Washington's Dirty Little Secret

Bill McBride writes an excellent blog on the US economy, Calculated Risk. The following is a bit from a post about the May unemployment numbers entitled "Employment: A dirty little secret and more graphs":

Second, I was reminded of a "dirty little secret" when I read Paul Krugman's column this morning. Krugman wrote about how the "D.C. economic discourse is saturated with fear" of "invisible monsters", but that no one seems to care about the very real plight of the millions of unemployed.

Actually it really isn't much of a secret that Wall Street and corporate America like the unemployment rate to be a little high. But it is "dirty" in the sense that it is unspoken. Higher unemployment keeps wage growth down, and helps with margins and earnings - and higher unemployment also keeps the Fed on the sidelines. Yes, corporations like to see job growth, so people have enough confidence to spend (and they can have a few more customers). And they definitely don't want to see Depression era unemployment - but a slowly declining unemployment rate (even at 9%) with some job growth is considered OK.

I just want to be clear: I don't think 9% unemployment is OK. It is pretty $%^# far from OK. (think Marsellus Wallace in "Pulp Fiction" for my non-G rated reaction). I'm amazed that unemployment isn't the key topic in D.C., but the unemployed don't make political contributions. (Ok, enough rant).

The politicians simply aren't doing their duty. They are meant to represent "the people" and the people are hurting. But instead the "representatives" are busy representing the money under the table from lobbyists for corporations which are quite happy with things as they are. The great tragedy is that in 2008 the American people voted for "hope" and "change you can believe in" thinking that the Democratic standard bearer would again bring focus to "the little people" but Obama sees himself as a centrist, a conciliator, and really values those big corporate donations, so they aren't getting any movement on the economy. Obama has calculated that by late 2012 things will be better, not great, but improving enough so that voters will happily return him to power. As a politician he is interested in only one employment number: who holds the presidency.

Don't get me wrong. I like Obama. He is a breath of fresh air compared to the crazy Bush. He has done good things including taking the risk that Clinton and Bush never would to get Osama bin Laden.

But Obama pulled a fast one on the American people. He had a chance to be a truly great American leader, a new FDR, by following through with his election promises as well as fighting hard for an economic policy that would have led to a fast recovery from the Bush-generated financial catastrophe of 2008. But Obama hasn't. He's a nice guy, but not a great guy. He has fallen short of the greatness he envisioned for himself as he spent all those hours reading about Lincoln and seeing himself as the one who would bind up the wounds and heal the nation. He forgot that before you heal, you've got to get the patient back on his feet and you've got to get rid of the miasma of pro-business lobbying and corruption in politics. Sadly, Obama will be remembered as a "fine" president, maybe even a "good" one, but not a "great" president.