About All Those Obama Job Gains….
It looks like the Republicans aren’t the only ones with a flare for the dramatic. This week’s Democratic National Convention has included a great deal of rhetoric about all those jobs President Obama has created. But it helps to put things in perspective here before we start exaggerating what has and has not happened.
First of all, President Obama inherited a total disaster. We all know that. And his Presidency involved almost a full year of continued job losses before the economy started to turn around and gains actually started. But we can’t cherry pick start dates, and frankly, there’s been some historical advantage to inheriting a disaster (snapbacks tend to be strong) so let’s just take 2009 as it was.
As you can see below, President Obama has cut government employment substantially. The following chart shows government employment gains vs private employment gains. As I’ve discussed previously, the decline in government employment is largely due to state & local job losses. As currency users with balanced budget amendments the states are largely dependent on the Federal government to sustain employment levels if tax revenues collapse. There is simply no other way they can balance budgets when revenues collapse if they don’t lay off workers. So some will say this doesn’t fall at the Presiden’t feet. I say wrong. A misunderstanding of the currency user vs issuer dynamic is most certainly an important factor here. And while the Recovery Act bolstered state budgets it clearly left a great deal to be desired. So what we’ve seen is a democrat who has essentially gutted government workers. Not exactly the record you might expect and certainly not something the Democratic party would be expected to applaud as some try to frame this as a positive when compared to past Republican administrations (as if this government austerity is a good thing just because it goes against the Democratic “big government” label).
To President Obama’s credit, private employment has been relatively strong. Since the bottom we’ve seen over 4MM jobs. But since 2009 we’re essentially flat. So it sounds great when you cherry pick the bottom, but the overall picture looks less impressive when you consider the President’s full term. Not to mention, a deeper contraction has historically resulted in a stronger snapback. As the AP recently noted, this job’s recovery is unusually weak when compared to past recoveries:
“The economy shed a staggering 8.8 million jobs during and shortly after the recession. Since employment hit bottom, the economy has created just over 4 million jobs. So the new hiring has replaced 46 percent of the lost jobs, by far the worst performance since World War II. In the previous eight recoveries, the economy had regained more than 350 percent of the jobs lost, on average.
During the 1981-82 recession, the U.S. lost 2.8 million jobs. In the three years and one month after that recession ended, the economy added 9.8 million – replacing the 2.8 million and adding 7 million more.”
The chart below shows the overall picture. As you can see, we’re about back to break-even and historically, this is a very weak recovery. So again, without cherry picking, President Obama’s record is extremely mixed here. He’s gutted government employment and his private employment record leaves much to be desired, especially when we consider how historically weak this job’s recovery has been. The DNC is right to point out that President Obama inherited a mess, but his recipe for recovery hasn’t exactly been great either.
Cullen Roche
Mr. Roche is the Founder of Orcam Financial Group, LLC. Orcam is a financial services firm offering research, private advisory, institutional consulting and educational services.
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69 Comments
We don’t hear the other side of the “inherited” coin all that often. It’s nice to put this in historical context. It should have been a positive that Obama inherited the mess he did.
Yes, a wonderful thing to inherit the worst recession since the Great Depression, and an opposition party so divisive and hell bent on your failure that they were willing to throw the American people and the economy under the bus to get him out of office before he finished swearing in. And the state of economic thought where austerity is considered a good thing just as blood letting was good for disease. OHHH the other side of the coin is sooooo shiny and Obama so fortunate to be blamed for millions of job losses before he had a chance to find the bathroom in the oval office. Not all Presidents were that lucky. No idea how people don’t see that.
I think the only point that anyone is making is that a gain of 4.5M jobs from the absolute trough after a loss of 8.8M is a lackluster recovery. It’s like a stock that rises 5% in one day after losing more than 50% since its IPO – not something to brag about (even if the odds were against you).
I don’t think there is a bathroom in the oval office. That was his first mistake.
CR, could it be that government employment was due for a correction and Obama just happened to be in office when the inevitable transition began? For instance, take USGOVT as a fraction of total US population POP [1] and ask yourself whether the US really needs 7% of its population in the government sector when so much can now be automated.
Personally, I think the emphasis on jobs is entirely misplaced. The US Government can create any number of jobs it wishes, but whether those jobs contribute positive wealth is another matter. You can boost aggregate measures like GDP or employment by building bridges to nowhere or ghost cities in Inner Mongolia, but future generations won’t necessarily thank you for it.
[1] http://research.stlouisfed.org/fred2/graph/?g=aeS
I agree Nathan. When businesses face tough sales climates they go through the roster and purge unneeded staff. I think the same process is healthy for government as well. And you hint at another economic factor I think is key – all government (and non-profit) spending must by definition come originally from private sector wealth creation. So that should be the real measure of how well your economy is doing – not simply aggregate GDP. Sure, we need government to run deficits in downturns but only if they run offsetting surpluses in upturns. This permanent stimulus economic policy we have been running for much of the past 40 years masks an overall decline in the percentage of our GDP that is attributable to private sector (for profit) economic activity.
