Will Obama Turn Around Jobs Outlook?

Labor ministers reporting to the G20 heads of state in Toronto will document a truly scary rise in unemployment worldwide—a mind-boggling record high of 212 million.

In its annual Global Employment Trends report, the International Labour Organization (ILO) estimated that 34 million people joined the ranks of the unemployed in 2008 and 2009. It would have been closer to 55 million if the largest economies hadn't taken steps to offset the global collapse in financial markets with government stimulus, according to Ron Blackwell, chief economist of the AFL-CIO.

Here in America, 15 million unemployed is the official number, but each week scores of jobless drop off the unemployment rolls because their benefits run out and they are no longer counted. The actual number, far higher than what the weekly stats tell us, is on the way to becoming a permanent feature of the new economy. And while governments scrambled to save banks, there's no comparable urgency about creating jobs.

The Obama administration, given its rhetoric, has been particularly disappointing. In an effort to push the administration to get serious about tackling the jobs gap, the New America Foundation, a nonpartisan think tank, convened a luncheon discussion on Wednesday focused on the advocacy of a single idea: public-led investment in infrastructure as the only viable way to build back the jobs that have been lost.

Former Clinton administration economist Laura Tyson, now a member of the current President's Economic Recovery Advisory Board, opened the event with a talk that laid out the gloomy numbers. It will take 11 million new jobs to get back to where we were before the Great Recession, and absorb new workers coming into the labor force. If we create 200,000 jobs a month, it will take 12 years; at 350,000 jobs a month, four years. In May, the private sector generated 41,000 new jobs. Don't do the math; it's too depressing.

Business remains reluctant to hire, and the "summer of recovery" that the White House is touting as evidence that its policies are working is fine as far as it goes, but does very little to chip away at the growing jobs gap. Unemployment is expected to remain at about 9.5 percent through this year, and then under the most optimistic scenario very gradually decline to 8.2 percent by the end of 2011, in time perhaps to help ensure Obama's reelection, but not in time to save Democrats this fall.

What Democrats need are some bold initiatives, but first Obama will have to regain the upper hand from the deficit hawks. Senate Republicans, with the help of a lone Democrat, Ben Nelson of Nebraska, once again this week defeated legislation to extend unemployment benefits and provide cash assistance to strapped state governments because it would increase the deficit. The premise of the Obama administration is the positive use of government, but he's been put on the defensive by charges that his policies are bankrupting the country and setting it on a slippery slope to Greece-style socialism.

Economist James Galbraith suggests creating a modern-day TVA (Tennessee Valley Authority) to carry out long-term reconstruction in the gulf the way the Depression-era agency modernized an economy that had been left behind, and provided jobs. It's hard to imagine an administration that cowers in the face of GOP opposition to more stimulus money proposing a new federally owned corporation—not with the woes of Fannie and Freddie still draining taxpayer money. "How can something so unanimously believed in find so little political will?" exclaimed CNBC economic guru Leo Hindery Jr.

The short answer is politics. Democrat Rep. Brian Baird recalled arguing with administration economist Larry Summers about the amount of infrastructure spending in the Recovery Act that Congress passed early last year. According to Baird, 12 percent went to infrastructure, and it created 24 percent of the jobs. Baird thought it should be more, but the wisdom received from Summers was that infrastructure projects wouldn't create jobs fast enough, so the money was put into tax cuts. "Not a single person has said to me, 'Thanks for the tax cut; they didn't know they got one,' " Baird says. "The right says the stimulus didn't work; part of the reason it didn't work [as well as it should] was we spent it on things the right likes, like tax cuts."

Democratic Rep. Peter Welch told the group that like it or not, a growing number of Americans think we've spent our way into the problem we have, and that any proposal for spending, however worthy, "will be used against us." Welch offered the wisdom of someone who's been on the campaign trail, saying that Democrats should talk very concretely about retrofitting local schools, expanding broadband into communities, and rebuilding deteriorating water systems. "It's unbelievable how bad our water is. Red state, blue state—your water system is failing."

Well before the recession hit, the government was spending well below what was needed to maintain existing infrastructure, let alone make the investments that would make us competitive. With Americans holding back on consumer spending, and businesses not yet hiring, a government boost in infrastructure looks like the logical path to job creation and political salvation. "The deficit is the creation of the right-wing media and the absence of any jobs program," declared Working America executive director Karen Nussbaum. "If we were delivering jobs, nobody would be talking about the deficit."

Eleanor Clift is also the author of Two Weeks of Life: A Memoir of Love, Death, and Politics and Founding Sisters and the Nineteenth Amendment.