President Obama has finally delivered his address to the joint house of Congress on September 8, 2011 at sundown. The media here in America was abuzz for the last few days discussing whether Republicans in the minority chamber (House of Representatives) would pass Obama’s Jobs Bill designed to spur the anemic economy in which virtually no jobs growth took place in August 2011. It is a worrisome issue for the president who will be up for reelection in November 2012.
Right now, the unemployment figure got stuck at 9.1%, which is a tad better than what it was in 2010 when 9.5% Americans could not find any employment. Lately, American news media is paying a lot of attention to the nation’s economy because recovery from the last recession is anemic at best and it is taking such a long time to get back to normalcy. On top of it, the jobs growth is not robust by post-recession standard; consequently many Americans are hurting as financially.
In the past, when U.S. economy came out of recession, the annual GDP growth was usually a robust one showing 3-4% growth. Unfortunately, in 2011 the economy was growing but ever so slowly. In August this year, the Republican lawmakers in Washington were putting all the roadblocks they could so that the debt ceiling could not be raised by President Obama. It was seen by most observers as being a ploy to portray the president a weak leader. The legislators belonging to Tea Party wing of the Republican Party were vociferously opposed to Obama’s request to increase the debt ceiling so that the government could pay all the bills. A deal was however struck at the eleventh hour to raise the debt ceiling but by then the damage was already done. The premier credit rating company, Standard and Poor’s, had downgraded the government’s credit rating from AAA+ to AAA while citing a dysfunctional Congress in Washington. This is the first time ever that a credit rating company has downgraded the credit worthiness of the U.S. government. This action by the S&P had spooked the financial market in August; consequently, the Americans have suffered a paper loss of over trillion dollars. Now, their nest egg is worth less and many would-be-retiring Americans are worrying how they are going to make their ends meet in the golden years.
The other fallouts from the anemic post-recession recovery are deteriorating housing market, sluggish jobs growth, consumers not opening their wallets, new construction at a historic low level, and the nation’s factories not humming as they should — had there been healthy demands for durable goods. All in all, a very dismal picture for the economy of the premier industrial nation on earth.
Many pundits in America have opined that the rancorous partisan politics in Washington is not helping either the anemic economy to expand at a healthy rate that would have spurred the jobs growth and build confidence among American consumers. To make matters worse, the president is at loggerhead with the majority lawmakers in the House of Representatives where Republican Party is in control. If you’ve not noticed, President Obama was bruised very badly during the debt ceiling debate in late July and early August this year. The austerity measures propounded by Republican lawmakers were deemed counterproductive to the expansion of American economy. Under this dismal backdrop, President Obama decided to unveil his Jobs Bill so that millions of unemployed Americans, who were out of work for a long time, could be gainfully employed.
President Obama’s Job Bill if passed by the Congress would infuse about $ 450 billion into the economy over the next 12 months. The government would spend money to rebuild the infrastructure such as roads, bridges, schools, etc. The construction industries were hard hit by the recession and fresh infusion of money would certainly put millions of construction workers back into the job. In 2010, the Federal Reserve Bank of America has done quantitative easing (QE) to buy the government bonds so that the interest rate remains quite low. The Fed has done it twice already in the last two years, which had helped the economy to grow. The Federal Reserve’s QE program had ended earlier and many economists have expressed their opinion that more infusion of money into the economy is needed to help expand the economy. Thus, President Obama’s call for another round of infusion of money to help the infrastructure of the nation is being viewed by many macro-economists to be a positive development. In theory, it is a Keynesian approach but many Republican lawmakers abhor the idea because it runs counter to free market approach to governance, which they believe.
The million dollar question is – would the Republican control lower house give their seal of approval to Obama’s Jobs Bill? One line of thinking is that even though they dislike the bill but if they do not pass this bill, then they would be viewed by many Americans as doing politics at the cost of robbing the future of many people who are now unemployed. In a popular poll taken recently by a few polltakers, the members of the House of Representatives received a low score than President Obama. The entire members of the lower chamber would be up for reelection in November 2012. Therefore, if the House would not give their seal of approval to Obama’s Jobs Bill, then many of the Congressmen would face ignominy in the next election. There is a real danger lurking out there for them vis-à-vis November 2012 election. Thus, they may not take a hard position on Obama’s Jobs Bill.
Like a crafty and seasoned politician, Mr. Obama had taken the high road at this time. He wanted Americans to know what is at stake here if his Jobs Bill is not passed by the Lower House. The president has urged Americans to contact their representatives and press them for the passage of the Bill. Mr. Obama is anxiously waiting to have the bill into his desk after its passage in the Congress. If everything goes okay, then he expects the piece of legislation to arrive his desk, which he would sign very eagerly to make it a law. Money could then flow into the economy right away to re-employ tens and thousands of construction workers. Many economists think that this infusion of $ 450 billion into the economy may lower the unemployment rate from 9.1% to 8% within a year. If that happens, then candidate Obama would look good in the eyes of American voters in November 2012. The Republican think tank members and politicians know what it would mean for their party’s challenger. Thus, the members of the Congress belonging to Republican Party may do the foot-dragging and not pass the Bill the way it is written. Therefore, let us stay tuned.
Dr. A.H. Jaffor Ullah, a researcher and columnist, writes from New Orleans, USA