A weak US jobs report has heightened political tensions leading up to the two-pronged talks between the White House and lawmakers next week over Joe Biden’s next multi-billion dollar economic plans, further complicating the road to an agreement.
After releasing data on Friday showing that the rate of hiring in the U.S. economy had fallen from 770,000 in March to 226,000 in April, Biden called on Congress to act quickly to pass additional economic legislation in addition to the already approved fiscal stimulus packages of $ 1.9 billion.
He urged lawmakers to propose $ 2.3 billion in infrastructure spending and $ 1.8 billion in social safety net spending over a decade, paid with higher taxes on the rich and businesses.
Next Wednesday, Biden will host the four congress leaders – including Nancy Pelosi, the House speaker, Chuck Schumer, the Senate majority leader, and Republicans Mitch McConnell and Kevin McCarthy – at the White House to jump-start talks.
“No one should underestimate how tough this battle is,” he said. “We still have a job to do here in Washington. The American people are counting on us. So let’s get it done. Let’s build an economy that delivers dignity and gives everyone a chance. ”
But while Democrats stress the importance of additional measures to support the recovery, Republicans are calling on the government to change course and adjust their economic strategy.
“I think [the jobs data] has reinforced each side in confirmation of the position they already held. Democrats see the danger of walking out, a childcare crisis and the fear of contracting the virus at work to keep people away and so little chance of overheating, ”said Austan Goolsbee, a professor at the University of Chicago and a former high-ranking Obama administration officially. “Republicans see an improved safety net that keeps people away and oppose government involvement.”
McCarthy, who is the most senior Republican in the House of Representatives, issued a blistering statement saying that Biden was “not solving a crisis, but creating new ones.”
“Unless President Biden stops doubling down on his failed tax and spending agenda, unless he works with Republicans to rebuild our economy, his policies in the crisis age will continue to trap Americans in a cycle of fear,” he added. .
Many economists, surprised by the slowdown in the rate of job creation, say they expect the dip to be only temporary, and the strong rollout of vaccinations in the US coupled with the strong spending from the previous stimulus will recovery in the coming months.
Janet Yellen, the US Treasury Secretary, said in the White House on Friday that she still expects America to be fully operational next year, although she acknowledged the recovery could be “bumpy”.
The Democrats and the White House are likely to argue that their next spending plans will help address some of the major structural problems that have held back the U.S. economy in the past, including participation in the workforce. Among them are shortages in physical infrastructure, childcare and education.
The slow numbers can also help allay concerns about an inflation spike that is too high. “I think a very small number of people have those concerns. And I think there was a lot of high-profile data on that, ”said Michael Madowitz, an economist at the Center for American Progress, a left-wing think tank.
“The real silver lining in this is that the Pollyannish ‘oh my god, the overheated economy’ people look ridiculous now.”
But Republicans and Conservatives say this should serve as a warning to the White House that its policies so far have been too focused on stimulating the demand side of the labor market rather than the supply side.
“They need an economic message that’s a little more tailored than just spend, spend, spend,” said Doug Holtz-Eakin, a former economic adviser to George W. Bush now at the American Action Forum, a think tank. “To get this package through, they need to explain how it gets people to work and how more productive the work can be.”
If no agreement is reached with the Republicans, the White House and Democrats can still approve their plans with their own tiny majority on Capitol Hill, but that requires a high degree of party unity that is difficult to achieve.
“The evidence is clear that the economy requires urgent action and Congress will not be deterred or delayed from making transformational investments for the people,” Pelosi said.