The reaction to January's jobs report shows how tragically our expectations have fallen, especially among some Democrats and their supporters. Their cheerleading isn't just bad policy or bad politics, although it is both of those things. It's also callous and insensitive to the misery of millions.

It's important to keep explaining what needs to be done to end that misery. To do otherwise is to serve, however unintentionally, an insidious agenda from the right that would lower our expectations until these tragic levels of unemployment are seen as the "new normal."

An increase in jobs is a good thing, of course, even if it's far from what's needed. Here's something else that was good about the report: Conservatives keep telling us that manufacturing jobs have moved offshore permanently, but 50,000 of them were created last month. Now we can put that argument to bed and can get to work creating more of them.

The Good, the Bad, and the Urgent

But millions of Americans - including minorities and the young - have already endured years of catastrophe, with years more to come if nothing is done. Why won't more people express support for their plight and explain what needs to be done to help them?

Here's the real story: Government intervention has created millions of jobs. But those interventions were too small, so we're still years away from fixing the problem. To claim anything else is to reinforce the delusions that created the problem in the first place.

If the president and his supporters make that case clearly and forcefully, the country will be able to choose between competing visions in November. It's more likely to choose an end to its misery. The pitch is pretty simple, really: The medicine's working, but let's not stop before the patient gets well. And despite this month's report, the patient is still very, very sick.

Help is needed urgently.

Continue reading »

If nothing else, Mitt Romney seems dedicated to proving that repetition of a lie will make it true. On no point is Romney's tilting against the windmill of truth more comically pathetic than his long-ago debunked claim that President Obama "did not cause this recession, but he made it worse." After a tidal wave of fact-checkers demolished his mythology last summer, Romney on June 30 pretended, "I didn't say that things are worse" before reinstating the falsehood in his stump speech just days later. Now, Mitt has a new twist on his "Obama made it worse" fraud, declaring in light of the improving economic outlook that "It's getting better not because of him, it's in spite of him and what he's done."

Sadly for the myth-maker from Massachusetts, the numbers and the overwhelming consensus of economists - including John McCain's 2008 brain trust - demand Mitt Romney give credit where credit is due.

That, of course, is something the serial deceiver Romney is refusing to do, even as he acknowledges the economy is improving. As Mitt put it in New Hampshire ten days ago:

"I'm sure the president will want to take credit for it, for any improvement. Guess what? He doesn't deserve it."

Two days later during a GOP debate, Romney repackaged his con job this way:

"The president is going to try and take responsibility for things getting better. You know, it's like the rooster taking responsibility for the sunrise. He didn't do it," Romney said. "In fact, what he did was make things harder for America to get going again."

But back on planet Earth where the force of gravity still applies and the sun rises in the east and sets in the west, Romney's slander shuold receive the ridicule it rightly deserves.

This summer, Time blasted Romney's accusation that "the recession is deeper because of our President," concluding "that Romney's claim has no credible basis" because "there's no credible economic data showing that Obama has inflamed our economic problems." As Greg Sargent noted on June 27, both the AP and the Washington Post's own fact-checker demolished Romney's talking point on the recession which the NBER declared over in June 2009. Confronted three days later by NBC producer Sue Kroll about the growing economy, modest job gains and surging stock market, Romney simply denied he ever made the charge:

"I didn't say that things are worse...What I said was that economy hasn't turned around."

Nevertheless, just four days later Romney marked Independence Day by returning to his lie. As the New York Times reported:

Speaking at the annual July Fourth parade here on Monday, Mr. Romney told a crowd of supporters and passersby, "the recession is deeper because of our president," adding, "it's seen an anemic recovery because of our president."

Mr. Romney made a similar assertion earlier when reporters had pressed him on the point near the parade staging grounds, after initially seeming to limit his commentary to the president's handling of the recovery, which he said, "has been slower and more painful,'' But then he went ahead and said it, that the president "made the recession worse."

