Jobs summit shows urgency of problem
Australian Financial Review
Monday November 16, 2009
Battling political fallout from a weak employment market and rising concerns about the federal deficit, the Obama White House plans to hold a jobs summit next month and also begin to lay heavier emphasis on spending curbs. The administration's ability to rein in spending is limited by pressures to enact additional stimulus measures to boost job creation.The Politico website reported at the weekend that President Barack Obama would use his first State of the Union address early next year to focus on curtailing the federal deficit which is at record post-World War II highs.However, the outlook for deficit reduction is not encouraging. A record shortfall was registered in the first month of financial 2010.The Treasury Department reported a deficit for October of $US176.36 billion ($189 billion), the fifth largest recorded for any month. In its preparations for the fiscal 2011 budget - to be presented to Congress early next year - the Office of Management and Budget has asked Cabinet agencies to submit two budget plans: one that freezes spending at existing levels and another that trims expenditures by 5 per cent.In Tokyo at the weekend, Mr Obama referred in a speech to this moment in world economic history as an "inflection point". Mr Obama said the US needed to "save more and spend less" to "reduce our long-term deficit and borrowing".China alone holds about $US1 trillion of US debt, and together the four countries on the President's Asia schedule - Japan, Singapore, China and South Korea - account for almost half of US obligations to foreign creditors.US indebtedness is an increasingly contentious political issue.Holding a "jobs summit" is recognition of the extent to which a Democratic administration's political well-being depends on progress towards creating jobs.The October jobless number of 10.2 per cent of the workforce crossed a red line politically for an administration that has battled to stabilise the economy and promote jobs growth. Continuing high levels of unemployment - and underemployment - above the 10 per cent threshold pose a direct threat to Democratic control of Congress.Before leaving on his nine-day Asian tour, Mr Obama announced his jobs summit would bring together small-business owners, corporate executives, economists, financial experts and union leaders.KEY POINTS The October jobless number crossed a red line politically. The administration's ability to rein in spending is limited.
© 2009 Australian Financial Review