“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
“Common Sense Policy”: How Access To Contraception Benefits The Economy
Rush Limbaugh has been on a several day long sexist tirade against Georgetown Law student Sandra Fluke, who testified before Congress on the Obama administration’s proposed rule requiring employers to provide contraception coverage in their health plans. Limbaugh’s misogynistic attacks have earned him the condemnation of 75 Democratic lawmakers and lost him the support of at least four advertisers.
Conservatives have tried to frame the debate over the contraception rule as one of religious freedom, while progressives have countered that it’s simply about women’s health. However, as New Deal 2.0′s Bryce Covert noted, providing access to contraception is also simply good economic policy:
Research consistently demonstrates a link between decreased fertility thanks to contraception and increased female employment. And right on cue, women, freed up from unwanted child bearing and child rearing, consequently flooded the workforce after the pill became widely accessible. In 1950, 18 million women were in the workforce. By the 1980s, the pill’s impact had had such an effect that 60 percent of women of reproductive age were employed. By 2000, the ranks of women in the workforce had more than tripled since the ’50s, rising to 66 million. Overall, from 1970 to 2009 women went from holding 37 percent of all jobs to almost half of them.
This change has had a significant impact on women’s lives and families, the fallout of which is still reverberating throughout the culture wars. But the impact on our economy is easy to quantify. The private sector has long recognized this fact: consulting giant McKinsey explains that without the huge increase in women’s workforce participation since the 1970s, “our economy would be 25% smaller today — an amount equal to the combined GDP of Illinois, California and New York.”
According to the Economist, since the 1970′s, “back-of-the-envelope calculations suggest that the employment of extra women has not only added more to GDP than new jobs for men but has also chipped in more than either capital investment or increased productivity.”
And then, of course, there are the health care savings that come with contraception. Nationally, every dollar spent on family planning saves $3 in Medicaid costs. According to the Guttmacher Institute, “every $1 spent on public funding for family planning saves taxpayers $3.74 in pregnancy-related costs.” When California spent $400 million on family planning services in 2002, “$1.1 billion was saved in public funds that would have been spent on medical care, income support, and social services through averting pregnancies up to age two, and $2.2 billion up to age five.”
By: Pat Garofalo, Think Progress, March 2, 2012
Mitt Romney: “Scourge Of The One Percent”
When Mitt Romney unveiled his new tax plan cutting taxes across the board by 20 percent in Arizona today, he pledged that he would “make sure the top one percent keeps paying the current share they’re paying or more.”
This illustrates how much the landscape has shifted in the wake of Occupy Wall Street and the broader public’s rising preoccupation with inquality. After all, only last month, Romney attacked Obama as divisive for using the 99-versus-one-percent language, which he termed as “entirely inconsistent with the concept of one nation under God.”
That aside, his rhetoric raises a question: What does his new plan actually mean for the wealthy?
I just got off the phone with Bob McIntyre, the president of the liberal-leaning-but-nonpartisan Citizens for Tax Justice. He says the upshot for the rich is a huge tax cut that’s paid for by cuts to Social Security, Medicare and Medicaid. Total taxes cut in the plan: $10 trillion over 10 years, by his calculation.
The central feature of Romney’s new plan is an across-the-board 20 percent tax cut — on top of continuing the Bush tax cuts, by McIntyre’s reading. For the top earners, that means the tax rate drops to 28 percent. The plan also cuts the corporate tax rate from 35 percent to 25 percent, repeals the estate tax, and maintains the current tax rate of 15 percent on income from capital gains.
Bottom line?
“The wealthy will pay far less in taxes than they do now, including a wealthy person named Mitt Romney,” McIntyre says.
McIntyre notes that the plan does allow for the closing of some loopholes enjoyed by the wealthy, but said we need more detail to see whether they will constitute anything meaningful.
The plan appears to be paid for by unspecified cuts to Social Security and Medicare. On the latter program, Romney’s plan envisions a “a premium support system that gives each senior the freedom to choose among competing private plans and traditional fee-for-service Medicare.” That appears to be a reference to the Ryan-Wyden Medicare plan.
So how does this all square with Romney’s claim above about the one percent? McIntyre says the key is that Romney said the one percent’s “share” would not drop. He didn’t say the amount the one percent pays wouldn’t drop.
“If you reduce the whole thing by 20 percent then they can go down by 20 percent and still pay the same share,” McIntyre explains.
So there you have it.
By: Greg Sargent, The Washington Post Plum Line, February 22, 2012
The Republicans’ Deceptive Payroll Tax Compromise
Republicans finally came to their senses yesterday and realized they were waging a losing battle with their opposition to a payroll tax extension. The two-month extension Congress passed in December was set to expire by the end of this month, and Republicans were adamant that any further extension be paired with equal spending cuts. Democrats balked, instead suggesting a surtax on millionaires that the Republicans would never accept, and another last minute legislative showdown appeared inevitable. Then out of nowhere yesterday afternoon Congressional Republicans announced that they would drop their resistance:
“Because the president and Senate Democratic leaders have not allowed their conferees to support a responsible bipartisan agreement, today House Republicans will introduce a backup plan that would simply extend the payroll tax holiday for the remainder of the year while the conference negotiations continue regarding offsets, unemployment insurance, and the ‘doc fix,’” said GOP leaders in an official statement Monday afternoon.
The last impasse on the tax extension left Republicans limping out of Washington for the Christmas recess. The payroll tax cut—which maintains the current 4.2 percent rate that, for a family earning $50,000 a year, amount to about $80 extra per month than the standard 6.2 percent rate—is a widely popular measure and Republicans faced public scrutiny as their obstinacy risked raising taxes on 160 million people, all in the name of political brinkmanship. By slipping this announcement out far in advance of the deadline on the same day the president released the 2013 budget, Republicans hoped to avoid a repeat of their previous public relations debacle.
Seems like an unabashed win for the Democrats, right? It’s certainly reassuring that the payroll tax extension, a form of stimulus bolstering the still shaky economy, will remain in place through the end of the year. Except unlike the December concession, this change of heart only covers the politically popular payroll tax. Excluded is an extension of unemployment benefits for the long-term jobless and the so-called Doc Fix, which stalls a drastic drop in the fees paid to Medicare physicians.
I imagine Republicans will also find common ground on the latter half—they wouldn’t want to position themselves against your grandma’s doctor during an election year—but the agreement seems designed as a ploy to put an end to the increased unemployment benefits that Republicans have fought against throughout Obama’s presidency. While the payroll tax cut helps keep the economy afloat, the unemployment benefits are the more simulative part of the equation, possibly dropping GDP by 0.3 percent if no extension is passed. But since those benefits aren’t dolled out to as wide a base as the payroll tax, there is less of a public groundswell whenever Republicans hold the extension hostage.
If Democrats buy into the Republicans’ attempts to separate the various measures, it’s unlikely that any offsets would be enough to convince Republicans to support extending unemployment. The party is secretly crossing their fingers, hoping the economy doesn’t improve before Obama is on the ballot this fall. Any form of stimulus that lacks widespread appeal would be a nonstarter.
By: Patrick Caldwell, The American Prospect, February 14, 2012
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