Today President elect Barack Obama addressed the news that 524,000 jobs were lost in December, and 2.6 million jobs were lost last year by calling for the passage of his economic stimulus plan.
“524,000 jobs were lost in December across nearly all major American industries. That means that our economy lost jobs in all 12 months of 2008, and that the nearly 2.6 million jobs lost last year amount to the single worst year of job loss since World War II. The unemployment rate is now over 7 percent. Clearly, the situation is dire, it is deteriorating, and it demands urgent and dramatic action,” Obama said.
He tried to urge Congress to action by reminding them that the jobless are real people with families, “But let me be clear: today’s jobs report only underscores the need for us to move forward with a sense of urgency and common purpose. Behind each and every one of those millions of jobs lost there are workers and families who are counting on us as they struggle to pay the bills or stay in their homes. There are American dreams that are being deferred and that risk being denied. There is a devastating economic crisis that will become more and more difficult to contain with time. For the sake of our economy and our people, this is the moment to act, and to act without delay.”
Obama’s first and biggest test will be how he handles the Congress during the debate on the stimulus package. Republicans like the tax cuts, but aren’t so crazy about the spending, while Democrats love the spending, but are questioning the tax cuts. The truth is that 40% of the stimulus is going to be tax cuts.
Big infrastructure projects take time to develop and fund. Tax cuts are the fastest way to get money back into the economy. Even if the price tag on Obama’s plan is $800 billion, actual government spending would be closer to $480 billion. Obama is correct in saying that something needs to be done quickly, but as usual the Congress is being tempted to get bogged down in politics and appearances.
Psychologically it is important to hold under 10%, but I think that ship may have already sailed. If the number of jobless continues to rise at December’s rate, we should hit 10% unemployment by March. Obama faces the unprecedented tasks of turning around a recession while redeveloping an economy. The last thing he needs right now is petty partisan infighting, but this is what Congress does best.