$2 Gas And $1 Eggs
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The jump in the unemployment rate to 5.5% from 5% should be a wakeup call to Congress.
“This is the biggest single-month surge in unemployment since 1986 and, along with the last five months of job losses, it should put the economy front and center on the White House’s agenda,” the chair of the Joint Economic Committee of Congress, Senator Schumer, said on Friday at a hearing.
The American labor force was swollen in May by an abnormally large and early influx of teenagers, which may have something to do with the unemployment rate jump. More troubling, though, was the lack of private-sector job creation and the fifth consecutive monthly decline in payroll jobs.
New jobs were mostly in government, education, and health — female-dominated sectors kept afloat by the public purse. Workers in the declining sectors of manufacturing and construction are predominantly male.
“What can be done?” a committee member, Rep. Maurice Hinchey, asked.
The answer is, plenty. Contrary to Mr. Schumer’s belief, it’s not the White House that has the power to help Americans, it’s Congress, which under both Republican and Democratic leadership has declined to consider many White House initiatives. Are a half percentage point jump in the unemployment rate and $4 per gallon gas sufficient to galvanize the lawmakers into taking some necessary action?
Originally, I had been asked to testify on the employment status of women before the committee, but I put aside my prepared remarks on how much better American women are doing than their counterparts in other countries and addressed Mr. Hinchey’s question about what would help alleviate the slowdown in the economy for both men and women.
First, Congress could extend or lower the current tax rates, set to rise in 2011 to 40% from 35% at the top and to 15% from 10% at the bottom. This will discourage work, business creation, and investment. Moreover, investment write-off allowances will shrink in 2011, and taxes on dividends will rise to the regular income tax rate from 15%.
Lower taxes would help all Americans, particularly women, who are frequently the second earner in the family, yet their incomes are taxed at the family’s top rate. Lower taxes also would help the many women who own or are employed by small businesses and pay taxes as individuals.
Second, women often drive and control family budgets, and don’t like high gas and energy prices. Congress won’t tell women this, but it has the power to lower energy prices by allowing oil companies to use America’s domestic energy supplies.
The U.S. Minerals Management Service estimates that American untapped oil and gas reserves total 143 billion barrels of oil and 1,050 trillion cubic feet of gas.
Yet for Congress, energy independence illogically seems to mean not using these resources. Cuba, assisted by China, is drilling for oil 45 miles off the Florida coast, but American companies aren’t allowed to do the same.
The chairman of the Council of Economic Advisers, Edward Lazear, estimated that for every 2 million barrels a day of additional oil pumped, prices could fall by $30 per barrel, and increased domestic oil exploration could yield 1.5 million barrels a day. But we don’t know what’s there until we explore. Five years ago no one forecasted that large oil reserves are located in Brazil — and if the Brazilians hadn’t drilled, they wouldn’t know now either.
Third, American women, especially single mothers, are burdened by the rapid increase in food prices. Gone are the days when a dollar could routinely buy five ears of corn, a carton of eggs, a half-gallon of milk, or a five pound bag of flour. These price rises can be traced partly to Congress’s mandate that energy producers include ethanol in gasoline. Ethanol is produced from corn grown on land that is not yielding food.
America consumed 8 billion gallons of ethanol last year. Under December 2007 legislation, America is required to use 9 billion gallons this year, with volumes rising to 36 billion in 2022. Since making ethanol uses as much energy as it gives off in fuel, America is raising food prices without even saving energy. Congress can repeal the mandates, and start lowering food prices.
It’s not a mystery what would make women — and men — better off in today’s economy. More jobs, a larger share of take-home pay, and a return to $2 a gallon gasoline and $1 eggs. And, if Congress desired, it could pass laws that would allow this to happen.
Ms. Furchtgott-Roth, dfr@hudson.org, former chief economist at the U.S. Department of Labor, is a senior fellow at the Hudson Institute.