The 88,000 net jobs added in March, if that or a similar figure holds up through revisions, is a tragedy: Nearly four years into the economic recovery, with the unemployment rate still close to 8 percent, the nation recorded a month in which too few jobs were added to keep up with the growing American workforce (that number is more like 125,000). The headline read that the unemployment rate fell to 7.6 percent from 7.7 percent, but it was almost entirely for bad reasons. A whopping 496,000 people dropped out of the labor force, and 206,000 fewer people reported having a job, meaning that the proportion of Americans currently working actually ticked down, not up. [...]
So, what is the culprit? March was the month that the policy of sequestration, across-the-board government spending cuts went into effect. But the patterns of what sectors added and lost jobs doesn't match what you would expect if this was the major driver of the weakness. The professional and business services sector, which includes many contractors, actually added 51,000 jobs, consistent with its recent results. The federal government excluding the U.S. Postal Service shed 2,200 jobs, which amounts to a rounding error across the whole of the American labor market. It's not that the sequester won't have some negative effects on the economy eventually, but you have to squint awfully hard to see them in this report.
The more plausible case is that the increase in payroll taxes that took place in January, lopping 2 percent off of most workers paychecks, is damaging the retail sector. Retailers shed 24,000 jobs, with the steepest losses among sellers of building materials and garden supplies and of clothing and clothing accessories. It makes sense that it would have taken two or three months for less cash in customers’ pockets to translate into retailers keeping fewer cashiers and sales clerks on staff. That said, consumer spending data and reports from retailers themselves has held up reasonably well in 2013 despite the payroll tax, so it's hard to assign too much confidence the idea that the drop in retail jobs is a consequence of fiscal austerity as opposed to a routine statistical blip.
Which leaves us with this overarching conclusion: This economy isn't as strong as we thought it was. What had seemed to be a nice winter acceleration in activity may be, as it has been for the last three years, undermined by a spring-summer swoon.
We've already received warnings about the dangers of austerity. This is yet another one. Can we really afford to continue ignoring these warnings?
Remember, even this jobs report doesn't include anything close to the full effect of the latest manufactured crisis. It just includes effects from the previous one in January. So we probably don't even know yet how much more carnage we'll see in the coming months.
Meanwhile in Washington, we're seeing yet another budget brawl. "TEA" fueled Republicans are demanding more manufactured crises, while Congressional Democrats are offering more reasonable budget plans with a mix of new revenue and budget cuts.
Now, President Obama is offering his own budget plan. Basically, it's yet another attempt at a "Grand Bargain" of more far reaching tax reform... And a "chained CPI" benefit cut to Social Security. Wait, WHAT?! Greg Sargent has more details.
At a certain level, this shouldn’t surprise anybody. On entitlements, Obama is merely reiterating what he’s previously offered John Boehner, and it has long been clear that this offer is still on the table. Many liberals have long suspected that Obama actively wants to cut entitlements. So here is my understanding of White House thinking on why a Grand Bargain is a good outcome.
Obama and his advisers don’t necessarily view Chained CPI as good policy. But they think a Grand Bargain is ultimately a better outcome than continued sequestration, and the only way to the former is to peel off individual Republicans who are open to new revenues. They believe a Grand Bargain is good for Democrats in general, because it essentially would lock in a medium-term agreement over core disputes —about the safety net and about the size of government, and who should pay for it —that have produced a debilitating stalemate in Washington.
Yes, Republicans would continue railing about government spending, the thinking goes, but no one would listen, since they would have already endorsed a deal stabilizing the deficit. This would deprive Republicans of the ability to focus attention on one of their core targets —Big Government —as a way to avoid grappling with other issues, such as jobs and long-term middle class economic security, immigration, guns, and perhaps even climate change. Reaching a deal on the deficit will force Republicans to confront those problems more directly and to choose between real cooperation on them or continue to calcify as a hidebound, reactionary party incapable of addressing major challenges facing the country.
Liberals will point out that it’s folly to offer Republicans so much up front, because they’ll only denounce the offer as “unserious” and demand more, shifting the debate further in their direction. But officials insist the White House has no intention of budging on its demand for new revenues or allowing Republicans to pull Obama further towards them. (This doesn’t mean liberals shouldn’t make it clear that any further concessions on revenues are unacceptable.) The offer in the budget, the thinking goes, will drive home that Obama is the one who occupies the compromise middle ground, and if Republicans refuse to deal, it will be crystal clear in the public mind who is to blame for continued austerity. The White House doesn’t worry about putting its fingerprints on entitlements cuts, because Obama has long proposed them himself.
The President wants to end the ongoing manufactured crises that result in more and more austerity. So again, he's making a "Grand Bargain" offer with proposed entitlement cuts. He's essentially daring Congressional Republicans to oppose this.
And the beat goes on. We're now forced to endure an ongoing debate on who in the working class needs to "endure the pain". Meanwhile, we all continue to suffer from manufactured crises producing more austerity.
Our economy likely can't handle more austerity. Most American families certainly can't. So when will this madness end? What will it take for the G-O-TEA faction in Congress to stop harming our economy? And what will it take for Democrats to try something new to break this cycle of austerity madness?