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Why jobs no longer top Washington's agenda

"Where are the jobs?" 

In Washington, it's a question that Republicans brandished like a sword during the first two years of Barack Obama's presidency and one that Democrats used when the GOP took control of the House of Representatives in January.

For both parties heading into another campaign, the question remains the same, and the answers aren't any closer. While there are plenty of ideas about job creation, political realities make implementation unlikely.

So a softening of the economy — reflected in Friday's dismal jobs data from the Department of Labor — doesn't mean Congress will pass a new stimulus program. Deficits and debt dominate the Washington agenda, not new ways to create jobs.

Only 54,000 jobs were added in May, and the unemployment rate, which had declined since last year, ticked up to 9.1 percent.

It isn’t that Obama and congressional Republicans aren’t offering job creation proposals — they have been for months.  And it isn’t that Obama hasn’t signed job creation legislation — he did last December.

In an interview on CNBC Friday morning, Labor Secretary Hilda Solis emphasized the positive trend of the previous few months: "If you look back on the last four months, we've on average put (on) about 200,000 jobs each month.... And if you look at the past 15 months, it's well over 2.1 million private-sector jobs. We're on the right path. We knew all along we were going to have some bumps in the road."

During a visit to a Chrysler plant in Toledo, Ohio Friday Obama celebrated the revival of the American automobile industry and defended the bailout of Chrysler and General Motors which began in 2008.

But he alluded to the lackluster employment data by saying, "I don't want to pretend like everything is solved. We've still got a long way to go, not just in this industry but in our economy: all our friends, all our neighbors who are still feeling the sting of recession. There's nobody here who doesn't know someone who's looking for work and hasn't found something yet."

Talking about the need for reliable jobs as anchors for cities such as Toledo, he cited the example of a woman working at the Chrysler plant whose mother, stepfather, uncle and husband also had worked or were working at the plant.

"What would be life like here in Toledo if you didn't make these cars?" he asked. "Two years ago we came pretty close to finding out."

It "would have been a brutal and irreversible shock" to the nation's economy to have allowed GM and Chrysler to be liquidated, he said.

But Rep. Jeb Hensarling, R-Texas, reacted to the discouraging data by saying, "Another month, and another data point on the failure of Obamanomics. The administration still doesn't seem to understand that you cannot spend, borrow, tax, and bail out your way to economic prosperity."

Even as their political leaders talk about job creation, there's some evidence Americans don't have faith Washington can even do much to help produce those jobs.

Voters 'very skeptical' on job creation Democratic pollster Stan Greenberg, unveiling new research Thursday based on his polling and focus groups, said Americans are dubious even when the government announces that more than 200,000 jobs have been created in a given month.

“When they hear that, their response is: ‘Ah, what kind of jobs are those? 240,000 jobs that don’t pay anything? Or two million people applying for those jobs?’ They are very skeptical on the jobs numbers,” Greenberg said.

Speaking before Friday’s jobs report was released, Greenberg said disappointing data may cause Democrats on the ballot in 2012 to want to “rethink how much you want to link your fate to the ups and downs of the monthly jobs report.”

The voters in his recent surveys and focus groups, Greenberg said, “are more self-reliant and individualistic” than they were two years ago.

“There’s a sense that ‘you’re on your own.’ And it’s combined with a tremendous distrust of government and who it’s for," he said. "The biggest problem, frankly, is not a lack of ideas about how to address the economy, it's skepticism and a sense of powerlessness that government can do something ... because of the way they think the economy and politics works in this country.”

His survey found that roughly two-thirds of Americans are just as pessimistic today about the economy as they were in the spring of 2009.

Greenberg said his research also showed voters are open to new ideas about spurring economic growth. “They don’t like the idea of stimulus, or special projects,” but they would be open to long-term investments that would build the country for future decades.