As it turns out, it's not just the tidal wave of reporters and fact-checkers that washed away the mud Mitt Romney hurled at President Obama on the economy. A bevy of economists, including ones who worked for Romney endorser John McCain, long ago concluded that Barack Obama saved the U.S. economy from calamity.

Continue reading »

enlarge

Credit: ThinkProgress

When President Obama on Tuesday declared that decades of Republican trickle-down economics "never worked," conservatives were predictably apoplectic.

But for all of their protests of "class warfare", "socialism" and worse, Obama was being kind to the Republican ideologues. After all, as the historical record shows, from economic growth and job creation to stock market performance and just about every other indicator of the health of American capitalism, the modern U.S. economy has almost always done better under Democratic presidents. Despite GOP mythology to the contrary, America generally gained more jobs and grew faster when taxes were higher (even much higher) and income inequality lower. And while the U.S. recovery from the Bush recession remains painfully slow, most economists - including the nonpartisan CBO and some of John McCain's own 2008 advisers - believe President Obama saved it from the abyss.

(Click a link below for the details on each.)

• Job Creation and Economic Growth
• The Stock Market
• Income Inequality
• National Debt
• The Bush Recession and the Obama Recovery

Job Creation and Economic Growth

To be sure, George W. Bush provided the perfect bookend to era of modern Republican economic management ushered by Herbert Hoover. The verdict on President Bush's reign of ruin was pronounced even before Barack Obama took the oath of office. Just days after the Washington Post documented that George W. Bush presided over the worst eight-year economic performance in the modern American presidency, the New York Times on January 24, 2009 featured an analysis ("Economic Setbacks That Define the Bush Years") comparing presidential performance going back to Eisenhower. As the Times showed, George W. Bush, the first MBA president, was a historic failure when it came to expanding GDP, producing jobs and fueling stock market growth.

On January 9, 2009, the Republican-friendly Wall Street Journal summed it up with an article titled simply, "Bush on Jobs: the Worst Track Record on Record." (The Journal's interactive table quantifies his staggering failure relative to every post-World War II president.) The meager one million jobs created under President Bush didn't merely pale in comparison to the 23 million produced during Bill Clinton's tenure. In September 2009, the Congressional Joint Economic Committee charted Bush's job creation disaster, the worst since Hoover:

Continue reading »

enlarge

Credit: CBPP

On this the fourth Thanksgiving weekend since the start of the Bush recession, families across America are still struggling with persistently high unemployment, underwater mortgages and stagnant wages. But as the nonpartisan Congressional Budget Office (CBO) reminded us this week, Americans can be thankful for the 2009 stimulus. Despite Republican mythmaking that the American Recovery and Reinvestment Act (ARRA) "created zero jobs," the CBO reported that the stimulus added up to 2.4 million jobs and boosted GDP by as much as 1.9 points in the past quarter. As it turns out, that conclusion confirms the consensus of most economists - including John McCain's 2008 brain trust- that President Obama's recovery program is continuing to deliver benefits for the American people.

From the beginning, the CBO has testified to the success of the largely concluded 2009 stimulus package in driving employment and economic growth. (That's one reason why Republicans like GOP frontrunner Newt Gingrich want to abolish the agency.) Now, as The Hill reported Tuesday, the CBO has found that "President Obama's 2009 stimulus package continues to benefit the struggling economy":

The agency said the measure raised gross domestic product by between 0.3 and 1.9 percent in the third quarter of 2011, which ended Sept. 30. The Commerce Department said Tuesday that GDP in that quarter was only 2 percent total.

CBO said that the stimulus also lowered the unemployment rate by between 0.2 and 1.3 percentage points and increased the number of people employed by between 0.4 million and 2.4 million...

By CBO's numbers, the $800 billion stimulus added up to 0.9 million jobs in 2009, 3.3 million jobs in 2010 and 2.6 million jobs in 2011.

