New February Jobs Numbers Are Encouraging -- But CAF Warns Against Turn to Austerity

Washington, DC -- “Today’s 227,000 increase in net new jobs in February announced by the Labor Department is a good sign that the economy is starting to produce private sector employment,” said Roger Hickey, co-director of the Campaign for America’s Future. “But now that the economy is struggling to maintain job growth, it would be a huge and dangerous mistake if Congress and the President now slam on the brakes by imposing new spending cuts on a still-sluggish economy,” he warned.

“Clearly, the Obama stimulus program not only stopped the recession, and prevented a dangerous depression, but that fiscal stimulus (with help from Fed policy) has finally started to move the economy to steady, although still inadequate levels of job growth,” Hickey said. “But in a week or two, Republican House Budget Committee Chair, Paul Ryan will soon introduce a budget that would seriously harm the struggling recovery by slashing federal spending. This kind of fiscal austerity, like the similar spending cuts now being imposed in Europe, could strangle the recovery and throw the US (and the world) back into recession.”

Hickey warned that the pace of the recovery is still painfully slow, compared with after previous recessions. He noted that, according to the Jobs and Unemployment Calculator, created by the Atlanta Federal Reserve Board, at this month’s rate of 160,000 average jobs per month, it will take till 2017 to get to 5% unemployment. (Even at a faster pace of 300,000 average jobs per month it would take at least two more years to get anywhere near full employment.)

Therefore, he said, “Americans should be wary of politicians telling us that the economy is recovering enough to turn immediately to cutting public spending – and that is exactly what the budget produced by Republican House Budget Chair, Paul Ryan, would do.”

“Instead of austerity and budget cutting,” Hickey declared, “Congress should take additional steps to create jobs and stimulate growth. We need action on a range of proposals, some advanced by President Obama in his American Jobs Act, among them:

• Additional investment in public infrastructure, new energy technologies and conservation that would increase job creation, financed at almost no cost at today’s low interest rates.
• Immediate aid to hard-pressed state and local governments, which are still laying off teachers, police and firefighters – layoffs which are now undermining the recovery and hurting people.
• An increase in funding for education, school construction, scholarships (instead of burdensome loans for college tuition, and aid to community colleges and trade schools.
• Jobs for young people, including public service jobs, so we don’t lose a generation of people, especially young people of color, now entering the labor with little hope of finding jobs.
• A change of course by the Federal Housing Finance Agency, which oversees Fannie Mae and Freddie Mac, to allow a write-downs of underwater mortgages held by Fannie and Freddie. Campaign for America's Future has called for new policy which would give homeowners relief from foreclosures and help revive the economy by encouraging a revival of the housing market.
• Action to force the Chinese to revalue their currency would help American manufacturing, which is already recovering, and reduce the US Trade Deficit.

Hickey noted that unemployment is likely to increase in coming months, as millions of Americans who had stopped looking for work (and were thus not counted in the unemployment numbers) become encouraged that they might find a job, and begin actively looking for work, starting to be counted as unemployed once again.

“The US economy is finally producing jobs again, but our weak recovery – which has been aided by good public policy – could easily be choked off by stupid budget policies which would condemn a new generation of Americans to joblessness and a bleak future, when we could be working to sustain jobs and new opportunity for all,” he declared.