What House GOP proposes on jobs
Once one of the Republican presidential contenders wins the party’s nomination, he or she will offer an economic plan in contrast with Obama’s. But for now the House GOP leadership is speaking for Republicans.

Its plan includes a variety of business-friendly steps:

  • Easing regulation of business, for example by requiring congressional approval of any proposed rule that would “have a significant impact on the economy or burden small businesses.”
  • Eliminating “special interest tax breaks” and reducing the top tax rate to no more than 25 percent for businesses and individuals including small business owners.
  • Reforming the visa system “keeping the most accomplished graduates in math, science and other critical fields here in America as well as making it easier for start-up entrepreneurs to obtain visas.”
  • Allowing states flexibility to use federal unemployment compensation funds to balance their budgets or pay for job training programs, rather than paying additional unemployment benefits.

For his part Obama has spoken often about the need for new “green jobs” such as those at the General Electric plant he visited last January in Schenectady, N.Y.

“Ultimately winning this global competition comes down to living up to the promise of places like this,” he said pointing to the job training partnership between the local community college and the GE factory.

Obama's jobs bills
Obama has signed two major pieces of job creation legislation: the $830 billion stimulus plan in 2009 and a tax reduction bill he signed last December that he touted as a spur to job creation.

Last December’s tax cut bill included a one-year lowering of the Social Security payroll tax, as well as an extension of the current income tax rates until the end of 2012. The total amount of tax cuts in 2011 will be $374 billion, according to the Joint Committee on Taxation.

As Obama signed the bill into law he said it “will protect the middle class, will grow our economy, and will create jobs for the American people.”

“I think we are past the crisis point in the economy, but we now have to pivot and focus on jobs and growth,” he said.

Six months later, employment is higher, but there are still 2.3 million fewer people employed than when Obama took office in January 2009.

Obama’s visit to the Chrysler plant in Toledo, while underscoring his interest in keeping that state’s 18 electoral votes in his column, also conveyed his message that government interventionism does work to save companies and jobs.

And while some Republicans such as Rep. Michele Bachmann, R-Minn., ran for re-election in 2008 proudly noting they'd voted against bailouts of banks and car companies, interventionism was at least partly a bipartisan idea in 2008.

President George W. Bush approved $13.4 billion in loans in late 2008 to prevent the collapse of General Motors and Chrysler, and Obama provided more support in 2009.

Even Rep. Paul Ryan, R-Wisc., now the chairman of the House Budget Committee, voted for the 2008 House version of the auto industry bailout.

Fears of a double-dip recession
Democrats don’t begrudge Obama celebrating Chrysler’s survival, but some on the left side of Obama’s party are now fretting that the economy is faltering; they’re wishing that an old-fashioned Democratic job creation program were feasible.

“The possibility of a double dip (recession) cannot be dismissed,” warned former Clinton administration Labor Secretary Robert Reich Thursday in an op-ed in the Financial Times, lamenting “Washington’s paralysis in the face of a stalled recovery.”

He said, “Under normal circumstances, this would be the time for the federal government to take bold action to ward off a double dip,” such as a new version of the Works Progress Administration that Franklin Roosevelt created in the 1930s.

But that issue was settled last November when Republicans won control of the House of Representatives.

The jobs debate is a sideshow to the main event in nation’s capital: bargaining between Obama and congressional Republicans over an agreement to raise the government’s borrowing limit.

If the two sides clinched a deal, it wouldn’t in itself create jobs.

But Obama economic advisor Gene Sperling argues a deficit-cutting deal would give financial markets greater confidence that government wasn’t dysfunctional.

By passing a fiscal discipline bill, “you will create confidence in your country,” Sperling told the Peterson Institute fiscal summit last week. “You will create confidence for people to make long-term investments because they believe we have the political will to compromise and do things that are significant to get our fiscal house in order and live within our means.”

Fiscal responsibility has now replaced job creation as the order of the day; whether fiscal responsibility will be enacted, and whether it will lead to job creation, remain open questions.