The Star Beacon; Ashtabula, Ohio

World, nation, state

May 9, 2013

President pressed to do more on jobs, stagnant wages

(Continued)

WASHINGTON —

For the White House, creating jobs is as much a political as it is an economic challenge. Republicans have long resisted any further spending that would prime the economy, arguing instead that Obama’s regulatory regime and his new health care law are hindering job growth.

What’s more, Obama has tried to take a two-pronged approach to the economy, looking to boost the economic recovery with up-front spending while at the same time proposing deficit-reduction measures that would kick in later as the economy strengthens.

“That’s like a textbook economic response to the current economic situation,” said Michael Greenstone, who was chief economist at the White House’s Council of Economic Advisers during Obama’s first two years in office. “And that’s not where there is political agreement.”

Indeed, Obama’s jobs proposals have stalled in Congress and have been met, instead, by immediate budget cuts that by most accounts have begun to create a drag on the economic recovery. After winning a tax increase on the top 1 percent of income earners, Obama has insisted against unified Republican opposition on more tax increases to help close deficits. The resulting stalemate has limited Obama’s response.

“With aggressive fiscal stimulus we can bring the unemployment rate down rapidly; Washington has gone entirely in the other direction,” said Heidi Shierholz, an economist at the liberal Economic Policy Institute.

Job growth in this recovery has lagged that of previous economic upturns and has been especially hurt by job losses in government employment and a weak construction sector.

Though unemployment has hit across demographic groups, the hardest hit have been young workers, workers with low levels of education, and racial and ethnic minorities — the very same Americans who made up much of Obama’s winning political coalition.

The average unemployment rate in the first quarter of this year was 7.7 percent. But for African-American workers that rate was 13.6 percent. For Latinos, it was 9.5 percent.

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