The GOP's unemployment trap

Romney and Gingrich aren't talking about unemployment for a reason: Because they don't have any solutions

Published January 24, 2012 5:00PM (EST)

Job seekers stand in line at a Career Fair in San Francisco on Jan. 18, 2012.      (AP/Eric Risberg)
Job seekers stand in line at a Career Fair in San Francisco on Jan. 18, 2012. (AP/Eric Risberg)

This story is part of our new series on long-term unemployment in America, which aims to keep jobs a primary topic during this presidential election year. To watch part one of our new video series, "F**ked: The United States of Unemployment," click here.

The unemployment rate is gradually trending down. That's the good news. The bad news is that by any civilized standard, the current state of the labor market in the United States is an ongoing atrocity.

As of December 2011, there were 13.1 million unemployed workers in the United States, an increase of more than 5 million since the Great Recession officially began in December 2007. Even worse, 5.6 million of those workers (42.5 percent) fall under the category of "long-term unemployed" -- they've been jobless for 27 weeks or more. Since the end of World War II, we've never seen anything close to such a disaster; the previous high, in the aftermath of the 1981 recession, was only 25 percent.

No matter what your political persuasion, those numbers hurt. The distressing plight of the long-term unemployed has been well-documented. The longer you are out of a job, the less likely you are to find new employment. And if you do find a new job, it will probably pay less and offer worse benefits. Extended unemployment is bad for marriages, physical and mental health, and plain old self-respect.

With all that in mind, we face an astonishing political reality: The Republican presidential nomination battle has moved into Florida, a state still suffering the pain of an unemployment rate over 10 percent, and we're hearing more from Newt Gingrich and Mitt Romney about each other's personal failings than we are about what they are going to do to fight the scourge of unemployment.

Oh sure, there's no end of talk about how President Obama's policies are responsible for everything that is wrong with the American economy. We're also hearing a lot about the (bogus) theory that extending unemployment insurance benefits makes Americans too fat and lazy to get off the couch and look for a job. And there's the occasional rhetorical gesture: At the end of his concession speech in South Carolina, Mitt Romney pledged that "I will get America back to work, and I'll make sure that we remain the shining city on the hill."

It's certainly possible that the necessity for mano-a-mano combat between Romney and Gingrich has forced the two candidates to shelve their critique of Obama's handling of the economy for the time being while they busy themselves going for each other's throat. But there's another reason why we aren't hearing much about the unemployment crisis on the campaign trail: None of the Republican presidential candidates have anything new to say on the topic that we haven't already heard from the GOP, ad infinitum, ad nauseam, for the last 30 years. Their proposed strategy hasn't changed an iota since Ronald Reagan ran for president: It's still all about cutting taxes and slashing regulations.

And there's a big problem with that. Because whether or not you believe that the current unemployment problem is cyclical -- that is, part of the normal ups and down of the business cycle -- or structural -- a more or less permanent response to a profoundly changing economy -- the Republican platform is toothless. On the one hand, it's hard to combat a cyclical problem with the same policy proposals that one puts in place in good times or bad, and on the other, it's arguable that the structural problems in the U.S. economy are, at least in part, a consequence of decades of low taxes and deregulatory philosophy.

A tour of the GOP candidates' websites is revealing. Ron Paul's website doesn't even mention either "jobs" or "unemployment" under the category of "issues." The closest he gets is advocating the passage of more anti-union "right to work" laws. Rick Santorum's Where I Stand page tells us that he believes in American "Exceptionalism," is a "Champion of Faith and Families" and makes clear that he really, really opposes gay marriage; but it has no section devoted to either jobs or unemployment. Newt Gingrich does manage to include a page on "Jobs and the Economy" but somehow can't bring himself to utter the word "unemployment."

To his credit, Mitt Romney is the only Republican candidate whose website includes a comprehensive (87-page!) plan announcing his economic agenda. If you're looking for a full-throated lambasting of Obama's management of the economy, along with complaints about high unemployment, that's where you'll find it, a fact that, at first glance, would seem to make Romney a little more suited for electoral success than his current poll numbers would indicate.

