“Congressional Enemies Among Us”: Five Ways Republicans Have Sabotaged Job Growth
New numbers released today by the Bureau of Labor Statistics show that the economy added a mere 80,000 jobs in June. That’s down from an average of 150,000 jobs a month for the first part of the year, and far too little to keep up with population growth.
Republican intransigence on economic policy has been a key contributor to the sluggish recovery. As early as 2009, Republican fear-mongering over spending and their readiness to filibuster in the Senate helped convince the White House economic team that an $800 billion stimulus was the most they could hope to get through Congress. Reporting has since revealed that the team thought the country actually needed a stimulus on the order of $1.2 to $1.8 trillion. The economy’s path over the next three years proved them right. Here are the top five ways the Republicans have sabotaged the economic recovery since:
1. Filibustering the American Jobs Act. Last October, Senate Republicans killed a jobs bill proposed by President Obama that would have pumped $447 billion into the economy. Multiple economic analysts predicted the bill would add around two million jobs and hailed it as defense against a double-dip recession. The Congressional Budget Office also scored it as a net deficit reducer over ten years, and the American public supported the bill.
2. Stonewalling monetary stimulus. The Federal Reserve can do enormous good for a depressed economy through more aggressive monetary stimulus, and by tolerating a temporarily higher level of inflation. But with everything from Ron Paul’s anti-inflationary crusade to Rick Perry threatening to lynch Chairman Ben Bernanke, Republicans have browbeaten the Fed into not going down this path. Most damagingly, the GOP repeatedly held up President Obama’s nominations to the Federal Reserve Board during the critical months of the recession, leaving the board without the institutional clout it needed to help the economy.
3. Threatening a debt default. Even though the country didn’t actually hit its debt ceiling last summer, the Republican threat to default on the United States’ outstanding obligations was sufficient to spook financial markets and do real damage to the economy.
4. Cutting discretionary spending in the debt ceiling deal. The deal the GOP extracted as the price for avoiding default imposed around $900 billion in cuts over ten years. It included $30.5 billion in discretionary cuts in 2012 alone, costing the country 0.3 percent in economic growth and 323,000 jobs, according to estimates from the Economic Policy Institute. Starting in 2013, the deal will trigger another $1.2 trillion in cuts over ten years.
5. Cutting discretionary spending in the budget deal. While not as cataclysmic as the debt ceiling brinksmanship, Republicans also threatened a shutdown of the government in early 2011 if cuts were not made to that year’s budget. The deal they struck with the White House cut $38 billion from food stamps, health, education, law enforcement, and low-income programs among others, while sparing defense almost entirely.
There have also been a few near-misses, in which the GOP almost prevented help from coming to the economy. The Republicans in the House delayed a transportation bill that saved as many as 1.9 million jobs. House Committees run by the GOP have passed proposals aimed at cutting billions from food stamps, and the party has repeatedly threatened to kill extensions of unemployment insurance and cuts to the payroll tax.
According to the Congressional Budget Office, those policies — the payroll tax cut, food stamps, unemployment insurance, and discretionary spending for low-income Americans — have the highest multipliers, meaning more job boosting potential per dollar.
By: Jeff Spross, Think Progress, July 6, 2012
“Mass Amnesia”: Mitt Romney Bets On Forgetfulness Of The American People
I’ve said this before, but in light of Mitt Romney’s economic speech today, it bears repeating: Virtually his entire case against Obama’s economic record rests on the assumption that the American people have developed a case of mass amnesia about the depth and severity of the economic crisis the President inherited.
A few months ago, Romney liked to claim that Obama made the economy “worse.” But the good economic news forced Romney to revise that argument, and he took to claiming that, yes, okay, the economy is getting better, but only in spite of Obama’s policies, which are slowing down the natural recovery.
Today Romney upped the ante yet again, offering still another explanation for why Obama should be denied a second term, even though the economy is recovering: It’s all about freedom! From the prepared remarks:
The Obama administration’s assault on our economic freedom is the principal reason why the recovery has been so tepid — why it couldn’t meet their projections, let alone our expectations. If we don’t change course now, this assault on freedom could damage our economy and the well-being of American families for decades to come…
The proof is in this weak recovery. This administration thinks our economy is struggling because the stimulus was too small. The truth is we’re struggling because our government is too big.
Relatedly, this morning, Romney said: “The economy always comes back after a recession, of course. There’s never been one that we didn’t recover from. The problem is this one has been deeper than it needed to be and a slower recovery than it should have been, by virtue of the policies of this president.”
