The December jobs report was rotten. The economy created only 74,000 jobs, and 347,000 people left the workforce, thereby lowering the unemployment rate to 6.7 percent. That said, the number is entirely out of sync with two months of job numbers and a jump in gross domestic product.
Douglas Holtz-Eakin of the conservative American Action Forum e-mails, “The bottom line: The December report muddies the waters. Going in, job growth was viewed as solid, if unsatisfyingly slow to lower unemployment. Once again, however, the pace of recovery appears threatened and the adequacy of White House economic polices further in in question.”
Each party will extract from it proof for the validity of its policies. Liberals see proof of the need to extend unemployment insurance (even though insurance only goes to people looking for work, and fewer are doing that). Conservatives will see the urgent need for pro-growth policies. What is clear is that both parties need to prioritize growth over deficit reduction for now. Until we get a new president, no real progress can be made on the driver of debt: entitlements.
The bargaining then becomes easier. If Democrats want infrastructure spending, they must give the Republicans something on GOP bills, about 200 of which are piling up in the Senate, including on domestic energy development. If each side thinks the other’s plan won’t work, so what? We have flexibility on deficits and an urgent need to spur growth. And if the economy does improve, both sides can claim credit.
The cruddy jobs numbers, ironically, could make deal-making on jobs easier. We hope so.