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Friday, July 3, 2009

550,000 Lost Jobs in July: A Thought Experiment

Shock waves were sent through both our economy and our political apparatus yesterday. They were swift and significant and in fact, no one has yet fully determined these shock waves. These shock waves occurred after the release of June's employment data. The June numbers showed job losses of 467,000. This number is important on several different levels. First, the number is awful in its own vacuum. Second, the jobs numbers were improving for four months in a row. June broke that mini streak. So, where is our economy? Not only are we losing an extraordinary amount of jobs but it's unclear if things are getting better, worse, or staying the same.

Now, imagine, if you will, if July's numbers show a loss of 550,000 jobs or frankly anything worse than 500,000. That would be a near death blow for the Obama agenda until at least after November of 2010. Some of you maybe thinking that I am a wishful thinking, if you will, partisan. First, I am not wishing for any one's pain. Second, a second straight month of worsening jobs means that at best the employment picture is lousy and its unclear where it's headed. At worst, it's lousy and getting worse.

In such an environment, all of Obama's policies will become toxic. Until the job's picture becomes more clear, no moderate or conservative politician is going to want to have anything to do with any of his domestic agenda. Imagine you're a moderate Democrat from North Carolina? Are you really going to vote for cap and trade, which Republicans will deem cap and tax, when the economy is hemorrhaging half a million jobs monthly? Would you be on board with a massive new health care entitlement given how "well" the stimulus was performing? Remember, perception is reality. At this point, any moderate Democrat knows all too well that the economy is not only really bad and getting worse. That blame will be laid at the president and anyone that supported him. That's not an environment in which a legislature is likely to support some sort of sweeping presidential legislation.

The entire legislature will become totally impotent if we have a second job's number in a row that shows things are not only awful but getting worse. The public is growing increasingly skeptical of Obama's domestic agenda. Another month in which things get even worse is all it takes for public outcry to get so strong that his agenda grounds to a halt.

Here's somethings to keep in mind. The July job's numbers will come out the first friday of August. Within weeks, Obama and his Democratic allies will want to begin taking some sort of votes on health care reform. It will be hard enough to pass in a normal climate. In a climate where the public believes that his policies are making things worse, it will simply be impossible.

Furthermore, it will be months, in the best case, before the president can show any evidence that in fact his policies are working. A bad July job's number means that August's number will be even more vital. Of course, unless the number shows a dramatic improvement, even if it improves that will only make September's number vital. Even if both September and August show improvements over July, the president will have little credibility to claim that things are getting better. After all, that's exactly what he said starting in March and look how that went. Worse yet, even in the best of scenarios, we'll be sitting on the first Friday of October (employment data is almost always released the first Friday of the following month) will another 300,000 lost jobs and nearly 4 million lost jobs since Obama took over.

Not only will Obama have almost no credibility left on the economy, but the public will stand for nothing legislatively besides something that can clearly create jobs, and create them quick. Health care reform, cap and trade, and education overhauls will do none of that.

Furthermore, if there's even worse July numbers, it means that none of his policies will have made any more forward movement. As such, we'd be sitting in October and the Senate will still have had no cap and trade bill even come out of committee. There'd be no health care bill with any votes to speak of. The legislative process will have been destroyed.

Furthermore, the Republicans would be screaming jobs, jobs, and more jobs. There would be enough fearful Democrats that there would simply no longer be enough votes to pass any of Obama's agenda until the jobs picture was clearly heading positive. Even in a best case scenario, we wouldn't see that until the next spring. At that point, we'd simply be too close to the next elections to get anything done. As such, one more worsening jobs report and you can kiss Obama's entire domestic agenda good bye.


Jason Gillman said...

I really dislike having to posit this, but.. Given the recent firings of watchdogs within government, do you think it possible that we may not see accurate jobs reporting?

mike volpe said...

I heard similar conspiracies all throughout Bush's terms. The job's numbers are created by hundreds of career bureaucrats. Until you find real evidence that the numbers are compromised, it's very improper to make such accusations. Stick to facts.

Jason Gillman said...

Didn't necessarily accuse. More along the lines of asking is it possible. You have made a good point. The firings are still suspect.

But my question does not come from trying to merely insert suspicion in the minds of readers, but rather flows from a distrust in this administration in its entirety. If it WERE possible, I would bet it would be faked in some manner, if not only for the perceived image of the powers that be, but perhaps in a more noble manner of building confidence.