The common thread here is obvious, and it’s important. The pace of this recovery, according to Romney, is sluggish compared to that of previous ones — proving that Obama’s policies, or his “assault on freedom,” are the reason why. Missing from this telling, of course, is the most important reason this recovery is different from previous ones: It came after the worst financial crisis since the Great Depression.
Romney’s argument that the recovery’s pace would otherwise have been normal if not for Obama’s polices rests on a bet that the American people will forget about this, or won’t factor it into their decision this fall. Perhaps some enterprising reporter will ask Romney the obvious follow-up questions: What would you have done as president in early 2009? Is it really your contention that the economy would have recovered at a typical pace from the worst financial crisis since the 1930s if government had done nothing at all?
By: Greg Sargent, The Plum Line, The Washington Post, March 19, 2012
“Invested In Economic Failure”: The GOP Plans To Sink The Economy
We’re just under eight months away from Election Day now, which means that the GOP is starting to run out of time to think up new ways to ruin the economy so that Barack Obama doesn’t get reelected. The Republicans have to do this delicately, of course; they can’t be open about it lest it become too obvious that harming the economy is their goal. But they have to be aggressive enough about it for their efforts to bear some actual (rotten) fruit. There are three fronts—gas prices, jobs, and the budget—on which we should keep our eyes open for signs that the Republicans are trying to achieve Mitch McConnell’s No. 1 goal for America.
Let’s take them in order. The Republicans received joyous news Monday in the form of the Washington Post poll that showed Obama’s numbers sinking in inverse proportion to rising gas prices. The gas situation is perfect for the GOP for two reasons. First, there’s very little a president can actually do about gas prices. Second, even though those prices don’t really tell us much about the more general economy, most people have the impression that they do, so for the out-party, it’s just a free whack.
No one can blame Republicans for using Obama as a piñata on the issue. But here’s what they can be blamed for. What is causing these high prices? Not low supply and high demand, which is what they teach you in school. In fact, supply is high—domestic oil production is at its highest point in years, higher under this allegedly business-hating president than under oilmen Bush and Cheney. And demand has been low because of the economy, although it’s now picking up.
No, experts blame a lot of the increase on fervid speculation in the oil markets, and a chief reason for a lot of that speculation is anxiety in those markets about a possible war with Iran. Said anxiety, in turn, is heightened every time a politician blusters about how we have no choice now but to go start that war. So this kind of rhetoric is a nice little two-fer for Republicans, who get to sound like tough guys and can also take comfort in knowing that the more they talk up attacking Iran, the more they’re doing their small part to keep prices high.
Now let’s look to jobs. As you may know, while we’ve been getting these hopeful job reports these last few months, there is one sector that’s been lagging notably: the public sector. In fact, during 2011 the public sector across the country—state and local governments, in addition to the feds—laid off massive numbers of people. Public-sector job losses averaged 22,000 a month in 2011. State and municipal governments are laying people off mainly for two reasons: the economy, which means they’re bringing in less revenue, and the drastic cuts in federal aid, which have forced the layoffs and firings of nearly half a million public-sector workers in the last two years.
True, Republicans want smaller budgets on ideological grounds. But they also know very well that the more domestic discretionary spending cuts they can force, and the more public employees they can make states and cities shave off their payrolls, the greater the negative effect on the overall employment picture. If those nearly half-million people were still working, what would the unemployment rate be? Maybe down to a flat 8 percent.
Lately, though, things are starting to look worrisome on that front for Republicans. In February, the public sector cut just 6,000 workers, well down from last year’s average. This indicates that the party might not be able to count for long on the public-sector numbers dragging down the private-sector ones. Hmmm. What to do about that?
Interestingly and conveniently, exactly what the Republicans on Capitol Hill are doing right now! They have been signaling lately that the budget numbers they agreed to with Democrats last year in the debt deal need to be revisited, and the cuts must be even deeper. Speaker John Boehner is open about the possibility of reneging. He has sent some mixed signals—he’s also talked about trying to get the House to accept a transportation bill that the Senate has already passed by the eye-poppingly bipartisan margin of 85–11. New York Democratic Sen. Chuck Schumer says the bill can create 3 million jobs. The House returns to Washington next Monday. Where would you put the odds that this House of Representatives will vote, less than eight months before the election, to support a bill that Chuck Schumer boasts can produce 3 million jobs?
Every out-party does a little discreet cheering for the economy to be weak. But the GOP has put itself in a unique position. By opposing everything Obama wanted with such ferocity; by saying all those thousands of times that he had no clue about the economy; by sending out a parade of presidential candidates, from the semi-serious to the clown posse, all of whose central criticism of Obama is that he killed the economy—in all of these ways the party has more invested in economic failure than any out-party I can remember in my lifetime. Its best hope for now is gas prices, but even they eventually get lower, usually by late summer. Beyond that, all the GOP has to rely on is Mitt Romney’s unstoppable charisma.
