Analysis: Jobs report is bleak news for Democrats

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WASHINGTON (AP) — The economic die is cast, and it's grim news for Democrats. There's nothing now that Congress or President Barack Obama can do to before the November elections to jolt the nation's listless recovery.

Friday's unemployment report — the last major economic news before the midterms — showed the nation continued to lose jobs last month, reinforcing the bleak reality that it probably will be not months but years before the jobless rate returns to pre-recession levels below 6 percent.

With nearly 15 million Americans still without work, that tightens the pressure on Democrats ahead of the Nov. 2 elections. And it also casts a dark shadow well into the 2012 election season and beyond.

"We won't see under 6 percent for five years," David Wyss, chief economist at Standard & Poor's in New York, said Friday after the Labor Department reported that 95,000 more jobs were lost in September and the unemployment rate held at 9.6 percent. "It's going to be a slow recovery."

Economists say at least 100,000 new jobs must be created each month just to tread water and keep pace with growth in the labor market.

Democrats, who now control the White House and Congress, are sticking with a positive line: The economy is moving too slowly for anybody's comfort, but Obama and his congressional Democratic allies have laid the groundwork for future prosperity. They are blaming the downturn on the policies of Republican George W. Bush's eight-year presidency.

"The unemployment rate is what it is," David Plouffe, Obama's 2008 presidential campaign manager, told reporters. "What we want people to focus on is: Are we moving slowly in the right direction?"

No, insist Republicans. They say Democrats are leading the nation in the wrong direction. They were quick to insist that Friday's report only underscored the weakness of Democratic big-government and tax policies.

The jobs report is "the final verdict on the failed policies of this White House and Democratic Congress as voters head to the polls," asserted GOP party chief Michael Steele.

Unemployment has now topped 9.5 percent for 14 months in a row, the longest stretch since the Great Depression of the 1930s. And while government figures show the economy has been growing for nearly 15 months, it's been doing so at a snail's pace. Most Americans, polls show, believe the country remains mired in recession.

Congress, meanwhile, has left town until after the midterms, failing to decide what to do about wide-ranging Bush-era tax cuts that are due to expire on Jan. 1. Uncertainty over those tax cuts itself is contributing to the lack of hiring as businesses, especially small ones, attempt to figure out what their tax burdens will be next year.

Obama and Democratic leaders want to let the tax cuts expire for wealthier Americans but extend them for the middle class. Republicans and some Democrats want to extend them for everybody, arguing that this is no time for any tax hikes.

The jobless level remains high even though Washington has hurled trillions of dollars at the problem. The efforts include an $814 billion stimulus package and the $700 billion financial institution bailout.

Also, the Federal Reserve has held the short-term interest rates it controls near zero for months and has flooded the nation's financial system with hundreds of billions of dollars in newly created money. Given Friday's discouraging jobs report, the Fed now seems more likely to increase the money supply even further to prod growth.

Polls show little public appetite for additional congressional spending on stimulus, and a darkening view of Obama's ability to deal with the economy. An AP-GfK poll last month showed people disapprove of his handling of the economy by a 58 percent to 42 percent margin. A new CBS poll shows approval at just 38 percent.

"Both parties are culpable," said Ross Baker, a congressional scholar at Rutgers University. "But Democrats are more vulnerable. After all, they control all the political branches of government."

GOP leaders have been taunting Democrats with "where are the jobs?"

But that refrain was earlier sounded by Rep. Nancy Pelosi, D-Calif., before she became House speaker. As the economy inched out of the 2001 recession, she asked in an October 2003 television appearance: "Mr. President, where are the jobs?"

But that month saw 203,000 new jobs and 6 percent unemployment, notes former Bush strategist Karl Rove. "Her party would kill for such a rate today," he wrote earlier this week. "Instead, they will be killed at the polls," he added.

Private businesses did add 64,000 jobs in September, but that was the weakest showing since June. And the gain was outpaced by a wave of government layoffs, including census jobs and the largest cuts by local governments in nearly three decades. Among the hardest hit: teachers not hired for the new school year that began in September.

Economist Heidi Shierholz of the Economic Policy Institute, a labor-oriented think tank, estimated 300,000 new jobs would have to be created every month between now and September 2015 to get back to the 5 percent jobless rate of September 2007.

"The mountain we have to climb is huge. And it will take extraordinary levels of growth just to get there anytime soon," she said.


EDITOR'S NOTE — Tom Raum covers economics and politics for The Associated Press.