Gridlock for the Unemployed

Recent economic news -- including disapointing job numbers and home prices dropping--suggest that we are not climing out of this economic slump anytime soon. Unemployment hovers near 9%, which does not count those Americans who have given up hope of finding work and stopped looking. Persistent, long-term unemployment is a large scale social tragedy that our political system is simply not addressing.

Where is the national program to deal with unemployment?

The Federal Reserve, which has kept interest rates a rock bottom levels since the crisis began and has taken other extraordinary measures to stimulate the economy, is signaling that it "is tapped out."

The ideological divide between the parties on economic issues is so far apart that a plan to deal with unemployment is not even a subject for discussion.

It is now an article of faith on the Republican side that the failure of the 2009 stimulus package to substantially bring down unemployment demonstrates once and for all that government spending does not contribute to economic growth. Government austerity is the word of the day, based on the belief that bringing down deficits (and reducing the size of government) will give businesses confidence to invest and hire new workers. This is taking place at both the state and federal level where the deep cuts on the table for public sector workers, especially teachers, are going to make the unemployment problem even worse.

Most Democrats would have no ideological objection to new government investments to bring down unemployment, but appear so spooked by the 2010 election results and daunted by the long term deficit problem that, they too, are virtually silent on the damage that unemployment is causing to our social fabric. Their strategy is to minimize cuts being proposed by the Republicans to social welfare and other programs while advocating for more revenues, primarily through increased taxes on the wealthy, to help lower the structural deficits.

What we really need is to step on the gas and the brakes at the same time -- keep public sector spending going now to put some life into the slumping economic recovery, but cut a deal on health care and other entitlement spending to improve our long term fiscal picture. But there is no political alignment to bring this about.

Republicans are using deficit politics to achieve their political goal of reducing the size and scope of government -- this means reductions to public spending now. Democrats want to run as the defenders of Medicare in 2012 based on what they perceive to be a public repudiation of the Ryan budget plan. Agreeing to big Medicare cuts - thereby giving the Republicans a get out of jail free card on Ryan - has little political appeal.

Something has to budge in order to break the impasse on the debt limit extension, especially with the warnings coming from the credit rating agencies (if only they were so vigilant about the risks of credit default swaps!). But the prospects of a deficit reduction/debt limit extension package including some ray of hope for the unemployed are remote, at best.