One day after the Bureau of Labor Statistics (BLS) reported that the economy shed 533,000 jobs in November, President-elect Obama called for a huge public works infrastructure program as the centerpiece of his economic recovery plan. Mr. Obama is focusing his plan on transportation projects and school buildings, and “green” jobs as a way to create millions of new opportunities to put Americans back to work. In light of the dismal jobs report Congress may now feel compelled to act on a new stimulus package before it recesses, as the President-elect had pushed in his initial press conference following the November 4 election, but still remains highly unlikely.
Under his proposal the federal government would likely make the single largest investment in public works projects since the interstate highway system was developed in the 1950’s; a project that had as much to do with national defense as it did with the mobility of Americans. Mr. Obama also indicated his plan would include “the most sweeping effort to modernize and upgrade school buildings that this country has ever seen.” In addition to the nation’s surface highway network, the President-elect also called for the connecting of schools and libraries to the internet and the modernization of the nation’s health care system through technology.
With unemployment now at 6.5 percent, and projections of 8 percent before the recession levels off, the incoming President is attempting to slow down the economy’s seeming free fall. His proposal currently does not include a price tag but would easily represent hundreds of billions of dollars of investment; another huge bill on top of the first $700 billion aid package, the bailout of Bear Stearns and AIG, and the billions that Congress is eventually expected to provide the auto industry. Even with all of this spending it may not be enough to kick start the economy as whole industries are slumping, including the retail sector that may see its holiday sales season fall flat despite deep discounts being offered by merchandisers.
Clearly President-elect Obama and his team sense the urgency of taking action now. He said, “We need to act with the urgency this moment demands to save or create at least two and a half million jobs so that the nearly two million Americans who’ve lost them know that they have a future. And that’s exactly what I intend to do as President of the United States.”
There will be one more jobs report released prior to the inauguration and if the numbers are bad, as they are now projected to be, the country could see depression like anxiety set in among consumers. Just days prior to the release of the November numbers many analysts had predicted the number of people who lost jobs during the month would be in the 300,000 range; a staggering figure. When the report indicated half a million jobs were lost, it significantly raised the stakes for the Obama team. Were he to take office in January, following two months of excessive job losses, the President-elect and his Cabinet might be confronted with social unrest. Given the normal stresses of the holiday season, consumers, many of whom are drowning in debt, will feel added pressure in January once many of the holiday bills come due. A dismal December jobs report will also mean that many Americans will not be able to pay their household bills. It is a recipe for disaster that the incoming administration is hoping to head off at the pass by pushing a large scale works program.
One of the biggest challenges facing Mr. Obama is that his plan may not create nearly enough jobs in light of the number currently being shed. The U.S. Conference of Mayors and the National Governors Association have indicated that there are projects already queued up that are only in need of funding. Still, even those projects will require some time to get up and running, and hiring staff, while made easier by the downturn, will be a challenge to ramp up quickly.