"The level of unemployment is unacceptably high. And will, by all forecasts, remain unacceptably high for a number of years."
Who do you suppose said that? A Republican political operative? A Fox News political analyst? One of those several hundred thousand Tea Partiers who assembled in Washington on Sept. 12? No, it was Lawrence Summers, the director of Barack Obama's National Economic Council and, by common consent, one of the world's leading economists.
Summers made this gloomy forecast in the course of arguing that our economy is headed to "sustained recovery." And while it sounds like self-protective political rhetoric, it is also in line with the thinking of Democratic economists who bemoaned a "jobless recovery" during the first Bush term.
They argued then that a variety of factors -- big increases in the incomes of high earners, the crowding-out of wage increases by the fast-rising costs of health insurance -- prevented the rapid job growth that followed previous recessions. There was something to these arguments.
But it's also true that job creation accelerated in 2004 and kept going for another three years. Perhaps, although Democrats would not like to admit it, the Bush economic policies had something to do with that.
And perhaps the rather different policies of the Obama administration and the Democratic Congress may help Summers' gloomy predictions come true.
Tax policy is one example. The Bush tax cuts are scheduled to expire next year, and the Democratic Congress will surely allow income tax rates on high earners to go up to 39.6 percent again, or even more if it enacts the administration's proposed policy of limiting high earners' charitable deductions.
These increases will produce revenue that the government needs to reduce the enormous budget deficit, though surely not as much revenue as static economic models indicate. But they will also depress economic growth to some non-trivial extent, and thereby depress job creation.
Then there's trade protectionism. A week ago Friday, late at night, the Obama administration slapped import tariffs on Chinese tires. The Chinese retaliated by imposing tariffs on auto parts and chickens -- take that, United Auto Workers and Tyson Foods! Upshot: American consumers will pay more for tires, and auto-parts and chicken-processing jobs will be at risk.
Democrats Remain Silent as Obama Economy Kills Jobs, Freezes Wages Amid More Layoffs to Come | Donald Lambro