Joblessness hits 9.2%, weakening President Obama's hand in deficit negotiations
This morning's new government report of only 18,000 new jobs created in June substantially weakens President Obama's hand as he enters weekend negotiations with Republicans on raising the debt ceiling.
Today's dismal employment numbers, which kicked up joblessness up to 9.2% from 9.1%, will give the president less ability to insist on raising taxes as part of an overall debt reduction deal.
The June jobs number means that the economy is weakening at a quicker pace than expected and that the president's economic recovery program continues to fail. The June jobs report was less than May's weak numbers of only 25,000. Wednesday in a presidential "Twitter Townhall," House Speaker John Boehner (R-OH) asked the President, "where are the jobs?"
The job report is likely to strengthen Republican hands in the tense negotiations. Republicans insist that no tax hikes are part of the formula for the deficit reduction plan.
The government also reported that state and local governments shed 39,000 jobs in June. It is an indication that state government are accelerating layoffs in the face of rising debt and falling tax revenues. More layoffs among government employees are expected as local and state governments try to live within their own budgets. Public employees who are members of government unions are a major base for the Democratic Party.
President Obama has insisted that raising taxes should be part of the package to cut down the cumulative federal deficit, which tops $14.2 Trillion on August 2. The president wants to raise the debt ceiling to about $16 Trillion.
Republicans have called for sharp cuts in federal spending amounting to $4 trillion over ten years, all from cuts and downsizing government. President Obama has agreed with the $4 trillion number, but wants to close the gap by raising taxes.
However Republicans refuse to add taxes during an economic downturn. "Why would you want to raise taxes in an ailing economy," asked House Majority Leader Eric Cantor (R-VA) yesterday at a meeting with reporters on Capitol Hill.