The Real Work Comes After the Election
12:00 PM, Nov 3, 2012 • By IRWIN M. STELZER
Worse still, despite an emerging recovery in the housing sector, and a spurt of auto purchases by consumers who want to replace vehicles in a fleet with an average age of eleven years, the economy does not yet seem to be in a strong enough position to make it sensible to gamble that the battering a fall off the cliff might produce will be of minor consequence. Even though the job market seems to be improving, the unemployment rate is stuck at 7.9 percent, about where it was when Obama was sworn in. The private sector did add 184,000 jobs in October, earlier reports were revised upward by 84,000 jobs, and the labor force participation rate ticked up as some unemployed workers re-entered the improving labor market. Better news than in the recent past, although there are indications that many of the jobs added are part-time. Some 23 million Americans are still looking for full-time work or are too discouraged to do so. Until businesses start investing, which they won’t do until uncertainty about the fiscal cliff is removed, the economy will remain unable to add the 300,000 jobs every month that are needed to get the unemployment rate down to the 5-6 percent range.
A bipartisan group of eight key senators is hoping to remove that uncertainty. With support from 80 CEOs banded together as “Fix The Debt,” they are scrounging for the votes needed for a compromise. They reason that a reelected Obama would not want to start his second term with a recession, or that a newly elected Romney would be able to persuade enough Democratic senators who face re-election in 2014 to support a compromise.
Perhaps, but only perhaps. This has been a bitter election campaign, with the president himself playing the role of mudslinger-in-chief; he has in the past rejected compromise on the ground that “we won.” Democrats believe, really believe, that fairness demands soaking the rich. Republicans believe, really believe, that raising taxes on successful entrepreneurs will doom America to slow, europaced growth. These partisans just might lock arms for a plunge off the fiscal cliff, which will or will not prove bracing, depending on the underlying strength of the economy.