In Response To "Shock" NFP Numbers, Democrats Demand Another Payroll Tax Extension As Republicans Say $4 Trillion Deficit Reduction Plan "No Go"
Proving once again that i) there is no idea on the Hill that is so stupid that it can't be recycled again... and again, and that ii) the last thing politicos care about is deficit reduction (yes $4 trillion cut over the next century works... too bad by then the deficit will be measured in quintillions) is the news from Bloomberg that following the "stunning" news from the BLS that "nobody", and certainly not Joe LaVorgna could predict (odd, we do recall saying on Thursday night that anything out of the ADP is and always has been complete garbage, and that the only definite pink slips should be those handed out to its employees) democrats are now demanding more of the same (failed medicine) that did nothing at all to boost Q1 GDP, namely an extension to the payroll-tax cut, which humiliated none other than Goldman's Jan Hatzius into believing it would do something to boost the economy (first see: Goldman Jumps Shark from December 1, 2010 then Goldman Apologizes For Its Horrendous December "US Economic Renaissance" Call, Begins QE3 Discussion). Hint: it won't. It will merely cost another $100 billion in incremental debt that will never be repaid, and a few dollars boost to Apple's EPS, but aside from the few non-edible iPads being bought, that will be about it. Yet that won't stop the screeching parrots from repeating the only word they know: more, more, more: "Senator Charles Schumer of New York, the chamber’s third- ranking Democrat, called for an “immediate jolt” to the economy by extending and enlarging a one-year payroll-tax cut that’s set to expire Dec. 31. He asked for action “as quickly as possible by including it in the final debt-limit agreement.” Jared Bernstein, until recently Vice President Joe Biden’s chief economic adviser, predicted the White House would step up efforts to include in the debt deal additional infrastructure spending or a new temporary payroll tax reduction." Yeah, good luck with that.
In addition to continuing a 2 percentage-point break in the employee payroll tax, the White House may push for an equal cut in the employers’ part of the levy, according to a Democratic official.
“It would be a mistake for them not to ratchet up the urgency on the jobs side, given the labor market really appears to be in a stall,” said Bernstein, now a senior fellow at the Center for Budget and Policy Priorities in Washington. “It’s not something you can ignore.”
The Labor Department reported the unemployment rate in June unexpectedly climbed to 9.2 percent, the highest this year. Employers added 18,000 jobs, the weakest growth since September 2010. Payroll growth for May also was revised downward, to 25,000.
When Obama and congressional leaders meet tomorrow for negotiations on deficit reduction, the jobs numbers will increase pressure on both sides to reach a deal that can be presented as bold, said Dan Schnur, communications director for Republican John McCain’s 2000 presidential campaign.
Funny that: And as we type this, we see AP headlines that Boehner has just dropped his efforts to reach a "comprehensive debt-reduction plan" and has advised Obama that only a smaller package is feasible. Which means that the realization that budget cuts at a time when there is no QE to mop up the economic collapse is not the best idea. It also means the conclusion of the debt ceiling soap opera is almost here. Some boldness. Republicans huffed and puffed, and folded like a cheap lawn chair when they were advised that the teleprompter is naked and chain smoking.
More on the opera, while it continues:
Republican presidential candidate Mitt Romney said the “abysmal jobs report confirms what we all know -- that President Obama has failed to get this economy moving again.”
Former Utah Governor Jon Huntsman, also a Republican presidential candidate, said “extremely anemic job creation” demonstrates “we need free-market, pro-growth policies to spark a wave of job growth.”
The jobs report underscores the challenging economic environment Obama confronts for his re-election campaign next year.
Ronald Reagan, who faced an unemployment rate of 7.2 percent on Election Day in 1984, is the only U.S. president since World War II to win re-election with a jobless rate above 6 percent.
The climbing unemployment rate in recent months, up from 8.8 percent in March, will make it harder for Obama to persuade voters that the country is moving in the right direction.
“Voters already feel like the economy is stuck in the mud,” Schnur said. “Every month that we see a jobs report like this one reinforces the electorate’s sense that we’re not making progress, and that becomes gradually harder to reverse.”
And of course once the next fiscal stimulus fails, which it will in about 2-3 months, there will be only one option left. Monetary stimulus. Enter QE 3/Operation Twist 2.