EPI on jobs and the debt ceiling debate
A deteriorating labor market couldn’t distract lawmakers from moving forward with a debt ceiling deal that fails to address our most immediate problems. Amid the debate’s cacophony, EPI’s position did not waver: Our nation’s chief economic problem continues to be a lack of jobs. During the course of the debt ceiling debate, EPI released several analyses that explained why emphasizing the debt ceiling while ignoring solutions to improve the jobs crisis is calamitous economic policy. Indeed, the final agreement between President Obama and Congress did nothing to address America’s worst labor market in three generations and will actually make matters worse.
Before the agreement’s passage, EPI President Lawrence Mishel released a statement in response to the bill’s proposals. Mishel pointed out that because “debt decisions are already made when budget bills are passed,” there was little reason to debate. Mishel further noted that, though rarely mentioned, our nation’s current debt resulted in large part from “unfunded wars, an unfunded prescription drug benefit, and two rounds of tax cuts under President George W. Bush.” Instead of seeking to speed the recovery and halt the labor market’s deterioration, the debt ceiling deal ended “a needlessly manufactured crisis and will do great harm to our nation,” said Mishel. The deal’s extreme spending caps coupled with the absence of an extended unemployment benefit or payroll tax holiday provisions ensure continued high unemployment rates and the lack of funding to invest in our nation’s future adequately.
EPI Research and Policy Director John Irons issued further commentary after the bill was passed. Expounding on Mishel’s concerns, Irons underscored the agreement’s erosion of funding for public investments and safety-net spending while also neglecting “an important opportunity to address the lack of jobs in the labor market.” The spending cuts in 2012 and the lack of the payroll tax holiday and emergency unemployment benefits for the long-term unemployed could lead to roughly 1.8 million fewer jobs in 2012.
In Debt ceiling deal threatens deep job losses and lower long-run economic growth, EPI federal budget policy analysts Andrew Fieldhouse and Ethan Pollack found that, in addition to the severe job losses, the “deal disproportionately cuts the non-security discretionary part of the federal budget to the lowest level in more than 50 years, potentially halving investments in education, transportation infrastructure, housing, health, and infant nutrition over the next decade.”
“In light of this debt ceiling deal, it is now more important than ever to renew the payroll tax cut and unemployment extensions for at least another year. But Congress should not limit itself only to these measures—the hole is deep, and we need an ambitious jobs agenda to get us out,” wrote Fieldhouse and Pollack.
EPI’s analysis on the debt ceiling debate and its effect on workers and the economy was cited by a variety of major news sources, including the Wall Street Journal, Washington Post, Huffington Post, Associated Press, ABC News, Mother Jones, the Ed Show and the Rachel Maddow Show.
Larry Mishel discussed the deal with Alec MacGillis of the Washington Post. In the article Mishel noted that “if anyone involved in this deal cares about jobs, it’s hard to see.”
To the Huffington Post’s Lila Shapiro, Mishel said the “deal represents a consensus of policymakers to look the other way at America’s persistent high unemployment.” To Dan Froomkin of the Huffington Post, Mishel noted that “we have a huge deficit because we have a huge recession.”
John Irons spoke to ABC News reporter Devin Dwyer for the article “President Obama to Talk Jobs on Bus Tour, but Why Can’t He Create Them?” In the article, Irons explained that extending unemployment insurance and the payroll tax holiday would “create well over a million jobs.”
From the Wall Street Journal: “An analysis by the left-leaning Economic Policy Institute expects the plan would reduce GDP growth by 0.3 of a percentage point in 2012. ‘We’re looking at these GDP forecasts and they’re just not looking good at all,’ said Ethan Pollack, a budget expert at EPI. ‘At this point the economy needs help.’”