The federal work force is 40,000 smaller than in January 2009; in part, because the build-up in security has been through contracting out work that should remain under close public supervision.

As CAP points out, the experiment in Europe to use fiscal restraint to create stability for growth has failed to produce growth and has instead worsened the job prospects in Europe and hurt demand for American exports. The arguments those Harvard economists’ Reinhart and Rogoff made warning of shrinking economic growth if federal debt got too high has been discredited. So, even the conservative American Enterprise Institute is getting on board, advocating for the direct hiring into government jobs for the long-term unemployed. Clearly, America needs a new conversation.

Now if only the administration is also listening. The new policy conversation will start when President Obama disengages the Republicans over “a grand bargain.” When he says to the Republicans in Congress who are debating the size of cuts to the SNAP program (food stamps) that taking food off the tables of American children and starving American children is not going to generate jobs or improve the path to fast job growth, America can start to have a real conversation about jobs.

It is time for the president to come before the American people and rally behind us, because the American people know that cutting Social Security benefits will not create jobs today or in the future, or that another trade agreement with Vietnam is not going to generate jobs for them, or raising the interest rate that students pay on college loans, or any of the list of items Washington is poised to debate. President Obama deserves a better legacy than compromising over the meaningless. Just as the president got behind the American people on immigration reform, and the justice in marriage, we need the president on the right side of history in economic policy. Negotiating with Republicans on things that don’t matter-and won’t help-puts him on the wrong side. 


William Spriggs serves as Chief Economist to the AFL-CIO and is a professor in, and former chair of the Department of Economics at Howard University.  Bill is also former assistant secretary for the Office of Policy at the United States Department of Labor.