President Obama’s campaign may be playing up the dropping unemployment rates, which once again decreased in September, but those numbers aren’t encouraging enough to suggest college graduates will see a steady paycheck after earning their degrees.
And it doesn’t matter who’s in office after the election; the job market will still be difficult to traverse and may be even more unstable.
Both presidential nominees have made their future economic policies clear. Obama, among other measures, would eliminate some Bush-era tax cuts, which offer tax breaks to the wealthiest citizens, to make up lost revenue over the last decade and close budget deficits. Republican hopeful Mitt Romney would cut rates, eliminate tax loopholes and slash spending.
Some experts have said Obama’s policies over the last four years haven’t done much to accelerate growth and provide jobs for students after they get their diplomas.
“Any student that graduates and is looking for a job, it’s not going to be easy,” said Phillip Swagel, a public policy professor and assistant secretary for economic policy at the U.S. Treasury Department under then-president George W. Bush. “It’s not as bad as two or three years ago, but it’s not the kind of job market that we would be hoping for.”
Obama’s past policies, such as passing a nearly $800 billion stimulus package of government spending and tax breaks, drew the ire from fiscal conservatives who maintain the incumbent’s spending policies are fueling future budget deficits and putting the country on an unsustainable path. Romney’s policies would try to avoid these costly measures by instead cutting government programs and spending.
“Gov. Romney says that he thinks he can turn the economy around,” Swagel said. “From my perspective, a change in policy seems like a good idea.”
Obama’s plan doesn’t propose cuts of the magnitude that Romney’s plan contains. Romney’s measures, Economic Policy Institute policy and research director Josh Bivens said, would make the economy hemorrhage even more jobs.
“If you take them at their word, the Obama plan would actually provide some upfront spending to support job creation and that would be good for jobs in the short-run,” Bivens said. “The Romney plan pledges a pretty draconian cap on total federal spending that would suck a lot of spending power out of the economy in the near-term, and I think that would cost quite a few jobs.”
At a time when households and businesses are forgoing spending to pay down debt, the government shouldn’t do the same, several experts said.
Instead, Bivens said, the government needs to bolster growth with further spending to ensure more money goes into the economy and incomes don’t fall. Obama’s plan likely won’t deliver on another full-scale stimulus package like in 2009, but Bivens said it’s better than Romney’s proposal to cut.
“I would say it’s nowhere near strong enough medicine-relative to what the economy really needs, but it would definitely pull the unemployment rate down, whereas the Romney plan, if you follow the letter of his policy, would actually start pushing it back up,” Bivens said.
According to the Bureau of Labor Statistics, the unemployment rate in September dipped to 7.8 percent – matching the rate in January 2009 when Obama took office – and numbers released late last week indicated the economy is growing better than expected, albeit still slowly. Obama supporters have lauded these numbers as proof of the president’s successful policies during trying economic times, while the Romney campaign condemns them as a testament to slow-growth measures. Swagel said the numbers wouldn’t do much to sway the election, and either side can spin them to their advantage.
“The recent data don’t change the picture of the economy or the political narrative,” he said. “You can look at it as glass half-full or glass half-empty; we’re a divided nation and it seems like half of it see it full and half of it see it empty.
“We’ll just have to see which half comes out to vote,” Swagel added.
Regardless of who is president, Bivens said the economy isn’t going to see a spark anytime soon, noting it could worsen in 2013. Conditions may not even clear up until at least 2017, he added.
“The outlook is just more of the same with risks greater on the downside than on the upside,” he said. “Unless we do something pretty radically different with policy, we’ve got elevated unemployment for a long time.”