But to really gauge the success of the stimulus, it's worth taking a second look at just how dire the U.S. economic situation was when the Obama administration made its fateful prediction that unemployment would peak at 8 percent. As The Economist and the Washington Post's Ezra Klein detailed, in early 2009 the American economy was not only in much worse shape than anyone imagined; it was literally on the brink of collapse.

Continue reading »

"Reality," Stephen Colbert famously told President Bush to his face, "has a well-known liberal bias." That inconvenient truth is at the heart of the expanding Republican war on the nonpartisan Congressional Budget Office (CBO). Increasingly frustrated by CBO analyses showing that the 2009 economic stimulus worked as designed, that the Paul Ryan GOP Medicare rationing plan would massively shift costs to seniors, that income inequality is at record levels and, most damning of all, the Affordable Care Act reduces the national debt, Republican leaders have slandered the agency's work as "smoke and mirrors" and "budget gimmicks, deceptive accounting, and implausible assumptions used to create the false impression of fiscal discipline."

Now in the latest escalation in the GOP's attack, former House Speaker and resurrected 2012 Republican presidential candidate Newt Gingrich wants to abolish the CBO altogether.

Gingrich’s most recent tirade against the CBO came during a campaign stop in New Hampshire. A supporter of the nonpartisan Congressional scorekeeper during his days as House Speaker in the 1990’s, Gingrich on Monday described the agency as part of a leftist conspiracy:

"The Congressional Budget Office is a reactionary socialist institution which does not believe in economic growth, does not believe in innovation and does not believe in data that it has not internally generated.”

That salvo came two weeks after Newt called for the abolition of the agency during his ersatz debate with Herman Cain (around the 6:45 mark of the video above). As TPM reported:

"If you are serious about real health reform, you must abolish the Congressional Budget Office because it lies," Gingrich said at a Saturday debate with embattled pizza entrepreneur Herman Cain. "Every hospital will tell you that if you get the family and patient involved, it is better and less expensive. The Congressional Budget Office refuses to see this as a savings. It wants more bureaucracy and less patient involvement."

Gingrich's animus is hardly surprising. When House Republicans proposed HR 2 in January to repeal the dreaded "Obamacare," they quickly got a rude awakening from the CBO. Demolishing Republican talking points on the subject, the CBO concluded repealing the Affordable Care Act would increase, not decrease, federal budget deficits:

Over the 2012-2021 period, the effect of H.R. 2 on federal deficits as a result of changes in direct spending and revenues is likely to be an increase in the vicinity of $230 billion.

That result did not fit the GOP script. So House Majority Leader Eric Cantor doubled down, essentially accusing the agency of lying:

Continue reading »

So what do you do when financial analysts are warning that housing prices are headed for a "triple dip", the second largest Swiss Bank (Credit Suisse) announces it's piling 1,500 additional job cuts - many from the US - on top of its previously announced 2,000 (after a 12 per cent increase in profits this past quarter) and the federal government just sued one of the nation's largest privately held mortgage brokers (Allied Home Mortgage) for a decade of "fraudulent lending practices that forced thousands of Americans to lose their homes."

Seriously, could the economic Big Brains who think it's a good idea to take money out of people's pockets via spending cuts, while rejecting increased spending on our nation's crashing infrastructure, try punching "Japan" and "lost decade" into the Google machine? Or perhaps just admit their relationship to understood economics is like Kim Kardashian's marriage - shallow, somewhat entertaining, but ultimately embarrassing.

These right-wing members of Congress and inhabitants of the "pro-market," think-tank-welfare world, with their flip reaction the ongoing economic crisis, have begun to remind me of an exchange between John Travolta (trying to steal and sell nuclear weapons) and Christian Slater (trying to stop him) in the movie Broken Arrow. Slater's character says to Travolta's: "You're out of your mind," to which Travolta replies - while wearing a spooky Herman Cain-esque, I-just-gave-a-massage-to-my-secretary smile - "Yeah, ain't it cool."

