Tying the Debt to Jobs? Not So Fast

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LINCOLN CITY, ORE. | Politicians like to make linkages. They like to take a problem they know everyone is worried about and tie it to something they have to handle. And so it is now with the debt ceiling and unemployment.

"Millions are looking for work, have been for some time, and the spending binge going on in Washington is a big part of the reason why," House http://www.patchworknation.org/node/add/blogSpeaker John Boehner said Monday night in his primetime rebuttal to President Obama's speech. He later said that fixing the debt ceiling crisis with more cuts would ultimately "help small businesses get back on track."

When you look at the country the way Patchwork Nation does -- through the struggles of individual communities -- that's a tough argument to make. There are many reasons to hate the national debt, particularly what it does to spending priorities, but the unemployment rate is not one of them.

As we have noted on this blog time and time again, the unemployment problem in the United States is deep and complicated. And fixing the economy is going to be all but impossible with manufacturing and construction sectors struggling. Getting the national debt under control is important -- and it's possible that the consequences of a continued stalemate in the next few days could hurt economic growth more broadly -- but at the moment a debt fix does little to help the unemployment problems in places like Lincoln City.

Walk and talk to people here on the Oregon Coast, and in small town Service Worker Centers like it around the country, and you get a sense of the problems.

Flat Is the New Up

Patchwork Nation has visited Lincoln City for more than three years now, and like other Service Worker Centers it has seen real struggles. People here sensed there were serious economic problems in 2008 before people in our other 12 county types did. And since then the unemployment rate has hovered consistently above the national average. It still sits at about 10 percent in Lincoln County according to state data, above the national average.

The map below shows national county unemployment rates for May (the latest numbers available).

On the whole, people here seem to feel a bit better about things. "Well, we are no longer in free-fall," says Kip Ward, owner of the Historic Anchor Inn. Ward is managing pretty well at the Anchor in part because his nightly rates -- $69 a room with breakfast -- appeal to budget travelers.

His food service deliveryman tells him the restaurants in town are doing OK, but they are selling a lot of cheaper things, like more pasta meals and less fish.

"Yeah, I think the feeling is at least its not getting worse," says Dan Draper, owner of Captain Dan's Pirate Pastry Shop. "But a lot of people are really struggling."

Desk people at hotels up and down U.S. 101, the main drag here, say things are essentially flat -- slightly up or down -- and that is flat as compared to a very tough 2010. Bartenders at the local Native American Casino, Chinook Winds, say things are slow. And one local upscale restaurant is on the air trying to drum up business by advertising lower prices.

Places here are essentially trying to keep their businesses going by keeping prices down. And while they are trying to make due, people shake their heads when you say the recession officially ended in 2009.

Washington's inability to get the debt problem resolved simply brings befuddled looks.

'How Long Can We Hang On'

Places like Lincoln City live and die on tourism, and fixing the debt, while important for the country, will mean little in terms of how much the wealthy folks from Portland and Salem spend while they are here. People here don't believe the national debt caused the Great Recession. Nor do they blame federal taxes. Federal tax rates are right where they were when times were good -- they have been the same since 2003.

And the small business owners here know things aren't going to suddenly get sunnier if the national debt is addressed in a serious fashion. The problem, they know, is much deeper.

"It's tough in rural America," says Lincoln City Mayor Dick Anderson. "There aren't a lot of choices when an industry goes bad. I'm convinced we are at the bottom, but I'm not convinced we are going to bounce back. ... Now the question is how long can we hang on."

That's the question in a lot of small-town Service Worker Centers and it creates tensions that can bubble up even in a small town where people know each other.

At a city council meeting this week a heated argument erupted when members of the city council said they were angry with how the local Visitor and Convention Bureau handed out local grants. The fight lacked the grand drama of the debt ceiling battle on Capitol Hill, but it showed how tense the argument over finances is getting at many different levels of government.

And, truthfully, that city council fight probably had a much more direct impact on Lincoln City's small businesses and unemployment rate than Washington's debt ceiling morass.

None of this is to say the debt and the debt ceiling debate aren't serious issues. They are.

But as 2012 approaches the real issue creating hardship in many corners of Patchwork Nation continues to be unemployment. That problem is not driven by the debt. And fixing it is likely going to be much harder than finding a compromise to pay bills the government already owes.