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Concerns Mounting That White House, Congress Won’t Do Enough to Halt Job Losses

Even as the White House today hosts a much-vaunted jobs summit with economists and leaders of businesses

Even as the White House today hosts a much-vaunted jobs summit with economists and leaders of businesses, nonprofits and unions, there are growing concerns among progressives that neither the White House nor Congress will take the bold actions needed to bring down the 10.2 percent unemployment rate and create enough new jobs. The political climate is relatively cool to new spending initiatives, and such programs could be further thwarted by growing White House interest in an independent deficit-slashing commission.

The political obstacles are not insurmountable, though, because Democrats are increasingly worried that their majorities in the House and Senate are threatened if unemployment continues at these levels, so grass-roots pressure for action might propel Congress to pass strong measures.

One well-connected reform advocate, citing comments by chief Obama economic adviser Larry Summers that there’s no need for added job-creation programs, told Truthout, “The White House is reluctant to do anything big, while members of Congress are going totally batshit because they have to face re-election in 2010.”

How bad is the jobs crisis? As noted by, “Nearly 16 million Americans are out of work, one-third of whom have been unemployed for more than six months. There are now six workers competing for every job vacancy.” If you count the underemployed and those who’ve stopped looking, the real national unemployment rate is 17.5 percent, and even higher in America’s hardest-hit cities. Among black men ages 16-24, the unemployment rate is a shocking 34.5 percent.

That anger over the disastrous impact of what Rep. Keith Ellison (D-Minn.) calls the “Great Recession” on America’s inner cities is a major reason that the Democrats in the Congressional Black Caucus on Wednesday voted against the administration-backed financial reform legislation in the House Financial Services Committee. As The Hill reported:

Congressional Black Caucus (CBC) members on Wednesday criticized the Obama administration for not doing enough to help African-Americans through the bleak economy.

Soon after withholding their votes on a wide-ranging financial services bill, ten CBC members said they are pressuring the White House to do more.

The House Financial Services Committee voted 31-27 in favor of the bill, but the lawmakers’ boycott came on a major financial measure the administration wants to see Congress pass this month.

“We have not been forceful enough in our efforts to protect the most vulnerable of our population,” said Rep. Maxine Waters (D-Calif.), who represents one of the nation’s poorest districts. “We can no longer afford for our public policy to be defined by the worldview of Wall Street.”

The Congressional Black Caucus favors such measures as increasing access to credit for black-owned businesses and forceful action to pressure banks to write down mortgage costs.

At the moment, House Speaker Nancy Pelosi (D.-Calif.) is taking the most active leadership role in the Congress in putting together a jobs package, but the scope of such a program is still very unclear, with only extended unemployment benefits and COBRA subsidies considered the closest to a sure thing to be included in a proposed jobs bill. Everything else is “jump ball,” one knowledgeable House aide told Truthout, including such major labor-backed proposals as aiding state and local governments to maintain their front-line work force and creating new public sector jobs in hard-hit areas.

At the same time, there’s also some increasing interest in Congress and among unions in an innovative approach to save jobs through government-subsidized work-sharing arrangements that reduce employees’ hours worked, rather than laying them off; under that approach, they’d still get paid nearly their full salaries. That strategy is already in use in 17 states, using unemployment benefits to keep people in their jobs, and is widely used in Germany to cushion the impact of the recession there. The AFL-CIO’s policy director, Damon Silvers, told Truthout the organization was seriously considering the proposal, in part because of the success unions in Europe had in working with management on the job-saving strategy. Sen. Jack Reed (D-R.I.) has introduced a bill to expand the program nationally, using $500 million in unemployment payments targeted to keep as many as 500,000 people in their jobs by making up most of the difference in pay if they work shorter hours. But that’s seen even by its proponents as a supplement to other job-saving and -creating programs, not as a substitute for an entire package.

Still, political groups, such as the AFL-CIO that’s seeking $400-$500 billion for a five-pronged jobs plan, are facing political threats that could make passage of any meaningful jobs package in Congress an uphill battle in the absence of strong presidential leadership. These political obstacles also could torpedo a genuine, job-based recovery: They include conservative-fed wariness and myth-making that the first $787 billion stimulus didn’t work (actually, it’s saved about a million jobs but didn’t focus primarily on job creation), and mounting interest by mostly centrist senators in what liberal critics call the cat food” commission to slash domestic spending, especially in Medicare and Social Security entitlement programs.

