Jobless Rate Offers GOP Potential Rallying Cry in 2010, 2012 Elections

It's the unemployment rate, stupid.

That could be the rallying cry for Republicans in elections next year, and possibly in 2012, as they seek to regain power in Congress and the White House.

Despite signs of improvement in the economy, the unemployment rate keeps climbing -- up to a 26-year high of 9.8 percent in September -- potentially providing Republicans political ammunition and putting Democrats on the defensive.

Republicans have seized on the rising jobless figures as proof that President Obama's $787 billion stimulus package was a spectacular failure. But Democrats insist that the economy would be in far worse shape without the spending injection.

Either way, top economists told that even with the job growth attributed to the stimulus package, it won't be enough to compensate for all the job losses since the recession began.

"The hole that has been blown in the labor market is enormous," said Heide Shierholz, an economist with the Economic Policy Institute.

In a new study by the institute, more than 53 percent of respondents listed unemployment and lack of jobs as the most important economic problem facing the country. The survey also found that 51 percent of respondents supported the stimulus package but an overwhelming majority, 81 percent, said the Obama administration still has not done enough to tackle unemployment.

"The thing is, even if the stimulus worked, it wouldn't have necessarily created a lot of jobs in the business cycle," said Kevin Hassett, the director of economic studies at the conservative American Enterprise Institute. "So I think the crowing on both sides in not the most defensible."

The economy has shed more than 7.1 million jobs since the recession began, in December 2007. All told, 15.1 million Americans are now out of work. But if the underemployed and people who have given up looking for new jobs are included, the unemployment rate is at 17 percent, the highest since such records were first kept, in 1994.

The stimulus package had aimed to create up to 3.5 million jobs.

Shierholz estimates the economy has lost more than 10 million jobs if the number of jobs needed to accommodate new workers -- college graduates and immigrants -- is included.

"The stimulus package, it is the thing that brought us back from the abyss," she said. "It is doing what it was expected to do. It's not enough. The level of growth to get recovery is enormous."

Shierholz said those who say the economy would be much worse without the stimulus package are "unequivocally correct."

But she added that, politically, "it's a tough one to talk about."

"Keep in mind just because we don't have this parallel universe to compare it to, we have a much heavier lift to get people to understand how worse things would have been and it makes it easier to discredit the stimulus package," she said.

Hassett pointed out the irony of Democrats being on the defensive about the economy after sweeping to power in Congress in 2006 and capturing the White House in 2008 based mainly on blaming Republicans for the economic woes. Now Democrats have adopted economic policies that were not well designed and will extend the economic misery for the next few years, he said.

Just like in 1994 when they retook Congress, Republicans are describing the economy as the worst since President Herbert Hoover presided over the start of the Great Depression, Hassett noted. The only difference? "This time it's true," Hassett said.

The Obama administration is consulting with Democratic congressional leaders on how to extend and possible expand the economic safety net. Among the ideas under consideration are extending jobless and health benefits and renewing a tax credit for first-time homebuyers.

David Autor, an economist at MIT, said those measures are good things. But when asked which political party will have the most effective campaign next year, he laughed and said, "Whatever is least true is most effective."