Democrats brace for jobs report after stocks plunge on Wall Street

Democrats are bracing for the jobs report due Friday morning from the Labor Department, knowing their political futures rest on the economy over which they have little control.

A disappointing jobs report for July could be a painful second blow one day after the Dow Jones Industrial Average plummeted by 512 points.

Democrats thought they would avert economic devastation by passing legislation to raise the debt limit by at least $2.1 trillion. Nevertheless, two days after the bill became law, destruction visited Wall Street.

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The market drop wiped out more than 4 percent of the Dow and 4 percent of the S&P 500, biting into retirement and savings accounts across the nation.

European and Asian markets fell Friday amid fears that the global economy was headed into a tailspin. Leaders in China and Japan, two countries that hold a large percentage of U.S. debt, have called for international talks to address the crisis, according to Reuters.

Market experts say the drop was driven by anxiety over the European debt crisis, which threatens to engulf Italy and Spain, and signs that the U.S. economic recovery has stalled.

Democrats know their control of the White House and the Senate will depend on public perceptions of the direction of the economy, which will be influenced strongly by the creation of new jobs.

Republican incumbents in the House have a stake in promising jobs numbers, but their control of the lower chamber is considered less endangered then Democrats’ control of the White House and Senate.


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Economic analysts have been split over what to expect from the Bureau of Labor Statistics Friday and what it means for the U.S. economy going forward.

“I expect payroll employment to increase 75,000 in July and private sector employment to increase by 95,000,” Mark Zandi, chief economist at Moody’s Analytics, told The Hill. “Unemployment should hold steady at 9.2 percent. This isn’t great but it would be a bit of relief given the very bad employment reports we got in May and June.”

Democratic strategists say their options for stimulating economic demand are limited given Republican control of the House and their staunch unwillingness to spend federal dollars on economic stimulus and infrastructure initiatives.

So the best option left, Democratic strategists say, is to spend as much time as possible between now and Election Day showing voters that they care about job creation and are willing to fight for jobs legislation.

“We’ve got to get on a message of jobs and stay there. Any Democrats not spending two-thirds of their time talking about jobs risks losing their elections,” said Celinda Lake, a Democratic pollster who has represented lawmakers including Sens. Debbie Stabenow (D-Mich.) and Jon Tester (D-Mont.), who are both facing tough elections next year.

“It we’re not fighting on the economy, we’re going to have trouble turning out our voters,” Lake said.

President Obama plans to do just that. He has scheduled a bus trip through the Midwest Aug. 15 to Aug. 17 to talk about jobs and the economy.

Senate Democrats plan to pressure Republicans to pass a multi-year transportation authorization and spending bill. They will also push legislation to set up an infrastructure bank, which could put $50 billion into the economy.

“We believe the resolution on the debt-ceiling crisis will now allow us to turn our attention to jobs exclusively,” said a Senate Democratic leadership aide. “The month of August will be spent winnowing the list of proposals to the best ideas. Those proposals will come to the floor beginning in September.”

Rank-and-file Democratic senators say jobs will be their No. 1 focus when speaking with constituents over the August recess and when they return in September.

“In all my committees I’m going to be focusing on job-creation bills,” said Sen. Tom Udall (D-N.M.), who expressed frustration that the debt-limit debate eclipsed jobs legislation. “Unfortunately we’ve spent six months on this and neglected the other side of it.

“Any kind of transportation bill is a good stimulus and a good jobs creator,” he said.

Strategists say that Democratic Senate incumbents could be in trouble next year if the economy does not start creating jobs at a fast enough clip to reduce the unemployment rate, which stood at 9.2 percent at the end of June.

If employment does not begin to pick up, then the strategy will be to blame Republicans for blocking jobs legislation, which happened this week during the partisan flare-up over the Federal Aviation Administration's partial shutdown.

Senate Democratic leaders and House Democratic Whip Steny Hoyer (Md.) held a press conference Wednesday to blast Republicans for holding up a short-term reauthorization that forced the furlough of 4,000 federal workers. Democratic leaders said it also deprived an estimated 70,000 contractors of work.

“If people don’t think things are getting better, it’s going to be really hard to convince them you’re able to make them better unless you can win the argument that Republicans are obstructing progress,” said Tad Devine, a Democratic strategist, discussing the weak economic outlook and what effect it might have on Democratic incumbents next year.

“The skirmish on the FAA is a way to convince voters that Republicans are obstructing efforts to do things to improve the economy that are common sense,” he said. “I think if there are repeated skirmishes along those lines and Democrats can convince people that Republicans are obstructing, if that takes hold it, it can harm Republicans.”

Devine said former President Clinton used this kind of argument in 1996 when he portrayed a government shutdown as the fault of Republicans unwilling to compromise.

Market experts do not expect incumbents to get relief from the private sector anytime soon.

“It seems apparent, to economists and the markets alike, that the U.S. economy will not produce sufficient growth to prevent the foregoing adjustments, as a consequence of the aggregate impacts of extraordinary levels of outstanding household and government debt — the likelihood that continued deficit spending is off the agenda and tax increases will eventually be required, and the continued drag of falling real-estate values — on both households and creditors,” said Dan Alpert, managing partner of Westwood Capital LLC.


—This story was posted Thursday at 5:46 p.m. and updated at 6:29 a.m.