Economists from the left-leaning Economic Policy Institute (EPI), the centrist Brookings Institution, and the conservative Heritage Foundation may not all agree on much, but they agree on this: unemployment, which currently hovers around 10 percent, is not coming down significantly between now and November's midterm elections. "I'm not aware of labor-market economists who expect unemployment to drop significantly before the midterms," says James Sherk of the Heritage Foundation. "The average for the last generation has been around 5.5 percent or so, and it won't be anywhere near that."
"My best guess is unemployment will be in November exactly what it is now," concurs Josh Bivens of EPI, adding that the nonpartisan Congressional Budget Office projects a yearlong average of 9.5 percent in 2011, and Goldman Sachs predicts higher unemployment in 2011 than in 2010.
That may be bad news for President Obama, who hosted small-business leaders in the Rose Garden on Tuesday morning as he called on Congress to pass his proposal to assist small businesses in hiring new workers.
Another rare point of agreement among economists across the economic spectrum? That Obama's proposal, which would strengthen state small-business lending initiatives and create a $30 billion fund for small community and neighborhood banks to increase their lending to small businesses, is more about politics than job creation.
"It's small potatoes," says Gary Burtless of Brookings. "It's not a program likely to have an impact between now and Election Day, or now and Election Day 2012. There are a lot of constituencies in both parties that like to help small business, so it might be popular." Says Bivens, "What they mostly want to do is signal to voters that they are serious about the jobs crises."
But if high unemployment poses such a political threat to Democrats in the midterms, is there anything that Obama and his allies in Congress can do that would have a more practical effect? Not in time to affect this fall's election. While liberals and conservatives favor drastically different approaches for generating jobs over the next few years, neither claims that their policies would, even if adopted tomorrow, have an appreciable impact in time for the election.
Sherk thinks that the president should encourage private wealth creation through tax cuts and tort reform to protect corporations against the costs of battling lawsuits. But he admits that this would take a while to boost employment figures. "The economy moves at a slow pace," notes Sherk.
Bivens advocates a second stimulus bill on the order of $300 billion that would extend unemployment benefits and food stamps, and subsidies for laid-off workers getting their health insurance through COBRA, plus fiscal relief to states facing recovery-killing budget cuts or tax increases. While these policies would be designed to take effect more quickly than Sherk's solutions, Bivens believes that a second stimulus passed "four or five months ago" might have had an effect before November. "We missed our window."
The expert with the most sanguine, or perhaps the least dour, assessment of the employment situation is the one who most closely aligns with the approach the administration has taken to date, Burtless. "It's not impossible that we'll see robust employment growth," he says. "But I don't think that's likely."
To some extent President Obama is a victim of circumstance: the economy shed more jobs (approximately 8 million since the recession began) than anyone expected, including Obama's own forecasters. (That's because this recession has been worse than past ones for employment, relative to other economic indicators). So Obama's efforts to save and create jobs are being measured against his own administration’s original unemployment projections—which were approximately 9 percent unemployment in 2010 without a stimulus bill, 8 percent with it—when the more revealing comparison is the unknowable number of job losses that would have taken place without government intervention. That's a hard case to make to voters who are hurting.
