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Why the Federal Government Can’t Solve the Jobs Crisis

The jobs crisis has been shoved under the rug in favor of other issues like the debt ceiling crisis and the Libyan massacre crisis. Now that there’s nothing but football and baseball to divert us from the fact that 14 million of us don’t have jobs, it’s finally come to the forefront of the federal government’s to-do list.

President Obama is going to announce some jobs plan tomorrow night and it should probably come as no surprise that it will be underwhelming. The reality is that we still have divided government and the Republicans completely disagree with every policy that the Democrats put forward, and vice versa. (Although, the difference between the two is that the Democrats keep enacting Republicans’ policies despite controlling two-thirds of the federal government.)

Since our government is representative of the general populace (at least, that’s the idea), it’s telling that we’re just as divided and conflicted over what to do about government spending and solving this jobs crisis as our elected officials.

According to this chart, much of our government spending evens out in 20 years, except for health care costs, which go up linearly to over 12 percent of GDP by 2051.

So, we know where the issue is in our budget. And we know that people, in theory, favor spending cuts to raising taxes. Per Reason.com 57 percent of Americans want primarily cuts in government spending. Even CNN’s poll found the same thing, although their poll revealed that 63 percent also favor raising taxes on the richest Americans and businesses as well as part of the overall debt reduction measures.

Great! Everyone agrees we need to cut spending. And we know where we need to cut. Done deal?

Not so fast. It turns out that an overwhelming majority opposes cuts to Medicaid – a Washington Post poll says 72 percent. A decent majority of 54 percent also oppose raising the Medicare eligibility age.

Since everyone is so desperate to cut government spending, and since no one wants to cut health care costs, that’s why we get the cuts we’ve seen happening: proposed future cuts in areas like defense that could end up not going through should the whole super-committee figure out something else. On the surface, it looks like we’ve made progress and the Republicans can claim victory to their cuts and the Democrats can say they’re not socialists out to just punish the rich with excessive taxes.

But really? For anyone crunching the numbers, our debt crisis has hardly been averted.

Perhaps that’s why, per a McClatchy-Marist poll, 59 percent of Americans prefer tackling the debt now even if it means slowing the economy down even further. You can blame the Republicans for being obstructionists when they adamantly refuse to add more to the debt to help fix the jobs crisis with new stimulus (except with their own proposed budget that added $5 trillion to the deficit over the next decade), but they seem to be voicing the opinions of a strong section of Americans.

For whatever reason, the fact that 14 million Americans are unemployed (and another 8.8 million not even counted anymore as they’ve completely dropped out of the workforce) doesn’t seem to faze a large swath of Americans, preferring to deal with an increasingly bleak jobs crisis for longer in order to cut down the debt, even though these two are connected. With fewer people working, that’s fewer taxes being paid to the government. It also means more revenue going out in the form of aid and unemployment benefits. It means less consumer demand, which means fewer business transactions, which means again, less revenue going to the government.

By solving the jobs crisis, we simultaneously help ease the debt crisis, since it stands to reason that getting more people to work will help curb our spending and increase our revenue without touching taxes.

But we can’t expect our politicians to listen to reason when a majority of us voters can’t either. I don’t know what the answer is. Perhaps more stimulus, which has a slim-to-none chance of getting passed through this Congress. (The Republicans are even talking of not renewing what little stimulus still exists out there for the average workers: the payroll tax cut – which means a tax hike. So you know they’re really against a stimulus when they’re in favor of tax hikes, which they’re scarcely in favor of.)

It’s no wonder we have so much faux-action in Washington. Since there’s no majority that agrees on the same way to fix it, looks like we’re destined to have this stalemate. And of the not-so-exciting options on the table, that might just be the worst possible response to this jobs crisis.

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