Obama, Dems show growing anxiety as unemployment numbers continue surge

President Barack Obama’s announcement Thursday of a White House jobs summit is the latest evidence the economy will drive the 2010 agenda.

Democrats at both ends of Pennsylvania Avenue are digging in to take down the unemployment rate in time for the 2010 midterm elections.

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October’s report from the Department of Labor showed the unemployment rate hitting 10.2 percent last month, the highest level since April 1983.

Unemployment wasn’t expected to hit double digits that soon, and many economists now warn they do not expect the jobless rate to drop until at least next summer; in the most recent recessions, unemployment has not stopped rising until a year after the recession’s end.

That could doom dozens of incumbent lawmakers in the House and Senate, jeopardizing the large majorities Democrats enjoy in both chambers. That, in turn, could make it impossible for Obama to move his agenda forward in the latter half of his first term.

The gloomy statistics are “a wake-up call,” according to Heidi Shierholz, an economist at the left-leaning Economic Policy Institute.

“Unless Congress authorizes substantial additional spending for job creation, unemployment will remain elevated for years to come,” Shierholz said in a statement responding to the Labor report.

Obama and Democrats in Congress appear to be heeding that message.

Senate Majority Leader Harry Reid (D-Nev.) on Tuesday announced to Senate Democrats that he will take up an initiative on jobs, though he did not offer specifics. Reid is facing a tough reelection battle himself; Nevada has been hard hit by the recession and housing crisis.

In the House, Democratic leaders have resisted suggestions for a second stimulus, but they are working on a variety of proposals they believe would create new jobs, including a program that provides small businesses with new loans. 

Obama on Thursday said he would invite investors, CEOs, small-business owners, academics, nonprofit officials and labor and financial figures to the White House for the jobs summit.

“We all know that there are limits to what government can and should do, even during such difficult times,” Obama said in brief remarks that preceded his trip to Asia, which will be dominated by talk about the global economy.

“But we have an obligation to consider every additional, responsible step that we can [take] to encourage and accelerate job creation in this country,” Obama said.

Republicans have criticized Obama and congressional Democrats over the rising unemployment numbers, and have zeroed in on the $787 billion economic stimulus package. The GOP argues the stimulus was mismanaged, and added hundreds of billions to the nation’s record deficit without lowering unemployment.

“Hopefully the White House summit is a sign that the administration is finally ready to join us in providing real solutions that will get Americans back to work,” House Minority Whip Eric Cantor (R-Va.) said Thursday in a statement.

Cantor claimed the stimulus proposal put forward by House Republicans, which focused more on tax cuts, would have created twice the jobs at half the cost.

Liberal groups and economists have argued that the stimulus was too small given the nature of the crisis. The recession is regarded as the worst to hit the United States since the Great Depression.

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Obama on Thursday said the stimulus had “created and saved more than a million new jobs.” The result of the stimulus and other actions is an economy “now growing again for the first time in more than a year,” Obama said.

Obama also noted that a report by the Labor Department on Thursday showed new jobless claims falling to 502,000. That’s the lowest level of claims in the weekly report since the beginning of the year.

“As I’ve said from the start of this crisis, hiring often takes time to catch up to economic growth,” Obama said. “And given the magnitude of the economic turmoil that we’ve experienced, employers are reluctant to hire.”

At the jobs summit, Obama suggested he’d try to focus discussions on why employers aren’t hiring. He said both small businesses and large firms are increasing employee hours and adding temporary workers, but “have not yet been willing to take the steps necessary to hire again.”

“Meanwhile, millions of Americans — our friends, our neighbors, our family members — are desperately searching for jobs. This is one of the great challenges that remains in our economy, a challenge that my administration is absolutely determined to meet.”

Democrats would be expected to lose seats in the midterm elections because of history alone; generally the party in power of Congress and the White House loses seats in a midterm.

But the economy has exacerbated the fears for Democrats. Last week’s losses by the party in gubernatorial contests in Virginia and New Jersey, two states carried by Obama in 2008, underlined the risks to the party.