During times of increased drama and uncertainty in Washington, good news is often lost in the contentious circumstances of political maneuvering. For the past week, there has been such combative discourse over the payroll tax cut extension and the Republican opposition to helping 160 million Americans survive the slowly recovering economy, that the fate of millions of unemployed Americans has taken a backseat in the 24-hour news cycle. Yesterday, there was good news that House Republicans caved to immense pressure from President Obama, the public, and Republicans in the Senate and agreed to extend the payroll tax cut and unemployment benefits for millions of Americans. However, there was also good news on the jobs front that portends well for the economy and struggling Americans.
The Labor Department reported that unemployment claims fell to their lowest levels since April 2008 in a sign that the economy is making a comeback at the end of the year. On Thursday, the Labor Department said it was the third straight weekly drop and the less volatile gauge of the four week average fell for the 11th time in thirteen weeks; the lowest since June 2008. A senior economist with BMO Capital Markets said, “The underlying trend is undeniably positive. I think everyone is starting to come around to the view that, yes, there is a recovery going on.” In March 2009, unemployment claims peaked at 659,000. Four years before Bush-Republicans’ Great Recession, unemployment levels stayed between 300,000 and 350,000 making the current level of 364,000 closer to pre-recession levels and is a sign that layoffs from the past three years have nearly stopped. An economist at Wells Fargo, Sam Bullard, said that “We haven’t yet really seen substantial numbers of new jobs, but this is definitely an encouraging sign of what lies down the road.”
A chief global strategist with a brokerage firm said if unemployment keeps falling, the rate may fall as low as 8% before the November election. The strategist, Dan Greenhaus also said, “When you fire fewer people, hiring unquestionably follows.” There can be little doubt that the payroll tax cut and unemployment benefits extensions certainly helped the economy and as business owners have said for two years; when people have more money to spend, they will begin hiring to keep up with consumer demand. That consumer spending also prompted another encouraging report by the Conference Board’s index of leading economic indicators that rose strongly in November, the second straight month, hinting that the dangers of another recession are receding. A chief U.S. economist said the economy is on track to grow at 4% annual rate in the fourth quarter that ends in less than two weeks. There has not been a 4% growth period since the first quarter of 2006 and the best since then was 3.9% in spring 2010.
There should be little doubt that President Obama’s stimulus spending and payroll tax cut and unemployment benefit extension have prompted spending, hiring, and economic growth. Perhaps that is why Republicans were reticent to extend the middle class’s tax cut or unemployment benefits. There are Republicans who opposed the payroll tax cut and unemployment benefit extensions so the economy would remain sluggish to portray President Obama as ineffective at handling the economy. Lost in the fray is the importance of keeping the unemployment benefits available to Americans who have been out of work. There are some Republicans who want to scale back unemployment benefits altogether.
Senator Orin Hatch (R-Utah) said, “I don’t see why you have to go more than 59 weeks. In fact, we need some incentives for people to get back to work.” Senator Hatch is right; Americans do need incentives to get back to work and the first place to start is jobs. The President proposed a jobs plan that Republicans panned because they refused to levy a 0.7% surtax on millionaires and billionaires. Hatch echoed a persistent claim by Republicans that, “A lot of these people don’t want to work unless they get really high-paying jobs, and they’re not going to get them ever.” However, most of “these people” did have really high-paying jobs before they were downsized or outsourced to maximize corporate profits. In California, there are thousands of people with post-graduate degrees who lost their jobs and are barely subsisting on their savings and food stamps. In one city two months ago, a restaurant chain faced 2,000 applicants for 120 part-time, minimum wage jobs and a year earlier, a Wal-Mart store offering 200 part-time minimum wage jobs had over 2,400 applicants desperate for any kind of work. Republicans like Hatch have little comprehension of the plight of the unemployed to expect professionals used to earning six-figure salaries to stand in two-block long lines for a minimum wage job instead of drawing unemployment benefits that are paid for by employers and in many professional jobs, the employees themselves.
The good news for the unemployed is two-fold. First, their long-term unemployment benefits will be extended for two months, and second, with news of economic growth and increased hiring, their prospects for finding a job are greatly improved. The best news is that despite the best efforts of Republicans to destroy the economy, President Obama’s stimulus, payroll tax cut, and unemployment benefit extension are clearly working. Republicans will not let up in their efforts to kill jobs and prevent economic growth, but they are being watched by the American people who witnessed another hostage scenario unfold before their eyes with the payroll tax cut and unemployment benefit extension. This time though, President Obama stood up to Republicans and refused to pay the extortionists in the GOP and 160 million working Americans and millions more unemployed people are grateful he did.
Maybe there is light at the end of the tunnel after all. Republicans caved to pressure from the President to help 160 million Americans with a tax cut and unemployed Americans will not be peasants for at least two months. The jobless rate is down and economic growth is up and Republicans have had nothing to do with any of the good news. For the doubters who questioned the Obama Administration’s economic acumen, their questions have been answered. Economic stimulus works, and tax cuts for the wealthy and deregulation does not; but business owners have known for years that the best way to stimulate hiring that leads to more jobs and economic growth is entirely dependent on increased consumer spending.
After a full year of bad news courtesy of Republicans in Congress, the holidays may be happy after all, at least for two more months. There is still that little problem of one-in-two Americans living at or near the federal poverty level and that Americans now understand that Republicans will do anything to increase the number of Americans living in poverty; but they also know the President and Democrats will not allow it to happen. With so much good news in one day, this will surely be a happy holiday.