But a closer look at Romney's plan -- or Gingrich's, for that matter -- reveals why neither he nor his fellow GOP pretenders to the White House throne are making a bigger deal of the plight of the jobless. They just don't have anything fresh to say.

Romney's prescription for an economy that isn't producing enough jobs is to reduce taxes on savings and investment, eliminate the "death" tax, and cut corporate taxes. As for regulatory policy, for starters, he promises to repeal "Obamacare" and Dodd-Frank, as well as "review and eliminate" all other Obama-era regulations. But this agenda doesn't separate him from his fellow GOP presidential candidates. He just spells out the party line in greater detail. If anything, Gingrich and Paul are further to the right -- advocating even more extreme tax cuts and greater swaths of regulatory slash-and-burning.

So what does this mean for unemployment?

For the last few years, economists -- left, right and middle -- have been arguing heatedly about the nature of the current crisis. As noted above, there are two main competing theories -- the spike in unemployment is either cyclical or structural.

Cyclical unemployment presumes that the key problem in the economy is a lack of demand. With no consumer appetite for goods or services, companies have to lay off workers. Consequently, there are more people looking for jobs than jobs available.

Structural employment speaks to a mismatch between the jobs that are available and the skills of workers who need jobs. If manufacturing moves to China, then the U.S. suddenly has a great many manufacturing workers who are ill-suited to fill the openings in the booming healthcare sector.

There are different policy options available depending upon what you think the nature of the employment crisis is. If the problem is cyclical, the answer, at least from a Keynesian liberal point of view, is stimulus. Government spending works to counteract the downturn in the business cycle, either by creating jobs directly (infrastructure spending, assistance to state and local governments) or by putting money in people's pocket -- food stamps, unemployment benefits, et cetera. More money creates more demand, resulting in more jobs.

If the problem is structural, the challenge is bigger. Government needs to aggressively retrain workers, or engage in industrial policy that targets strategic sectors, or tinker with trade policy.

Some liberal economists, led by Paul Krugman, are convinced that our current crisis is mostly cyclical. They point to the fact that nearly every job sector suffered huge losses in the recession (if the problem was structural, you'd see an uneven distribution of job losses) and to the huge mismatch between the number of job openings and the number of workers seeking jobs.

But it doesn't have to be either/or. We could be working our way through the worst of both worlds -- a situation in which a massive cyclical downturn exacerbates the negative effects of structural changes decades in the making. We know that the dual forces of globalization and technological progress have treated the American middle class harshly. If a machine or a Chinese laborer can do the job -- it's gone.

In an insightful piece in the National Journal last November, Michael Hirsh made a provocative case that there has been a steady rise in long-term unemployment over the last 30 years that transcends the recession-recovery cycle. He argues that we attribute this in part to the supremacy of free-market policies that have exacerbated income inequality, weakened the safety net, and ended up making American workers more vulnerable in a competitive world.

If that's true, where does that leave the Republican candidates? We already know that they're completely averse to counter-cyclical government spending, and indeed, their opposition to any kind of tax increases has effectively crippled the federal government's ability to act in a robust, fiscally prudent manner when the economy hits a downturn. But if the problem is structural, then their low tax, deregulatory agenda just continues us down the same path we're already on. It leaves us even more defenseless against a changing world. We're already enjoying historically low levels of taxation. We've already loosened up the rules restricting Wall Street's freedom. And look where that's got us!

The vast majority of the job losses contributing to today's high unemployment came before a single Obama policy took effect. The architects of the world that delivered us the Great Recession believed exactly what the current crop of Republican presidential candidates are advocating. If I was them, I'd be keeping my lips zipped too.


Salon exclusive: "F**KED: The United States of Unemployment," a series by filmmaker Immy Humes

By Andrew Leonard

Andrew Leonard is a staff writer at Salon. On Twitter, @koxinga21.

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