Sunday, July 19, 2009

Riding the Storm Out

When I was a teenager, there was a song by a popular band of the time that was titled, "Riding the Storm Out."

It might be a pretty good anthem for those who have been hammered by the current recession.

I know the millions of unemployed Americans are yearning for a time when, as Louis Uchitelle writes in the New York Times, help will be wanted by employers again.

"Recessions have their milestones," Uchitelle writes. "There is the start, of course, in this case December 2007; the worst months, the winter and spring of this year; the gradual return to economic expansion, late this year maybe; and, finally, adding jobs."

The improvement in the employment picture typically occurs at the end of a recession — and, given the fact that this recession is deeper than any that most people living today have witnessed, that is going to take awhile.

And even when employers start hiring again, hiring activity is apt to be "spotty and cautious."

That part, I suppose, should be obvious, even if it is an unpleasant truth that most unemployed Americans don't want to think about.

"Most Americans don't consider a recession really over until work is once again plentiful, and the unemployment rate — which is now at 9.5% — finally starts going down," Uchitelle writes. "Ask economists when that will occur this time and they hesitate. No sooner than next summer, nearly all of them say. And that's a guess, verging on wishful thinking."

Mark Zandi, chief economist at Moody's, observes that it will take time for manufacturing and construction to stop losing jobs, and it will take time for businesses to regain enough confidence to hire employees.

So the outlook is for a "jobless recovery," Uchitelle writes, comparing it to the last two recessions. But this one is worse because, instead of job losses in the tens of thousands each month, we have witnessed an economy that has been hemorrhaging jobs in the hundreds of thousands every month.

To move things along, Uchitelle suggests another stimulus package may be necessary. But I get the sense that there isn't much of an appetite on Capitol Hill for more debt (Uchitelle suggests a stimulus package with a price tag approaching $1 trillion). The Democrats may be able to muster enough support in the House, but it's going to be another matter to get the necessary 60 votes in the Senate, even with the recent addition of Al Franken and the defection of former Republican Arlen Specter.

But what choice do lawmakers have? More than a quarter of the states already have unemployment rates in double digits, and more are likely to join them in the months ahead. The Obama administration and the Democrats in Congress were warned by economists like Paul Krugman that the first stimulus package was too small, but they made concessions and compromises in a misguided — and unsuccessful — attempt to achieve bipartisanship.

Bipartisanship must not be a concern this time. The Democrats have the numbers in Congress. They do not need to ask the Republicans for permission. They must act — boldly and swiftly — for the good of the people who sent them to Washington.

To push through another stimulus package, at the same time that he is pressing for health care reform, Obama is going to have to demonstrate whatever skills of political persuasion he possesses.

He's going to have to use whatever "political capital" he has left. If he does not, his party faces a huge setback at the polls next year.

That is the reality.

It is not a pleasant prospect, but it is the only way the Democrats will be able to ride out this particular storm.

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