Or for that matter, any of the other tax cut silliness or fiscal austerity madness. Because to lower unemployment to where it was in early 2007 over the next eighteen months, that’s what we’ll have to do. The Slacktivist lays out the numbers:
Now, from 2007 through early 2009 the American economy saw some 8 million or so layoffs. These people were not fired, they were laid off.
The arithmetic involves large numbers, but it is not complicated. The economy gained 8 million unemployed workers and lost 8 million job openings. Those 8 million people could not just go get another job because another job did not exist. We wound up with 8 million fewer places to look for work at the same time that 8 million more people needed to find work….
Those 8 million workers got up and their seats were taken away. They cannot find new seats because there are not nearly enough seats to go around. Those 8 million or so workers cannot simply find new jobs because there are 8 million fewer jobs to be found.
The most recent figures, if you want to be precise: 14.2 million looking for work; 3.4 million job openings. That means 10.8 million Americans right now, today, are royally, epically screwed.
That means it wouldn’t matter if every unemployed American followed all the advice for what job-seekers are supposed to do. If every single one of them keeps a positive attitude while still being willing to settle for less, if each and every one of them takes classes and volunteers to keep their skills sharp, if each and every one networks furiously, gets up every morning, showers, shaves and gets dressed for the office before sending out dozens of perfect, enticingly crafted résumés all day, every day, then 10.8 million of them will still not find jobs because there are 10.8 million fewer jobs than there are job seekers.
That is the situation. That is what we are up against.
Just to make up the 10.8 million missing jobs, we would need to create 600,000 jobs per month for the next eighteen months. But don’t forget that, due to population growth, we need to create 150,000 jobs per month simply to keep unemployment from increasing (thus, 750,000 jobs per month).
The issue is lack of demand. Unemployed people don’t spend much because they don’t have much to spend (and reducing the length of time the unemployed can receive assistance doesn’t help). Middle class families (defined broadly here) are either paying off debts–which gives money to still-insolvent banks that aren’t making loans–or saving the money because they’re afraid they might lose their jobs. Corporations are sitting on record high levels of cash because there is no demand–businesses create jobs only when demand outstrips capacity and we’re not even close to that.
So that means the government has to create demand–that is deficit spend and pay people to do things. And the latest estimate is that our transportation system alone needs an additional $134 billion to $262 billion per year for the next 25 years. That doesn’t include sewer and water main repair, fixing the power grid, or rebuilding the physical infrastructure of our schools. There’s a lot of very basic stuff we can do and that we need to do that would create jobs.
At this point, some conservative douchebag will cry, “Keynesianism!” (as if that’s a bad thing). But how do tax cuts for the wealthy and business help stimulate job creation in the absence of demand? Even the payroll tax cut for workers won’t help as much as it should since people are hunkering down. How does cutting federal and state (let’s not even get started on the state and municipal implosion that will happen in 2011-2012) payrolls–the vaunted ‘fiscal responsibility‘–add jobs? You can’t argue crowding out due to government spending when 10.8 million people need jobs (well, you can, but that means you’re a fucking moron). Sure massive tax cuts will do something, but since they’re targeted towards the rich–and the poor will actually have less to spend–they won’t be very useful. They won’t create 750,000 jobs per month: the numbers just don’t add up. We might as well click our heels three times and say “There’s no place like home” for all the good the Obama-McConnell plan will do.
And for all the hububb about behavioral economics, they seem to be AWOL here. It’s pretty obvious that these tax cuts will do little to convince most Americans that their jobs are more secure (or that they can find a new job if they lose their current one). Again, without lowered unemployment (which also drives wages higher–a good thing), we won’t get this confidence back.
Sadly, I see nothing on the political horizon, in either the remaining dregs of this Congressional session, or during the next two years that will create these jobs.