Robert Borosage, co-director of the Campaign for America’s Future, told Truthout, “This crisis was created by speculators gambling on Wall Street, and it would be wrongheaded politically and in policy terms to make seniors, who are the most vulnerable, pay for a crisis they didn’t cause.”

The White House has already signaled that it’s interested in some form of the commission proposal, and the president is still planning to emphasize deficit reduction in his State of the Union address. It’s important to realize that the commission proposal is far from being a fringe idea favored only by conservatives, even as House Democratic leaders have initially expressed opposition to it. But it is gaining more traction with a threat led by Democratic Sen. Evan Bayh of Indiana, in a letter to Senate leadership by ten senators, to withhold their votes for a $1 trillion rise in the national debt that’s needed to keep government running unless a commission is included. As McClatchy newspapers reported Sunday:

A bipartisan group of more than a dozen senators is threatening to vote against an increase in the debt limit unless Congress passes a new deficit-fighting plan.

“I will not vote for raising the debt limit without a vehicle to handle this … This is our moment,” California Democratic Sen. Dianne Feinstein said.

She and nine other senators wrote to Senate Majority Leader Harry Reid (D-Nev.), asking that Congress create a special commission to make recommendations that then could be decided by an up-or-down vote.

This proposal has prompted angry attacks in the lefty blogosphere as undemocratic and harmful to the recovery, but the letter was also signed by such usually admired liberal Democratic senators as Claire McCaskill of Missouri and Amy Klobuchar of Minnesota. The Nov. 18 letter, noting the $12 trillion debt and contending it would limit resources for domestic needs, said, “We believe Congress needs to adopt a special process to deal with our nation’s long-term fiscal imbalances. We do not believe that action on these important issues will occur under the regular order in Congress.”

In contrast, a conference call with the press Wednesday, hosted by the Campaign for America’s Future, highlighted the overwhelming need for a major jobs plan and announced a push-back by 40 progressive groups against the emerging conventional wisdom in Washington that only this independent panel, likened to the military bases commission, could handle proposing sharp cuts in spending to solve the long-term economic problems posed by debt. Campaign for America’s Future co-director Roger Hickey pointed out the danger posed by the proposed panel: “This commission is undemocratic and would lead to deep cuts in Social Security, endangers health reform … and would slash Medicare benefits. It would undermine America’s fragile economic recovery.” 

To drive home his point, he quoted from the letter written by the 40 leading liberal organizations, including the AFL-CIO, to Congressional leadership and the White House protesting the panel. They disputed that it should be empowered to propose deep cuts in domestic programs – and then offer them to Congress for an up-and-down vote. Reading from the letter, Hickey said, “As unemployment continues to grow, we need a real debate about how to balance the need for economic recovery and productive public investment with the goal of long-term budget responsibility. The American people are likely to view any kind of expedited procedure, where most members are sidelined to a single take-it-or-leave-it vote, as a hidden process aimed at eviscerating vital programs and productive investment.”

Economist James K. Galbraith, a professor at University of Texas’ LBJ School of Public Affairs, denounced the commission proposal as “pure mischief.” It assumes that a recovery will happen without any jobs stimulus, he said, but he observed, “The reality is that budget deficits are the medicine that has kept the economy from imploding over the year of the great crisis. They’re the life support system which has provided stabilization to some degree that’s already occurred. It’s not appropriate while following a regime of life supports to criticize the medicine and equipment that’s keeping them alive.”

In response to the progressive groups’ letter, Budget Committee Chairman Senator Kent Conrad (D-N.D.) and ranking Republican Judd Gregg of New Hampshire, co-sponsor of the proposal, released a statement Wednesday evening to Truthout and other news outlets:

One of the main purposes of our Bipartisan Fiscal Task Force is to protect and preserve Social Security and Medicare for current and future generations. The fact is both Social Security and Medicare are currently cash negative and headed for insolvency. People who care about Social Security and Medicare should be joining us in this effort. 

The need for a special bipartisan process to address our nation’s long-term fiscal imbalance couldn’t be more clear. As much as we might like otherwise, the regular legislative process is simply not going to get the job done.

They also emphasized that debt reduction was necessary to preserve valuable programs that protect the most vulnerable citizens.

