As the reality of a recession far worse than anyone believed it was earlier this year takes hold, labor and its allies are laying the groundwork for another stimulus battle this fall. They are making their plans even as the Obama administration and Democratic leaders say it’s still too early to consider another recovery package.

The AFL-CIO and Change to Win, the nation’s two labor federations, say they will begin lobbying lawmakers for another jobs bill. Their position is that the $787 billion economic stimulus bill approved earlier this year was a good start but wasn’t big enough.

Heidi Shierholz, a top economist with the labor-backed Economic Policy Institute said yesterday that the first stimulus bill is working as planned and will create or save some 3 million jobs but that the recession is worse than anyone had predicted and there is now a jobs deficit of 8 million that has to be closed.

AFL-CIO policy director, Thea Lee, also said yesterday, “We have more information now. All that information points in the direction that additional stimulus is needed.”

The Department of Labor reported unemployment hit 9.5 percent in June, the highest level in 26 years. It is now almost certain to reach double digits and could pass the benchmark of 10.8 percent, which would make it higher than at any time since the Great Depression.

When the stimulus bill was passed in January administration officials had predicted that the package would keep unemployment from peaking above 8 percent.

While progressive groups gear up for the fight for a second stimulus bill, Republicans are gearing up for a campaign to use the issue to further their political aims, chief among which are more tax cuts for the rich.

House Minority Whip Eric Cantor (R-Va.) said the first stimulus isn’t working. “We stand ready and willing to work with the president to produce a bill that will actually yield results,” Cantor said in a telephone press conference yesterday. He said Republicans could work on a new stimulus bill with Democrats as long as it is “heavy on tax cuts.”

Forty percent of the $787 billion bill passed earlier this year actually included tax cuts, but not enough of the kinds of tax cuts the GOP wanted. Sixty percent of the first stimulus package funded job-creating government programs.

The package that was passed was almost $100 billion smaller than what most liberals in Congress really wanted. With only 3 Republicans voting for the measure, many progressives felt that they were making too big a compromise in the name of “bipartisanship.”

Robert Borosage, co-director of the progressive Campaign for America’s Future, said today that the campaign for a second stimulus package will begin in September, when Congress returns from the August recess.

When Vice President Biden spoke about the economy last Sunday he said the administration underestimated how bad an economy it had inherited from George Bush.

He said the current stimulus package needs more time to work but did not rule out eventual administration support for a new package.
Republicans, meanwhile, are flooding the districts of congressional Democrats who are facing challenges next year with e-mails. The e-mails say the individual House members bear responsibility for the “failed stimulus package” and that Vice President Biden “admitted” that the “Obama administration misjudged the economy.”
Cantor is saying that Democrats “miswrote the stimulus bill and got the prescription wrong.” He called for “redirecting” money in the first stimulus out of government programs and into private businesses.

Labor leaders say the Republicans are playing cynical political games and that the only problems with the first stimulus is that it wasn’t large enough to really jump start the economy and that it included too many tax cuts, as opposed to job-creating measures.

The AFL-CIO is saying that the new stimulus package should include more infrastructure spending, unemployment insurance and relief for state and local governments, which are suffering budget crunches.