It is very clear how last week's bad jobs report will affect the presidential race. It is less clear how it will affect policy that could create jobs. The election campaigns of President Obama and Mitt Romney have their talking points all lined up, but what Congress and the Federal Reserve do next remains murky. Federal Reserve chair Ben Bernanke will testify before Congress on the state of the economy, Reuters' Edward Krudy reports, who says it's possible the latest signs of a stalled make it more likely the Fed will do something to fix it. "This puts the Fed firmly in play and they will likely feel compelled to respond," Tom Porcelli, chief U.S. economist at RBC Capital Markets in New York, told Reuters.
The New York Times' Binyamin Applebaum agrees that the Fed "will ride again to the rescue," despite unease with the economy's apparent dependency on its help. But The Wall Street Journal's Jon Hilsenrath reports Monday that new action from the Fed isn't guaranteed. Sandra Pianalto, president of the Federal Reserve Bank of Cleveland, is the consensus-seeker between members of the Fed who want to raise interest rates to fight inflation and others who want to take action to lower unemployment. And right now, the Journal reports, Pianalto isn't ready to change policy. She explained, "I don't think this employment report, in and of itself, is likely to lead to a substantial change in my outlook. Consequently, it would not lead me, at this time, given what I know about my outlook, to change my position on policy."
Congress looks even less likely to do something. As the Times' Jackie Calmes and Nicholas Kulish report, even in 2008, when the economy looked like it was collapsing and there was a Republican president, most congressional Republicans voted against a plan to steady it. The Wall Street Journal suggests the White House might drop opposition to the Keystone XL pipeline in order to get a transportation bill, which would fund infrastructure projects, passed. The Times suggests that the threat of the expiration of the Bush tax cuts at the beginning of next year could persuade Republicans to pass a jobs bill.
But as difficult as it is to predict future policy on jobs, it is refreshingly clear to foresee how the jobs report will frame the arguments of the presidential race. Romney will say Obama's policies can't create jobs in a conference call to reporters in 11 states Monday. Obama will say his policies would create jobs if Republicans would just let him implement them. Romney will respond that he has a record as a jobs creator. Obama will say, in a new TV ad, that he made the same promises when running for Massachusetts governor and failed to deliver.