Roundtable: What Should Obama Do?http://www.fool.com/investing/general/2011/09/07/roundtable-what-should-obama-do.aspx Ilan Moscovitz
September 7, 2011
We may have stopped the jobs freefall induced by the financial crisis, but the U.S. economy has been painfully slow to return to full employment. Everyone knows it's tough out there: Unemployment sits above 9%, and when you include all the people who are forced to work part-time or have stopped looking for jobs, that figure reaches 16%. The August jobs report showed a tragicomical gain of zero jobs.
Thursday night, President Obama addresses a joint session of Congress to highlight his proposals for boosting employment. He will reportedly call for $300 billion in tax cuts, infrastructure, and aid to states. I decided to ask a few of our Foolish economic contributors what they thought Obama should do.
Morgan Housel, Fool contributor
That said, I think former Obama advisor Larry Summers nailed it when he pointed out that it's a false economy to be delaying infrastructure repairs when we can borrow money at record lows and construction unemployment is near 20%. These repairs absolutely have to get done someday, and the longer they're delayed the more costly they become. It's an incidence where spending money today can reduce unemployment and lower future deficits.
Finally, I'd like to see a jobs approach that acknowledges where the great majority of new jobs come from: New businesses, not small businesses, as is oft-repeated. Two things here are important. One, the U.S. Patent Office is in shambles, by its own estimates holding back "millions" of jobs due to delayed patent approvals. Second, I'd like someone to stand up and say that tomorrow's jobs aren't going to come from an elderly billionaire; they'll come from the 20-year-old Stanford kid tinkering with gadgets in his parents' basement. Any plan that doesn't emphasize education is inexcusable, in my opinion.
Alex Dumortier, Fool contributor
Another possible initiative addresses the issue of household debt. Expanding and accelerating programs to reduce the principal on some of the mortgages that are underwater -- where the borrowers have a realistic hope of making the lower payments -- would be useful. Large lenders, particularly those that lent aggressively, would be forced to take writedowns on these loans. That's not something Bank of America (NYSE: BAC ) needs right now, but it looks like an acceptable trade-off.
Mr. Bernanke's message at Jackson Hole was unambiguous: The government must step up and respond to the crisis with vigor -- there is only so much the Fed can do. Call me a cynic, but I'm expecting to be underwhelmed by the President's address. With politicians, I've learned to keep my expectations exceedingly low; that way, I'm not disappointed every time.
Matt Koppenheffer, Fool contributor
Obviously, they're going to do the latter. Going the ointment-and-gauze route might be quick and make it seem like they're addressing the problem, but it's a short-term fix that won't help the patient heal properly.
The need to create jobs is an unfortunate reality right now because the economy is in such a sluggish state. But President Obama's response needs to be much bigger than that. It needs to address the fact that a big part of the problem is that we have a chunk of the workforce that's not changing with the economy. Three of the country's five most valuable companies are Apple (Nasdaq: AAPL ) , Microsoft (Nasdaq: MSFT ) , and IBM (NYSE: IBM ) , underscoring the fact that we have a much more information- and knowledge-based economy as opposed to a factory- and manufacturing-based economy.
Forcing job creation is only a very-short-term fix. For a truly healthy country, we need to make sure workers have the skills needed to succeed in today's economy.