Apparently, the only stimulant conservatives favour is whatever Rick Perry was mainlining during his speech in New Hampshire the other night.

Infrastructure work creates jobs

What's so maddening, however, is that the answer is quite clear to sane people and non-shills-long-term infrastructure projects that, in the near term, provide jobs, and further out will provide ... jobs. And increased productivity. Ever hear of those train things or the internet? Yeah, well, people are more productive when they're faster and stuff.

Part of what's so frustrating is that not only was President Obama's stimulus bill too small by half, which top economists predicted before it passed (but yay, Susan Collins liked it!). But the administration didn't even defend it, which took something the Congressional Budget Office says saved up to 3.6 million jobs - and allowed it to be demonized by politically expedient grifters playing games.

These very same economists who were right about the stimulus are now clamouring for more infrastructure spending. Paul Krugman, who has been banging this drum for a while, pointed out in a recent piece how the very same crowd that flips out over any government spending on, for lack of a better phrase, people who can't afford his and hers dancing water fountains from Neiman Marcus as a stocking-stuffer, continually push for spending for defence contractors without a worry in the world about the budget. Why? Because these hypocritical dunderheads say "such cuts would destroy jobs."

So obviously the deficit hysteria is simply that, a pretend crisis to hide an ideology gunning for its greatest achievement to be reintroducing the elderly to the joys of the appetising and eminently satisfying Purina dinner.

Continue reading »

enlarge

Credit: Center for American Progress

On Thursday, House Speaker John Boehner peppered his address to the Economic Club of Washington with a dozen mentions of America's so-called "job creators." But in claiming that high taxes and unnecessary regulations have "pummeled" his supposed job producers, Boehner willingly misrepresented the source of and solutions to the nation's economic problems. After all, recent surveys show that regulations and taxes are not killing small business. With corporations flush with cash and the total federal tax burden at a 60 year low, the U.S. instead faces a demand crisis fueled by staggering household debt.

But John Boehner perpetrated the biggest fraud of his address when he declared, "Job creators in America are essentially on strike." If so, they've been on the picket line for a decade. As it turns out, George W. Bush's tax breaks for the wealthy sadly coincided with the worst period of job creation of any president since Herbert Hoover.

Like his lieutenant Eric Cantor, John Boehner has been regurgitating the "job creators" talking point for months. (Arguably, the sound bite dates back to 1993, when Republicans deployed the same "job killing" language against the Clinton upper-income tax increases that preceded the 1990's economic boom.) In May, Boehner served up the "job creators" line seven times in a speech to the Economic Club of New York. Contending that "the mere threat of tax hikes causes uncertainty for job creators -- uncertainty that results in less risk-taking and fewer jobs," Speaker Boehner explained that same month just who his magical job creators are:

"The top one percent of wage earners in the United States...pay forty percent of the income taxes...The people he's [President Obama] is talking about taxing are the very people that we expect to reinvest in our economy."

If so, those expectations were sadly unmet under George W. Bush. After all, the last time the top tax rate was 39.6 percent during the Clinton administration, the United States enjoyed rising incomes, 23 million new jobs and budget surpluses. Under Bush? Not so much.

On January 9, 2009, the Republican-friendly Wall Street Journal summed it up with an article titled simply, "Bush on Jobs: the Worst Track Record on Record." (The Journal's interactive table quantifies his staggering failure relative to every post-World War II president.) The meager one million jobs created under President Bush didn't merely pale in comparison to the 23 million produced during Bill Clinton's tenure. In September 2009, the Congressional Joint Economic Committee charted Bush's job creation disaster, the worst since Hoover:

Continue reading »

enlarge

As the New York Times reported Sunday, within the Obama White House a fierce debate is raging about what to do next about jobs and the economy. But on the same day Americans learned advisers David Plouffe and Bill Daley are pushing President Obama to put forward only proposals which can pass Congress as part of his continuing quixotic quest for the political center, the Times' Sheryl Gay Stolberg became the latest to document that it no longer exists.

