Amid reports that the official unemployment rate has gone over 10% (to 10.2%) and with the real figures even worse (17.5% underemployment), President Obama has called for bold new action, to go where no one has ever gone before. He’s calling for a summit on unemployment to be held next month, yes, in December when the figures will be even worse. It’s like the response of student government on the middle school level: got a problem, appoint a committee.

The trouble is Obama has been clueless on the economy since taking over the presidency. Contrary to his campaign pledge to bring new faces to his government and hence to his economic team (remember that campaign whopper of a lie about "bringing new faces to Washington because real change cannot happen with the same old people") Obama’s chief economic advisor is that very old face, Larry Summers. Yup, the guy that Harvard fired for being unable to run the world’s best university. Or how about Timothy Geithner, who W. had picked as head of the New York Fed and who did absolutely nothing but aid and abet the great economic collapse that we are in? Both old faces, both top economic advisors to Obama and both likely to be chairing the unemployment "summit" in DC in December. Doesn’t that inspire confidence in you?

Obama has a thing about summits and White House conferences. Remember the one earlier this year that he held on health care reform? Yeah, the one that Obama failed to invite a single speaker in favor of single payer? The one that came up with the compromise of the "public option" that Obama then ditched while pressing for "insurance reform"? Maybe Obama will invite Nobel Prize winning economists Joe Stiglitz and Paul Krugman to the White House summit in December but don’t count on it since both are not favorites of Summers (or Obama either). These are the guys who told him almost a year ago that his economic stimulus plan was too little, too late. Guess what, they were right, Obama and Summers and Geithner were wrong.

Meanwhile, the Washington Post, in an article on the proposed unemployment summit, attributes the following quotation to the President:

"We all know there are limits to what government can and should do even during such difficult times," Obama said at the White House before leaving on a nine-day trip to Asia.

http://www.washingtonpost.com/wp-dyn/content/article/2009/11/12/AR2009111210563.html

With that kind of forceful statement and leadership, it appears that Obama has given up studying the Lincoln presidency and now instead is emulating the presidency of Herbert Hoover. Hoover too was a bright guy (a Stanford trained engineer with far more experience in the world than Obama has) who didn’t seem to get the need for strong action when unemployment lines were growing.

Obama has yet to put together a plan to attack the unemployment situation, something that FDR did in the first few days of his administration with huge public works programs. Obama’s hometown newspaper, the Chicago Tribune, today described how bad the situation is:

Not only is the 10.2 percent unemployment rate among the highest of past recessions, but structural problems suggest many of the jobs people have lost are gone permanently. They are not expected to return, even as businesses become more profitable.

Gluskin Sheff economist David Rosenberg estimates that the unemployment rate is going to 12 or 13 percent, and the number, alone, is not as disconcerting as Rosenberg’s long-term concerns over the record 6.2 million permanent jobs cuts during this recession. Unlike the past, when companies laid off people during downturns and then brought them back to work as sales picked up, now many jobs presumably have just vanished. Companies, with the aid of technology, have learned to do more with less and factories have closed.

http://newsblogs.chicagotribune.com/marksjarvis_on_money/2009/11/obamas-unemployment-challenge.html

David Rosenberg is the same economist, by the way, who got it right way back in 2004 when he warned that lax mortgage spending was going to threaten the entire economy. Expect him not to get an invite to the White House unemployment summit too. Rosenberg notes that a record 5.6 million people have been unemployed for more than 6 months:

Rosenberg notes that this is unusual, with the lengthy unemployment period normally affecting about two million people in past recessions. In other words, about 36 percent of the people out of jobs have been out for six months or more. “Both the median 18.7 weeks and the average 26.9 weeks duration of unemployment have risen to an all-time high,” he said.

It gets worse. Although 11 million full-time jobs have been lost, many people have been shifted through no choice of their own to part-time work amid cutbacks. So the unemployment rate doesn’t reflect the full story. Now, Rosenberg notes, “a record 9.3 million Americans are working part-time because they have no choice. In past recessions, that number rarely got much above six million.”

Nor does Rosenberg believe, unlike the economists Obama relies on, that the unemployment rate has reached its crest. He sees it reaching 12 or 13% and says that the economists saying otherwise are the "same consensus community that predicted at the beginning of 2008 that the jobless rate would peak out below 6 percent this cycle.” People like Summers and Geithner who have Obama’s ear.

Meanwhile, an astute editorial in the online Cap Times (Madison, Wisconsin) titled "Unemployment must be top issue for Dems" drives home persuasively the political repercussions of double digit unemployment. President Obama and Congressional Democrats, it argues, are making a huge mistake in treating the unemployment problem as an "afterthought rather than the most serious issue facing the nation." If the Obama administration doesn’t make job creation a priority, it warns, is to risk political disaster in 2010. The 2009 off-year elections were a mixed bag, but where Republicans focused on job creations in Virginia and New Jersey, they won:

"If unemployment continues to rise, it will be the only issue in key congressional districts and states nationwide next year. Nothing else that the President or his congressional allies talk about will matter. For economic, social and political reasons, Democrats need to remake themselves as the party of jobs. If this requires a new stimulus plan with more money for job-creating infrastructure improvements, Democrats should go for it. …If unemployment rises in the mid-teens [as projected above by economist Rosenberg], families and communities across the country will experience a human crisis of daunting proportions. …Obama and his Congressional allies will see their House and Senate majorities slashed if not obliterated by an angry electorate."

http://host.madison.com/ct/news/opinion/editorial/article_78fb6724-9fae-54ef-a1fc-58fa7d049435.html

Another thing that the President should ponder as he apparently ramps up his escalation of the Afghanistan War. Every thousand troops that he sends to that country will cost $1 billion, so the anticipated 30,000 troops to go will cost $30 billion a year. That money would be far better spent on job creation programs at home. As JFK and LBJ found out, you cannot always have guns and butter at the same time. Instead of waiting until December to hold a summit on unemployment, Obama would be better served by calling in Stiglitz, Krugman and key labor leaders and putting together a plan to create new jobs pronto.