Economy has made real progress, but fiscal challenges still remain

As I travel across Pennsylvania talking to constituents, people continue to focus on one thing — jobs. 

As chairman of the Joint Economic Committee during the 112th Congress, I have worked with my colleagues on both sides of the aisle and with private sector leaders to spur additional job creation, strengthen the manufacturing sector, improve competitiveness and boost our recovery. My role at the JEC has offered me a unique insight into the opportunities and challenges ahead as the United States continues to recover from its Great Recession. 

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There is no doubt we face significant challenges. The U.S. share of global manufacturing dipped dramatically from 26.6 percent in 2000 to 18 percent in 2011. During the same period, China’s share went up from 6.6 percent to 19.9 percent. While there have been some recent improvements, those numbers are troubling. My home state of Pennsylvania has been particularly hard-hit. 

While unemployment is still too high, the economy is in better shape than it was three and a half years ago. When the Commerce Department releases second-quarter GDP numbers later this month, they will show the 12th consecutive quarter of growth. Private-sector employment has increased for 28 straight months and manufacturing has added 500,000 jobs over the same period. 

This progress on jobs is underscored when you consider how weak the labor market was in early 2009. During the first six months of 2009, the private sector lost, on average, 649,000 jobs each month. By contrast, during the first six months of this year, the private sector gained 159,000 jobs per month. 

Congress helped to bolster the economy by cutting payroll taxes, providing education and job training to those who lose their jobs as a result of unfair trade practices, and helping unemployed workers make ends meet while they search for a new job. I led the successful effort in the Senate to continue the payroll tax cut this year, putting on average $1,000 into the pockets of working families. The extra dollars in workers’ paychecks help to buy gas, put food on the table and pay tuition bills. And by driving increased consumer spending, the tax cut has increased demand and helped to create jobs. 

There is broad agreement among mainstream economists that temporarily reducing employees’ share of Social Security payroll taxes and continuing unemployment insurance, in the face of sometimes strong resistance, helped to sustain the recovery during 2011 and 2012. 

But there is more we need to do. Too many Americans haven’t felt the recovery.

In Washington, everyone likes to sing the praises of small business. But we should do more — right now — to actually support small businesses. The Small Business Jobs and Tax Relief Act would provide a tax credit of 10 percent for any increases to the payroll tax base — hiring new workers, increasing hours or raising wages of existing employees up to the $110,100 cap for the payroll tax. The proposed credit is capped at $500,000 per firm in order to target the tax credit to small businesses. We should pass this right away.

It’s long past time to put an end to China’s currency manipulation. We recently learned that China allowed its currency to weaken more in May than in any other month since 2005. When China cheats, Pennsylvania and the rest of the country lose jobs. I’m tired of it, and we should stop it. The Senate has already acted — I urge my colleagues in the House to pass legislation, such as the Currency Exchange Rate Oversight Reform Act passed by the Senate, to crack down on countries that manipulate their currencies to promote their own exports. 

We also have fiscal challenges to tackle in a bipartisan manner. Without congressional action, the automatic spending cuts contained in the Budget Control Act of 2011, along with the expiration of several tax cuts, including the payroll tax cut, will present a significant economic headwind in 2013. I recognize that a fiscal package likely won’t be finalized before the election. But we need to lay the groundwork now.

We can’t put America on the road to full recovery unless we all agree on tackling the huge budget deficit and debt America faces. We have to be smart about the cuts we make so we can continue to grow the economy and create jobs rather than make a bad situation even worse. We need to continue to cut spending. And certainly, you cannot reduce the deficit by spending tens of billions on tax cuts for the very wealthiest. 

The economy has made real progress since the worst days of the Great Recession. While the private sector has led the way, policymakers have helped to sustain the recovery — by boosting demand, creating a climate for job creation and supporting workers hit hard by the recession.

Before — and after — Nov. 6, Congress will need to build on this progress, staying focused on job creation while also taking steps to put our fiscal house in order.

Casey is the chairman of the Joint Economic Committee.