Triple Crisis blogger Jeff Madrick was the lead author on a report issued last week by the Citizens’ Commission on Jobs, Deficits and America’s Economic Future, which takes issue with many of the recommendations from President Obama’s deficit commission.
It seems now that all of Washington is focused on the likely level of unemployment in 2012. As well they should be. The White House, according to the all-knowing Washington press corps, says they always had it in focus. Sure. The press corps believe what they are told.
But, despite austerity economics, at least we have a bit of stimulus out of the new tax compromise engineered by the President and Republicans. The surprise is the payroll tax cut. A rough guess is that over two years, the stimulus on balance will add half a million jobs. Figure a cut in the unemployment rate of 0.3 to 0.4 percent. The estimates that already included the extension of the tax cuts, except for those earning above $250 k, had the unemployment rate in 2012 on average around 8.25 to 8.5 percent.
The best we can expect is an unemployment rate of 8 percent come election day or perhaps slightly lower. Sometimes economies hit a growth threshold and surprise on the good side. Maybe this small stimulus will put us over. Given the degree of leverage and the housing problems, it would be hard to count on. But there are lots of business profits around.
The rub— and everyone knows it— is that the renewal of the tax cut debate will be during the presidential campaign. Extension is a sure thing. The rich get richer— again. And any dealing with the budget deficit will come out of the hides of Social Security and Medicare beneficiaries.