Which is one more reason why President Obama not only must aggressively promote the job creation programs America are so desperate for. He should take a page from the GOP playbook while doing so. After all, the same Republicans who claimed the economy was the party's "number one priority" immediately pushed draconian anti-abortion restrictions, a stillborn repeal of the health care reform law and a disastrous balanced budget amendment they knew would never become law.

It's time for Barack Obama to start making Republicans offers they can't refuse. And if they do, they'll be on record for having said no to the economic recovery measures the American people so badly need.

1. The States' Rights Act. Republicans claim to love states' rights. Among them should be the right to get help from Washington to limit the cataclysmic budget shortfalls and layoffs now gripping cash-strapped state and local governments. The States' Rights Act would do just that.

Continue reading »

It was the best of times, it was the worst of times. Just for different groups of Americans. That's the picture emerging from a wave of stories about the depths of the American economic downturn. On the same day The Economist revealed that the U.S. economic contraction beginning in late 2007 was far deeper than originally thought, new IRS data showed that Americans' average income plummeted by almost 14% in 2009 compared to two years earlier. For most, employment and incomes have yet to recover. But for the gilded class, things are apparently back to normal.

As The Economist explained, the Bush recession Barack Obama inherited in January 2009 was far more severe than previously understood:

The White House looked at the economic situation, sized up Congress, and took its shot. Unfortunately, the situation was far more dire than anyone in the administration or in Congress supposed.

Output in the third and fourth quarters fell by 3.7% and 8.9%, respectively, not at 0.5% and 3.8% as believed at the time. Employment was also falling much faster than estimated. Some 820,000 jobs were lost in January, rather than the 598,000 then reported. In the three months prior to the passage of stimulus, the economy cut loose 2.2m workers, not 1.8m. In January, total employment was already 1m workers below the level shown in the official data.

Whether that information might have led to a much larger stimulus package in February 2009 is impossible to know. But what's clear is the toll the deepening Bush recession took on American households that year. As Reuters explained:

Average income in 2009 fell to $54,283, down $3,516, or 6.1 percent in real terms compared with 2008, the first Internal Revenue Service analysis of 2009 tax returns showed. Compared with 2007, average income was down $8,588 or 13.7 percent.

Average income in 2009 was at its lowest level since 1997 when it was $54,265 in 2009 dollars, just $18 less than in 2009.

That dip is explained in part by the temporary loss in stock market and other asset wealth for the three percent of Americans who earned over $200,000 a year. And it probably has a lot to do with the fact that in 2009, as Politico reported, a rising number of millionaires paid no taxes at all:

Though the tax rate for Americans earning a gross adjusted income of $1 million or more averaged 24.4 percent, up from 23.1 percent in 2008, that's still lower than the 28.5 percent rate they paid in 2002 when President George W. Bush was in office.

And, the data shows, the 235,413 taxpayers who reported earning seven digits or more in 2009 took in a total of $726.9 billion -- yet 1,470 paid not a penny of income taxes. In 2007, 959 Americans earning $1 million or more paid no income taxes.

But while America's so-called "job creators" didn't create jobs after receiving their decade-long Bush tax cut windfall, they did buy a lot of expensive shoes. That's word from the New York Times, which reported Wednesday that "sales of luxury goods are recovering strongly":

Nordstrom has a waiting list for a Chanel sequined tweed coat with a $9,010 price. Neiman Marcus has sold out in almost every size of Christian Louboutin "Bianca" platform pumps, at $775 a pair. Mercedes-Benz said it sold more cars last month in the United States than it had in any July in five years.

Even with the economy in a funk and many Americans pulling back on spending, the rich are again buying designer clothing, luxury cars and about anything that catches their fancy. Luxury goods stores, which fared much worse than other retailers in the recession, are more than recovering -- they are zooming. Many high-end businesses are even able to mark up, rather than discount, items to attract customers who equate quality with price.