Roger Hickey and other critics of the panel idea now entrancing the White House just don’t buy those arguments. Hickey replied in an email to Truthout:

Our 40 organizations say in our statement the Conrad-Gregg commission could result in drastic reductions of Social Security and Medicare benefits. Conrad and Gregg respond that they want to “protect and preserve Social Security and Medicare,” but “preserving” these programs by slashing benefits would instead transform them into a minimalist welfare system that would guarantee neither retirement security or good health coverage. They are just wrong when they claim that Social Security is currently cash negative. Current tax revenue exceeds Social Security payouts. And while Medicare has serious problems, the new health reform proposals now being debated would reduce Medicare expenses by reforming health care without cutting benefits. The Conrad-Gregg commission would slash benefits…

Conrad and Gregg profess that their major concern is for the health of the economy – but they both embrace the Republican mantra that the greatest threat is debt and deficits… The real threat to today’s economy is economic recession and growing joblessness.

Galbraith also underscored that this current unemployment catastrophe wasn’t fully addressed by the earlier stimulus package. That’s in part because it was based on unemployment assumptions of 8 percent that turned out to be “wildly optimistic.” Galbraith said, “In this situation, you cannot do too much. If by a happy miracle, unemployment starts disappearing really quickly, you can always scale back. But what’s difficult to do is to go back again and again, and ask for another bite of the apple, when you discover that previous bite was too small.”

That, in fact, is the political dilemma facing progressive groups and liberal Democrats now, thanks largely to the smear job by right-wingers against the stimulus and the political caution of Democrats the first time around, despite warnings from liberal economists like Paul Krugman that greater, more jobs-specific spending was necessary.

Now, however, some of the major programs that have gathered the strongest liberal support as essential for job saving and creation could face an obstacle course in Congress. For instance, Borosage and other advocates point out that without further aid to the states and localities they could lose at least 900,000 government workers, including teachers and police officers, over the next year. Moreover, as The New York Times reported recently, “Federal aid to state governments ranks high in economists’ reckoning of the stimulus value of various proposals. Every dollar of additional infrastructure spending means $1.57 in economic activity, according to Moody’s, and general aid to states carries a $1.41 ‘bang’ for each federal buck.” Yet, after 40 years of right-wing rhetoric about 
pointy-headed bureaucrats wasting taxpayers’ money, there’s not much political support for additional spending to save jobs in state and local governments.

Rep. Keith Ellison highlighted the impact on those governments when asked by a reporter about the political challenge of selling a new package because the first stimulus didn’t meet its initial jobs goals. “If we didn’t do the stimulus package, we’d be at 12 percent unemployment,” he said. “Just ask Governor Schwarzenegger, who can tell you that 100,000 public employees wouldn’t be working but for the stimulus package. So I think the critics are going to throw that out there [not meeting the original jobs target], but is the public going to buy that? I don’t think so, particularly when people need jobs, and people need people with money so they can actually buy things at their stores. Let’s remember that the CBO said Tuesday that between 600,000 and 1.6 million jobs have been saved.”

He added, “The stimulus has helped, but it wasn’t as big as it needs to be, so we’ve got to go back and fix that.”

Indeed, it’s Ellison’s own proposal to spend about $40 billion to create 1 million new public-sector jobs that has stirred considerable interest among Congressional leaders and advocacy groups backing similar measures. He argued passionately for the wide range of jobs benefiting families and communities that could be filled by people needing work. “By hiring people to fill 1 million jobs with high labor standards we could focus on areas critically in need in communities: people are needed to repair schools, clean up abandoned and vacant properties blighted by the foreclosure crisis, in emergency food programs, and we need the staff in Head Start and early education programs,” among other jobs he cited. The appropriate jobs would be decided in consultation with local officials and nonprofit groups about which needs were greatest, and be funded through Labor Department-administered community block grant programs. Unions also want to make sure that they don’t undercut or replace current public sector jobs.

With all those proposals on the table, there’s still no certainty which, if any, of them President Obama will support and help get through Congress with the considerable power of his bully pulpit. Liberal congressional aides are hopeful that if Democrats coalesce around a few solid proposals, they’ll get active presidential support.

Other progressives aren’t so sure. As Isaiah Poole pointed out in his column at the web site: “The bottom-line question as the job summit unfolds is who will exert the leadership that will go against the political wind… It should come from President Obama himself, who will wake up Friday morning to a jobs report from the Labor Department that will underscore the misery of the Main Street economy. But if it will not come from Obama, it should come from the pressure the rest of us apply on Congress.”

UPDATE: On MSNBC’s The Ed Show, after the jobs summit, Richard Trumka, the president of the AFL-CIO, offered a more optimistic perspective about the President’s role and the chances for strong action. ” President Obama understands the urgency of job creation and a lot of good ideas came out of it,” he said of the jobs summit.

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