New numbers from the Labor Department today showed that new jobless claims are again inching back upward, last week by 2,000. Last week's unemployment report showed net job growth to be stuck at zero. The nation's economy has ground to a halt, and in the leadup to the president's jobs speech tonight, it appears that the political process has done so as well, making chances of government action to promote recovery appear increasingly slim.
By now, the basic elements of President Obama's plan have been widely discussed: All told, his proposal is expected to cost more than $300 billion, with likely components including a payroll tax cut extension, an extension of unemployment benefits, the creation of an infrastructure bank, a new job training initiative, and providing aid to state and local governments, which have been hard hit by job losses. In response, congressional Republicans are preemptively criticizing the plan, and are even making symbolic gestures like refusing to give a formal response, with some even going so far as to refuse to attend the president's announcement on Capitol Hill.
As such, the much-hyped speech may very well result in minimal action, with Congress and the president agreeing on only marginally effective policies.
Matt Bennett, senior vice president for public affairs at moderate think tank Third Way, says that consistent GOP obstruction has led the president to propose economic measures that are a far cry from what he would really like to enact. "I don't think anyone, including the president, would suggest that [the new job plan] is going to restore us to economic health," he says. "There's just not that many levers the government can pull to bring unemployment down from 9 to 4 percent." Whatever Obama proposes tonight, says Bennett, will not constitute a cure, but rather "an important treatment of the symptoms" of the nation's current economic crisis.
Of course, politics aside, there is also broad disagreement between the two parties on what a successful treatment might entail. [Read: What Obama Can and Can't Do to Create Jobs.]
"I don't think any of these contain anything that will stimulate job growth," says Rob Russell, president of Russell & Company, an investment advisory firm based in Dayton, Ohio. Russell believes that government intervention is standing in the way of private-sector growth, and advocates a freeze on all new regulations to "give the private sector time to swallow what's already been thrown at them" by agencies like the Environmental Protection Agency and the newly created Consumer Financial Protection Bureau.
Many Republican politicians advocate financial and environmental deregulation as a way to promote private-sector growth. But Bennett says that recent history deflates this proposal. "The question about whether cutting taxes and deregulating can spur economic growth is a settled one. We tried it for a long time under [George W.] Bush. ... They massively deregulated, they massively cut taxes, and the economy collapsed at the end of the Bush administration." he says.
Likewise, the question of fiscal stimulus has been contentious throughout the Obama administration. President Obama has already attempted to jumpstart the flagging economy with a $787 billion stimulus plan. While many economists believe that the American Recovery and Reinvestment Act prevented a deeper recession, some—and particularly the president's opponents—say that the package was a failure, given that it did not even meet the White House's expectations of its effectiveness in bringing unemployment down. Peter Morici, professor at the Robert H. Smith School of Business at the University of Maryland, considers some elements of Obama's expected remarks, like increased aid to state and local governments, yet another stimulus package. As tonight's proposals will not be nearly as large-scale as that stimulus, says Morici, they are also likely to see little success.