As Arnold Aronson, managing director of retail strategies at the consulting firm Kurt Salmon, put it, "If a designer shoe goes up from $800 to $860, who notices?"

Certainly not America's rich and famous. After all, the recession that has proved so devastating for most Americans for the wealthy has been merely a hiccup.

Continue reading »

enlarge

During the debate over the stimulus program in early 2009, Senate Minority Leader Mitch McConnell proposed, "If the money were lent rather than just granted, states would, I think, spend it wisely and the states that didn't need it at all wouldn't take any." Now would be a good time to take him up on his offer.

After all, state and local governments have already slashed hundreds of thousands of jobs, and facing a staggering $175 billion budget gap over the next two and a half years, are certain to shed hundreds of thousands more. Last week, the Commerce Department revised down its fourth quarter GDP estimate, confirming once again that draconian state budget cuts are putting the U.S. economic recovery at risk.

So here is a modest proposal to rescue the states and protect the fragile American economy. Establish a $200 billion, two-year federal fund providing loans to those states desiring them to prevent further layoffs and to help pay for the rising, recession-induced costs of Medicaid, unemployment and other essential services. Call it the State Assistance Fund (SAF).

How Would the State Assistance Fund Work?

As the Congressional Budget Office (CBO) and Moody's economist and former John McCain adviser Mark Zandi each documented last year, aid to state and local government provides among the biggest "bangs for the buck" of any federal stimulus spending. While the CBO estimated "transfer payments to state and local governments" provides a multiplier as high as 1.8 (that is, delivers $1.80 in economic returns for each dollar spent), Zandi's model showed a 1.41 multiplier. As he put it last July:

Federal aid to strapped state and local governments also is providing significant economic benefits, lessening their need to slash programs and jobs or to hike taxes and fees.

Unlike the American Recovery and Reinvestment Act (ARRA), the State Assistance Fund would not offer grants, but instead low (or no) interest loans to state governments. With the approval of their legislatures and governors, states could apply for their share of the $200 billion pool of emergency assistance funds. While the formula for divvying up funds would have to address the relative size and need of the states, they themselves would control how the money is spent.

Keeping police, teachers and firefighters on payroll, bolstering depleted unemployment insurance funds, funding the increased costs of Medicaid for swollen ranks of the jobless, distributing aid to counties and municipalities or even addressing shortfalls in public employee pension funds, state capitals would make those decisions. The only requirement is to repay the U.S. Treasury within 10 years.

Participation in the program is entirely voluntary. If states for fiscal - or ideological reasons - did not need or want the help from Washington, they need not ask for it. So while cash-strapped California, New York and Illinois might take that deal, similarly situated states like Rick Perry's Texas, Chris Christie's New Jersey or Scott Walker's Wisconsin might take a pass.

Why Now?

Forty-nine of 50 states are required by law to balance their budgets. Mercifully, to fight wars and economic calamities like the Bush recession, the federal government is not.

As the Washington Post, the New York Times, Reuters, Bloomberg and the Wall Street Journal among others recently detailed, state and local governments are fiscal facing a fiscal triple-whammy. Even with spending now well below 2008 levels, the downturn-induced drop in revenues and increased demand for social services coupled with the looming end of the American Recovery and Reinvestment Act (ARRA) is producing yawning gaps in state budgets. And the states, all but one of which must balance its budget each year, are responding with sharp spending cuts, massive layoffs, deferred payments to state employee pension funds and, in some cases, tax hikes.

The numbers are staggering. By November, the Economic Policy Institute estimated that state and local governments had shed 407,000 jobs since their August 2008 peak. With state budget shortfalls estimated to approach $100 billion for each of the next two years, analysts including Moody's Economics and the Center on Budget and Policy Priorities have forecast more state and local job losses reaching between 400,000 and 900,000.

Continue reading »