By: Michael Tomasky, The Daily Beast, March 13, 2012
“Undermined By Congressional Partisanship”: President Obama’s Policies Revived The Economy
The economy had already lost 4.5 million jobs before President Barack Obama took office in January 2009, with job losses that month alone surging to 818,000. Economic contraction had also accelerated, reaching a staggering 8.9 percent annualized decline in the fourth quarter of 2008—the worst in 60 years. From this downward spiral, Obama’s economic policies proved instrumental in generating and sustaining a recovery.
In February 2009, Obama enacted the American Recovery and Reinvestment Act, and the pace of economic contraction and job loss immediately decelerated. As the stimulus ramped up, sustained economic growth took hold in mid-2009, and job growth resumed early in 2010—with 3.5 million jobs added since February 2010. The nonpartisan Congressional Budget Office estimates that without the Recovery Act, unemployment would have averaged roughly 10.7 percent in 2010, instead of 9.6 percent.
The Recovery Act was intended to jump-start the economy and avert a depression, not to restore full employment. The $831 billion price tag, spread over more than four years, was dwarfed by the staggering loss in economic activity caused by the bursting of the $7 trillion housing bubble. After economic growth resumed, mass unemployment and underemployment compelled more fiscal support. However, passing additional economic support through Congress proved a Herculean task.
In December 2010, the administration negotiated a payroll tax cut, continuation of emergency unemployment benefits, and targeted tax credits to sustain the delicate recovery as the stimulus began winding down. Without this boost, the economy would actually have slipped back into contraction in the first quarter of 2011.
It should be noted that the Federal Reserve also deserves credit for extraordinary measures taken to resuscitate the financial sector and facilitate recovery. But the Fed had already maxed out its key policy lever, the federal funds rate, when Obama entered office; monetary policy could not have single-handedly revived the economy.
While the economy has improved greatly under Obama’s stewardship, creating jobs for the millions of unemployed Americans who want to work remains imperative. In September 2011, Obama proposed the American Jobs Act, which would boost employment by roughly another 2 million jobs, according to numerous outside economists, including Mark Zandi.
Unfortunately, Obama’s substantive jobs agenda continues to be undermined by congressional partisanship. While more must be done to restore full employment, it is unquestionable that President Obama’s economic policies have been instrumental in ending the worst downturn since the Great Depression.
By: Andrew Fieldhouse, Economic Policy Institute, Published in U. S. News and World Report, March 13, 2012
“Forward Economic Momentum”: Obama’s American Recovery And Reinvestment Act Has Been A Success
The short answer is yes, the economy has improved due to the policies President Obama implemented with the support of Congress.
Labor market conditions are the most important indicators of whether the economy has improved. Most people get the majority of their income from paid employment and having a good job, with decent pay and benefits including health insurance, retirement, and policies that make sure employees can also be good caregivers for their families. Most have little savings, if any, to rely on.
The labor market is moving in the right direction and this is a testament to the success of the American Recovery and Reinvestment Act and other steps taken to address the Great Recession. Recent data from the Bureau of Labor Statistics shows that the private sector has added jobs every month since March 2010, with 245,000 jobs added on average over the past three months. This is a remarkable turnaround from when President Obama took office and the economy was shedding about 20,000 jobs per day.
As a result of job creation, the share of Americans with a job in February edged up to 58.6 percent, higher than it’s been since June 2010. Further, there has also been steady progress to bring unemployment down from its peak of 10.0 percent in October 2009 to 8.3 percent in February.
The Recovery Act and other programs worked because they targeted funds toward a variety of specific job-creation efforts that have been shown to have created jobs and been cost-effective. The President’s Council of Economic Advisers credits the Recovery Act with increasing employment through the second quarter of 2011 by 2.2 million to 4.2 million jobs and reducing unemployment by between 0.2 and 1.1 percent. Economists Alan Blinder and Mark Zandi estimate that the Recovery Act and other fiscal policies resulted in 2.7 million jobs, and that without them unemployment would have hit 11 percent and job losses would have totaled 10 million.
Make no mistake, there has been sure and steady progress in the economy. But, these gains would have been much stronger had conservatives not blocked efforts to invest in much-needed infrastructure and help state and local governments keep employees on the job teaching children and policing streets. The forward economic momentum continues to be at risk as Congress and state and local governments move toward an austerity agenda that will hinder, not promote, strong growth and an improved labor market.
By: Heather Boushey, Sr. Economist, Center for American Progress, Published in U. S. News and World Report, March 13, 2012
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