Nation: Obama in big trouble if unemployment rises further

The Obama administration predicted that the massive deficit spending Barack Obama pushed in the stimulus would save the country from runaway unemployment, which they defined as 8.8%.  With unemployment racing higher than the doomsday predictions after spending $800 billion on liberal pet projects, even the Left has realized that this presidency could be in serious trouble.  John Nichols at The Nation warns that crossing the double-digit mark on unemployment will pin the problem not on Obama’s predecessor, but on Obama himself:

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When the federal government actually acknowledges that the country has a double-digit unemployment rate, when a figure that is above 10 percent becomes that official number — something that the trend lines suggest could happen this summer — the country reaches an emotional and political tipping point.

“Ten is a tangible, very clear reminder that this is a severe recession,” explains Ohio State University economics professor Bruce Weinberg. “Ten becomes something psychological. People will say: ‘Whoa, we’ve got a double-digit unemployment rate.'”

Politically, it is the point at which people start looking for someone to blame. Obama and his people will blame the president’s predecessor. This is appropriate, as George Bush’s economic and regulatory policies were incredibly unsound and destructive.

The problem, of course, is that the blame game gets harder when it becomes possible to link a sitting president’s actions to soaring unemployment figures.

States that have been especially hard hit by the current recession — Michigan, Ohio, Indiana, among others — and urban areas that have been devastated by it (according to the Labor Department, 93 metropolitan areas registering an unemployment rate of at least 10 percent in April) now face the prospect of significant additional job losses in the coming months as a result of the administration’s auto bailout scheme.

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John and I have widely divergent ideas on economics, and John’s argument in this piece is that Obama hasn’t been radical enough in his approach to the economic crisis.  He dislikes Obama’s current economic team mainly because they aren’t progressive enough.  John objects to the bailout not because of the government overreach and its movement towards corporatism, but because the restructuring will result in lost jobs. Of course, the option here was bankruptcy, which would have also resulted in lost jobs — but would have cost the American taxpayers a lot less in the short and long terms.

Interestingly, we agree on the main points, but couldn’t agree less on the underlying arguments.  AndI give John high marks for intellectual honesty in this passage:

In fact, the real unemployment rate, as opposed to the official rate, is well over 15 percent.

That’s because the official unemployment rate — which as of Friday stood at at 9.4 percent, following another leap in jobless claims for May — is not, as economist John Williams has noted, “figured in the way that that the average person thinks of unemployment, meaning figured the way it was estimated back during the Great Depression.”

Normally, the Left likes to trot that out during Republican administrations and leave it in the barn during Democratic presidencies.

Even if we wildly disagree on economics, we agree that Obama will own this unemployment cycle, and soon.  The 10% mark is a psychological barrier that Obama simply cannot avoid.  Even without it, blaming Bush has a shelf life whose expiration date is rapidly approaching.  Bush didn’t spend trillions of dollars in 2009 and promise that it would create “or save” jobs.  Voters will get tired of hearing how many jobs Obama thinks he’s “saved” while unemployment continues to rise.

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Obama has been in charge for almost five months and got every single bit of economic policy he wanted from Congress.  If the economy remains mired and debt keeps skyrocketing, people will start to ask what they got for all of their great-grandchildren’s money.  Even a Party of No will look pretty good in comparison under those conditions, and perhaps especially so.

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