As Andrew Samwick says, today’s job numbers are more of the same — stagnant job growth that was too weak to to prevent the unemployment rate from edging up a tenth of a point to 9.6 percent.
More depressing is the stagnation on the political front. Even though the Obama White House is rushing to come up with a package of tax cut and spending proposals, the chances of passing anything substantive are somewhere between zero and zero point zero. In fact, the odds are pretty low that Congress won’t even agree on extending any of the Bush tax cuts before they expire at the end of this year.
The Republicans have absolutely no reason for engaging. Obstructionism has been a winning strategy so far, and Republicans know they they will rack up more House and Senate seats in November. If you listen to political handicappers like Charlie Cook, the GOP is poised to take back the House.
“Right now, the Republicans have no incentive to deal on anything,” says Kenneth Kies, one of the top corporate tax lobbyists in Washington and a one-time Republican tax staffer. “They know their leverage is going to improve dramatically.”
But it’s not obvious to me what the White House hopes to accomplish either. The Wash Post reports this morning that the White House is preparing a slew of business tax cuts, but the story mentions only two things: a payroll tax holiday and an extension of expiring business tax breaks, like the R&D credit. Passing the “extenders,” the second item, is hardly a new idea. It’s been on the Democratic agenda all year long.
In theory, the looming expiration of the Bush tax cuts should galvanize both parties to act. Neither side wants the tax cuts to disappear for most people, so Republicans and Democrats are playing a game of chicken. Dems want to make the tax cuts permanent for for all but the top two percent of earners. Republicans want to make them all permanent. If Congress doesn’t pass anything, they all disappear.
But in practice, Congress can easily punt until next year. That’s because the expiration of the Bush tax cuts doesn’t become real until people have to file their 2010 returns in early 2011.
I wish the Democrats had been tougher about dealing with all these issues. But the real delinquency in leadership has been with the Republicans, who tried to block the original stimulus bill and every other initiative that could have added a little juice to the economy. If the GOP had had its way, Congress would not have passed the original stimulus, or cleared the second half of TARP (which is turning out to be an amazingly cheap rescue), or passed extensions of unemployment benefits (42 percent of the 15 million jobless are now long-term unemployed), Medicaid assistance to states or money to prevent 100,000 teacher lay-offs.
When Republicans and business groups moan about the “uncertainty” that’s holding back investment, they ought to mention the incredible uncertainty that the GOP has created over the past decade. Start with their decision to make the Bush tax cuts “temporary” in the first place. Add to that the refusal to grapple with the Alternative Minimum Tax, a ruse that disguised the real cost of the tax cuts. Add to that their refusal to engage on health care or financial reform. To this day, GOP leaders have provided virtually no alternative gameplan beyond providing more tax cuts without paying for them.
I don’t blame Republicans for blowing off the Democrats right now, with two months before the mid-term elections. But why anyone would view them as a source of leadership is a mystery to me.