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Jobless Figures Pose Social, Political Threat for Obama, Dems

A month ago, when the jobless rate was edging toward 9 percent, it was clear that the most serious challenge facing the Obama administration was rising unemployment.

Unfortunately, Obama's pretty-close-to-clueless economic team peddled the absurd spin that because the rate of increase in the official total of out-of-work Americans had slowed somewhat in May the current recession might be easing. That happy talk dulled the sense of urgency, and the White House let another month pass without focusing seriously

That was a bad mistake.

John Nichols

July 5, 2009

A month ago, when the jobless rate was edging toward 9 percent, it was clear that the most serious challenge facing the Obama administration was rising unemployment.

Unfortunately, Obama’s pretty-close-to-clueless economic team peddled the absurd spin that because the rate of increase in the official total of out-of-work Americans had slowed somewhat in May the current recession might be easing. That happy talk dulled the sense of urgency, and the White House let another month pass without focusing seriously

That was a bad mistake.

During the month of June, 467,000 more Americans lost their jobs.

The official unemployment rate now stands at 9.5 percent.

That’s the highest level since August, 1983, during the severe recession of the early 1980s.

It is now all but certain next month’s figures will take America’s official unemployment rate into double digits – and take the Obama administration closer to both an economic and political flashpoint that the president should be focused on avoiding. ((The key word there is “official,” as the actual unemployment rate – including the long-term unemployed and the seriously underemployed, as well as those who are out of work but have not applied for benefits – is already in double digits.)

“The numbers are indicative of a continued, very severe recession,” economist Stuart G. Hoffman told the New York Times, after reviewing the new jobless figures. “There’s nothing in here to show that the economy and the market are pulling out of the grip of recession.”

The stock markets reacted rationally.

The Standard & Poor’s 500-stock index fell almost 3 percent.

The Dow Jones industrial average fell 223 points.

The Nasdaq composite index dropped 49.20 points.

The state of California is printing i.o.u.’s to “pay” local governments, vendors and taxpayers to which it owes money.

Referring to the ridiculously optimistic pronouncements of the president and his aides about “green shoots” of economic recovery, Tom Di Gamola of Guggenheim Partners told The Times, “These green shoots are turning brown.”

The Obama administration needs to get a whole lot more serious about the real economy.

The president and his aides can begin by recognizing that the $787 billion stimulus plan of earlier this year was a political response to an economic crisis. It was weighted down with tax cuts for the wealthy and unfocused in its approach to job creation. The White House needs to start listening to people who know a thing or two about these matters, such as United Steelworkers union president Leo Gerard and Leo Hindery Jr., the chair of the Smart Globalization Initiative at the New America Foundation, who have outlined a plan to use smart manufacturing strategies and new trade policies to forge a job-driven recovery.

The failure of the president and his aides to focus on Main Street’s unemployment crisis as aggressively as they have on Wall Street’s financial crisis is already haunting Obama. If that official unemployment rate moves into the double digits, it will rapidly become the most serious threat to his presidency.

History is instructive, chillingly so, in this regard:

Administrations that focused too intently on repairing Wall Street and too little on the real hurt of real people.

The elections of 1930 (Depression shifts 49 House seats and 8 Senate seats R to D), 1932 (Depression shifts 101 House, 13 Senate R to D and parties of the left), 1958 (recession shifts 48 House, 12 Senate R to D), 1974 (Watergate/recession shift 48 House, 4 Senate R to D) and 1982 (recession shifts 26 House, 1 Senate R to D) all produced massive rearrangements in the makeup of the Congress. In each case, Democrats gained because they were seen as the party that cared more about working people than Wall Street. In contrast, in 1994, Democrats suffered massive losses after President Bill Clinton adopted Wall Street’s agenda on free trade and NAFTA and proposed a health care “reform” that would have enriched some of the country’s largest insurance companies.

No matter what your party or ideology, certain facts of political life hold steady. The first of these is that a party that lets unemployment surge — especially if it gets into into double digits — and that does not seem to be focused on addressing the crisis is “at risk” of suffering serious losses at the next election.

John NicholsTwitterJohn Nichols is a national affairs correspondent for The Nation. He has written, cowritten, or edited over a dozen books on topics ranging from histories of American socialism and the Democratic Party to analyses of US and global media systems. His latest, cowritten with Senator Bernie Sanders, is the New York Times bestseller It's OK to Be Angry About Capitalism.


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