Don't Hold Out Hope
For the Jobs Summit
If you’ve been following the economy at all (and who hasn’t?), you probably already know better than to expect much from President Obama’s jobs summit later this week. It’s not for lack of trying; the need to put a big dent in the 10.2% unemployment rate is huge. It’s just that in the end, there is very little that Washington can do to speed job creation. No one wants to hear that, especially the millions who are unemployed or underemployed. It’s also unwelcome news to Democrats in Congress, who see their own jobs threatened as voters blame Obama and them for mishandling the economy. The pressure is only likely to increase on Friday, when new unemployment numbers come out, and over the next few months, as the jobless rates heads toward a peak of 10.5% or so.
Obama has invited more than 100 people to come to the Dec. 3 summit and share their ideas with him and economic advisers. The guests include the CEOs of big American companies -- Google's Eric Schmidt, AT&T's Randall Stephenson, FedEx's Fred Smith and Comcast's Brian Roberts, for example. Several small business owners will be there, too, along with half a dozen labor leaders, such as Anna Burger of Change to Win and Leo Gerard of the United Steelworkers. The mayors of Allentown, Pa.; Des Moines, Iowa, and San Antonio, Texas, will also be there, as will economists Paul Krugman, Alan Blinder and Joe Stiglitz.
Obama says everything will be on the table, and no doubt everyone there will have ideas to push. Many already are. Democrats in Congress, backed by labor, want to put a lot more money into infrastructure projects. Cities and states want another infusion of cash so they can avoid more layoffs. Business groups want a host of tax cuts, including lower corporate tax rates, a tax holiday on earnings brought back from overseas and a payroll tax holiday. Small businesses want more steps to loosen up credit. Liberal economists such as Krugman want a government jobs program akin to the old Works Progress Administration.
But the Obama administration and many in Congress feel their hands are tied by the huge federal deficits they already face. Big new spending plans are therefore out of the question. So, too, are major tax cuts. That leaves Obama likely to select, as is his penchant, a middle-of-the-road approach, with a modest spending boost to spur job creation in clean energy and a few tax breaks, such as a credit for employers who create jobs.
Obama will take the heat for a lack of action, especially from Democrats who think he should be doing a lot more to help the jobless and, not incidentally, help them hold off big losses in next year’s congressional elections.
The problem is the only things that might help – a massive jobs program, massive tax cuts, or both – are just unaffordable. Plus, there’s plenty of doubt that any of these ideas will really make that much of a difference. It may be good politics to be proactive, but the economy doesn’t do the bidding of government officials. We at Kiplinger continue to think that there simply isn’t much Washington can do but wait it out. What’s really needed is a restoration of confidence by consumers, by lenders who aren’t providing enough credit and by companies who are afraid to hire without more signs of a real recovery.
That’s terrible news for the nation, so don’t expect anyone in Washington to come right out and admit it. Instead, they’ll do what they can to offer encouraging words and some help around the edges, being careful not to raise expectations too much. But what they’ll really be doing is waiting and hoping.