Last week’s unemployment numbers are devastating. They are far worse than what economists had been projecting.
A net of just 18,000 jobs were created in June. That is one new job for every 1,000 unemployed Americans.
The government’s report also revised its estimate of new jobs created in May by more than 50 percent, from 54,000 down to only 25,000.
Overall, the workforce declined by 272,000 people from May to June. America now has its lowest rate of participation in the workforce in 27 years.
Even with a smaller work force, the unemployment rate increased for the third straight month, to 9.2 percent.
That 9.2 percent, however, does not even capture the full severity of our unemployment situation. Adding together all those who are unemployed, underemployed, or have quit looking for work yields a number closer to 16.2 percent. That is one out of every six eligible Americans.
The number of Americans receiving food stamps is at an all-time high and is also approaching one out of every six Americans.
This week’s numbers are one more sign that President Obama’s job-killing policies are continuing to hamper the economy. Instead of seeing improvements, we could be seeing America plunge deeper into the Obama Depression.
It Could Get Worse
The widespread, blindly optimistic assumption that the economy has bottomed-out is alarming to me as an historian.
The president and the Washington elite are insulated from the economic pain of the rest of America.
Washington is one of the only metro areas not in a decisive housing slump. A report last week found it was the highest performing market in the country.
Washingtonians have jobs and stable incomes driven by big government. The Washington, D.C. metro area has one of the lowest unemployment rates in the country, at just 5.7 percent.
The result is that the Washington political class does not understand the economic pain most Americans are experiencing.
This is what allowed President Obama’s chief political advisor to assert that the unemployment rate would not be a decisive factor in how people vote in 2012. He has a job and works with people who have jobs. He is greatly underestimating the level of concern in the rest of America.
Four Possible Downward Pressures
President Obama declared the beginning of the “Recovery Summer” over a year ago. In spite of what the president and his advisors may believe, the recovery is far from certain and millions of Americans remain vulnerable to further decline. There are at least four possible circumstances that would put downward pressure on our fragile economy.
1. A Greek default could trigger a rolling bank crisis throughout Europe and thereby have significant effects on the American economy. Already, a rapid sell-off of Italian government bonds this week was blamed on worries over Greek debt.
2. Instability in the Middle East could lead to a spike in oil prices and a consequent deep contraction in the American and European economies.
3. Continuation of the Obama Administration’s job-killing policies could send companies overseas and cause small businesses to stop hiring. In fact, a Chamber of Commerce study reported this week that roughly two thirds of small business executives said they would make no new hires this year, and another 12 percent said they would cut jobs.
4. People could simply run out of savings and find themselves cutting back on spending even more than they already have.
These are just four real possibilities among many others that could cause our weak economy to become worse. We must move to eliminate the artificial, political threats to jobs that leave America even more vulnerable to external shocks to the economy.
What Should Be Done
The Republican House should start repealing job-killing laws and programs and aggressively curtail job-killing bureaucracies.
Then the Democratic Senate would be on the spot. Does it favor big government and failed policies, or job creation?
The Democrats can be the party of bureaucracy and food stamps if they want to. Republicans are happy to be the party of jobs and paychecks. Friday’s unemployment numbers are decisive proof that President Obama’s big government, class warfare model leads to job killing and dependency.
Republicans must respond with a clear action plan to end the Obama Depression.
Jobs and the Debt Ceiling Bill
A major mistake in the debt ceiling negotiations has been the narrow focus on spending cuts as if all spending is equal. It is not. Some spending goes to legitimate purposes and some goes to activities that kill jobs: national defense and defense of union interests are not equally worthy expenditure.
We should start in the debt ceiling bill by cutting the spending that goes directly to job killing activities.
That should include a drastic reduction in the authority of the National Labor Relations Board so that it cannot kill manufacturing jobs in South Carolina (see my recent newsletter here) or come between individuals and their employers in other right-to-work states.
It should include restrictions on the Environmental Protection Agency’s ability to impose job-killing electricity rate increases—which, amazingly, it was doing just as the unemployment numbers were announced on Friday.
It should include an end to absurd government restrictions on the development of American energy, including offshore oil and gas. While the Administration takes as long as possible to authorize offshore drilling permits, in many places gas prices are more than a dollar per gallon higher than they were one year ago.
Senate Democrats and President Obama seem willing to choose job-killing policies even at the cost of a debt ceiling deal. Republicans should illuminate that destructive choice.
Unemployment and debt are sobering, historic challenges. We must meet them.
Our new documentary, A City Upon A Hill: The Spirit of American Exceptionalism, helps place our politics in a historical context to help us understand why America must overcome these challenges to remain exceptional.
Newt’s Quick Links
- In his piece on Renewing American Leadership, Phil Shackleton discusses the Seamless Garment. Read it here.
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