Ryan responds to jobs report: ‘This is not what a recovery looks like’
Update: Video of Ryan below.
Vice presidential candidate Paul Ryan appeared on CNBC Friday morning to discuss the newly-released August unemployment report, in which the nominal unemployment rate dipped from 8.3 percent to 8.1 percent … but only because an astonishing 368,000 people exited the workforce entirely, while job creation cratered to 96,000. This brings the United States to a 31-year-low in workforce participation.
“This is not even close to what a recovery looks like,” said Ryan, noting that 96,000 new jobs is far below the rate necessary to keep pace with population growth, a figure he pegged at 150,000 jobs per month. He observed that “for every net one job created, nearly four people left the workforce.”
“This is not what President Obama promised,” Ryan continued. “I would argue this is the result of failed leadership in Washington, and bad fiscal policy coming from this Administration. That’s why we have this very tepid report.”
Instead, Ryan said “we need growth, we need economic growth, and we can get that if we put the right policies in place. That’s why Mitt Romney and I are proposing specific solutions, pro-growth economic policies, to get the kind of growth we ought to be having in this economy, to put people back to work.”
Ryan was asked about the possibility that voters will focus on the U-3 unemployment rate, and take some comfort in its failure to increase, without taking account of the workforce decline and weak job creation numbers. “8.1 this month means 43 straight months above 8 percent,” he replied. “Remember when the President promised he would prevent unemployment from getting above 8 percent if he passed his stimulus package? It hasn’t been below 8 percent since then. If you look at the predictions they made when they passed the stimulus, they said unemployment would be down around 5.4 percent today.”
He described this as “limping along with stagnant growth” instead of recovery, and cited it as evidence of “lackluster performance and broken promises” from the incumbent President. While the Democrats spoke in glowing terms about manufacturing jobs and the General Motors bailout during their convention, Ryan noted that 15,000 of the jobs lost in August came from factories, half of them from the auto industry.
The alternative offered by Ryan and Romney would include “pro-growth economic policies” including “energy policy, tax reform, regulatory reform” plus “expanded markets for our trade” and a promise to “clean up the spending problem in Washington to prevent the debt crisis.”
Ryan discussed the unemployment numbers in the context of the current stock market rally, which he noted owed a great deal to events overseas, particularly the rescue plan announced this week by Mario Draghi of the European Central Bank. He also extended some credit to Ben Bernanke, chairman of the U.S. Federal Reserve, but cautioned that individual causes of market fluctuations can be difficult to pin down, for better or worse. Ryan suspects that the market will anticipate further Fed action in October, and respond accordingly. (Those trying to guess the contours of a prospective Romney Administration will be interested to note that Ryan would commit to neither retaining Bernanke at the Fed, or firing him.)
But Ryan professed himself troubled by the phenomenon of “central banks stepping in and trying to bail out lackluster fiscal policy.” Ryan explained, “There is no substitute for good fiscal policy. You can’t expect central bankers to bail us out all the time.” He warned that the tactic of propping up shaky economies with currency manipulation and bailouts was unsustainable, and said he didn’t think another round of quantitative easing in the U.S. would be much help, because he didn’t think the previous QE efforts provided sufficient benefits to justify their cost.
Good fiscal policy, in Ryan’s view, would include “low tax rates, economic growth, regulatory reform, predictability, certainty… those are the kinds of things investors and job creators need to be able to take risks. And all they get coming from Washington and the White House is the promise of higher taxes, more regulations, and those kinds of things that make it impossible for people to predict and create jobs.”
Of course, Ryan remains deeply concerned about the threat of our towering national debt, which by some measures is closing on in the 90 percent ratio to GDP that would trigger a crisis unlike anything we have ever seen before. He believes President Obama should be held accountable for his spectacular failure to live up to his promises of cutting the budget deficit in half, and sees nothing in Obama’s current campaign promises to indicate serious fiscal restraint would be found in a second term for the incumbent. “The debt increases under his watch,” said Ryan. “Look at these trajectories. They’re terrible… we’re going very close to that danger zone where we start getting an economic slowdown because of debt burdens.”
What Ryan means by that is a profound downshift, much worse than anything we’re seeing now, due entirely to the pressure exerted on both government and the private sector from financing the immense national debt. As bad as things are after four years of Obama, we really haven’t seen anything like that yet. Another round of credit downgrades, causing a major jump in the cost of financing the debt, would trigger the process. That would leave the government less money to spend on everything else, triggering further confiscation of wealth from the private sector and weakening both industries and individuals who are highly dependent on government spending… and that would cause GDP to collapse, which means less revenue for the government. It’s similar to the way a dying star collapses into a black hole. The event horizon is made of hyper-inflated, worthless dollars.
We should be doing a lot better than we are right now. Paul Ryan fears that following the same Keynesian policies could make things much worse. “Look,” he said, “if borrowing, and spending, and regulating, and taxing were the secret to economic success, we would be entering a Golden Age… along with Greece.”