Address the Jobs Crisis, Build a Movement

Published on Monday, July 11, 2011 by Demos

Address the Jobs Crisis, Build a Movement

by Robert Kuttner

Does anyone care about the American middle class? The working middle class -- especially its younger members -- now faces a prolonged period of high unemployment, declining wages, and diminished public services.

Meanwhile, the cost of things that you need to enter the middle class, like college tuition and affordable health care, keep outstripping paychecks. The housing crisis is somehow stripping asset values from those who do own homes without offering many bargains to aspiring young homebuyers, because banks belatedly have tightened credit requirements.

As unemployment keeps rising and the economy faces a period of prolonged stagnation, political elites of both parties can only yammer about debts and deficits. But reducing the deficit before we get a recovery going will only worsen joblessness, cut back essential public services, and deny government the needed tools to produce an economic recovery.

What's needed is a mass movement to shake the dominance of the austerity lobby. Here's a start: the Change to Win labor federation has begun a 12-city organizing tour, working with the House Progressive Caucus, to throw a spotlight on continuing joblessness combined with the failure of government to clean up banking abuses.

While the US Chamber of Commerce prepares for another "Jobs Summit" this afternoon, featuring GE CEO Jeff Immelt, who heads President Obama's competitiveness initiative, and emphasizing tax and budget cutting and more deregulation, Change to Win is partnering with the AFL-CIO, Demos, and the Economic Policy Institute on a pre-emptive Monday morning summit on the jobs crisis and the future of the middle class. This counter-event, moderated by former New York Times columnist Bob Herbert, will try to break through the austerity storyline.

For the straight scoop, you can't do better than this three-minute video produced by Change to Win.

The leaders of the unions make three core points. The creation of the American postwar middle class didn't just happen. It was socially constructed during the postwar boom, built on public investment, low-interest rates combined with right regulation of finance, and a strong labor movement which assured that as productivity rose, wages would rise with it. The postwar middle class went to public universities, could buy affordable homes, enjoyed rising wages, and could afford to raise kids often on one income.

The June jobs report could not have come out at a worse time for those on the political right and center who are obsessing about the deficit and the debt. Every key indicator is down, and we face prolonged economic stagnation.

The Republican story is that cutting public spending, deregulating, and refusing to raise taxes on the wealthy are the keys to job creation. That did not work so well for George W. Bush. Indeed, if low taxes and light regulation were all that it took to create jobs and sustain prosperity, John McCain would be president.

The political center -- Obama, the Bowles-Simpson Commission, the Peter G. Peterson Foundation -- offers essentially the same austerity medicine, but wants tax hikes as well as spending cuts. So eager is Obama to make a deal that he is now willing to throw Social Security and Medicare, as well as trillions in other spending cuts, into the pyre. But that centrist austerity formula won't work any better than the right-wing version. It won't restore jobs or prosperity.

In the short run, Obama may be saved from himself by two factors -- the right and the left. With each passing day, the Republicans become more in thrall to the know-nothings of the Tea Party. The White House keeps offering them the family jewels, but they won't accept. Meanwhile, Democrats in both houses are growing more and more wary of the kind of deal Obama seems all too willing to make.

The budget of the Congressional Progressive Caucus produces a surplus within 10 years, but does so by increasing taxes on the rich, plowing the money into social investment, increasing jobs and social programs, cutting back spending on military adventures, and safeguarding social programs. This should be the White House budget.

Until we get a recovery going, austerity will only breed more austerity. With consumer demand flat, business hesitant to invest, and banks reluctant to lend, there is only one economic force that can jump-start a recovery and that is government investment.

We need a massive public investment program, of the kind that finally ended the Great Depression. That was called World War II. Imagine if we put all that money to peaceful public purposes like rebuilding our communities and converting to clean energy.

With Republicans increasingly intransigent on any budget bargain that raises revenues, a deal would depend heavily on Democratic votes. But the Democratic caucuses in both houses, which have been largely ignored by the White House in Obama's evidently futile courting of Republican House Speaker John Boehner, are now refusing to vote for cuts in Social Security or Medicare.
The Republican stance is such bad economics and so irresponsible as budget politics that a president with strong convictions and a feel for how you use the bully pulpit to move public opinion would be eating their lunch. But we have long since realized that this is not the president we have.

Even commentators who have been willing to give Obama the benefit of the doubt are now out of patience. "I've been stunned, both in the spring during the government shutdown negotiations and now, that Obama has hardly ever gone to the American people to insist firmly that there are some things he would never abide," writes my former colleague Michael Tomasky in Daily Beast/Newsweek. Though Republicans are practically inviting Obama to define a new progressive center, he just won't deliver.

There are two ways progressives can prevent this economic calamity from turning into a deeper political catastrophe -- an inside game and an outside game. Progressives in Congress can refuse to cave in. That part of the fight is going better than one might have feared. Democrats in the House and Senate are resisting the capitulation impulses of a Democratic president. The other way is to build a movement. Better yet, we need to do both, and it is encouraging to see the two labor federations coming together and working with the Congressional Progressive Caucus.

There are far worse fates for this Republic than to miss the nominal deadline of August 2 for raising the debt ceiling. One would be to capitulate to Republican blackmail and give away the fruits of 40 years of struggle. The other would be to fail to seize this moment to build a movement of our own.
© 2011 Robert Kuttner
Robert Kuttner

Robert Kuttner is co-founder and co-editor of The American Prospect magazine, as well as a Distinguished Senior Fellow of the think tank Demos. He was a longtime columnist for Business Week, and continues to write columns in the Boston Globe and Huffington Post. He is the author of A Presidency in Peril: The Inside Story of Obama's Promise, Wall Street's Power, and the Struggle to Control our Economic Future, Obama's Challenge, and other books.