Cullen – do you honestly blame job losses in Jan, Feb, March ’09 on Obama? If you want to not be accused of cherry picking yourself you need to come up with a credible metric to pick a date for when Obama’s policies had a chance to actually do something. The stim bill passed in mid-Feb and couldn’t possibly be measured for at least 2 months which means picking May 1st or so as a start. Bush measured his own record with his first full budget year which means Oct ’09 as a start. Whatever it is, you’re being partisan if you pick Jan ’09. And most of the DNC speeches are factually accurate “4.5 million private sector jobs were created in the past 2.5 years.” That is quite clear and hardly misleading. Everyone knows there hasn’t been net job creation since Jan ’09
As for “a democrat who has essentially gutted government workers”… do you not recall any of the chatter from that time? After TARP, bank bailouts, and the original stimulus bill? It was a miracle the second stim was as large as it was. Obama had a 60 seat majority for 4 months, not the 2 years. Other jobs and stim bills had zero chance.
Lastly, you of all people know that the only recessions you can compare to this one too are debt deflation bubble recessions. Steve Keen’s manifesto starts with a chart showing private sector debt vs. public sector debt going back to 1920 says it all. Every other recession except now and the Great Depression benefited from the ability to grow private sector debt. And Reagan and Bush benefited from both private sector and gov debt growth. With private sector debt levels having no where to go but down, how much more could Obama have done for local Gov jobs from an MR perspective that $5 trillion in additional Gov debt didn’t do – especially in the face of all the debt fear mongering by everyone in this country except you and a handful of other bloggers?
I said it was not particularly fair to cherry pick at all. So I just started with the beginning of his Presidency. If you want to cherry pick the very bottom and put things in historical context then the Obama job recovery is weak when compared to past job recoveries. It’s well known that a larger decline in economic activity is generally met with a fierce bounce back. That’s not been the cases here. I know it’s an unusual recession, but from a historical perspective, Obama was buying low and doesn’t have much of a gain to show for it despite buying very low.
You want to compare the GD? Fine. It gets worse for your case though. Let’s cherry pick the trough as you prefer to do. Total non-farm at the trough of the GD: 23.7MM. 4 years later: 31MM. That’s a total gain of 7.3MM or 31% vs a gain of 4.5MM and 3.1% during this recession. Place that apples to apples and Obama will still come up way short compared to the GD. And that assumes no hiccups going forward and a pick-up in job growth. So even if you don’t like using other past examples and prefer only to use the GD then the numbers still look bad here.
I remember the chatter from 2009 well. Obama was intent on passing healthcare and neglected his other responsibilities. That’s fine, but if we’re going to grade his record on jobs (which I think most people would agree is the most crucial piece of the economic pie here) then he hasn’t done all that great. And that’s in large part because he had both houses of Congress and decided his priority was a healthcare bill. You think his JOBS act would have had any problem passing back then? It wouldn’t have. But he had other priorities. That’s fine, but let’s not misrepresent the job’s neglect in order to paint a rosy picture.
I know I am going to take flak from the left for this post, but I am being even handed. The DNC is trying to portray the economy as being good. The truth is the economy stinks. This recovery is awful. And Obama’s policies have not been all that great. Sorry.
Additionally, Obama is a deficit hawk like the Republicans & both of them foolishly decided to focus on reducing the deficit, especially during the debt ceiling
The fact that so much time & energy was spent on the debt ceiling & reducing the deficit shows how ignorant both sides are about the economy
-except that the Republicans are worst in that they, including Romney, have pledged to support a Balanced Budget Amendment, which would kill economic growth
You’re off in your Great Depression comparison. It started Sept ’29, so Obama’s timing is more akin to Hoover. Instead of actually having the “atrocious” record you accuse him of, he stopped the UE rate from reaching the 24.5% level of the GD. It’s pretty hard to improve upon that.
What’s more, we’re still in the Hoover phase right now. FDR’s phase lined up with today’s recession would be around now, or 2013. So if you’re looking to compare the totality of the recession and recovery, than Obama has 4 more years to match the GD’s jobs recovery. And he has to do it with the mandate Hoover had, not the one FDR had. This idea that Obama could do anything he wanted in ’09 is disingenous. So is claiming that he neglected his responsibilities when he did focus on the various bailouts and the stimulus and had a helluva lot more on his plate. I probably won’t convince you on this point since you know that if you were President, knowing what you do about econonics in a way few do, you would have chucked everything and gone all in on jobs – but you are rare in your understanding, and I implore you to think of the mandate FDR had vs. the one Obama has. There is no comparison.
Maybe you want to compare this recovery to Japan in the ’90′s, or some other country blown up from a bubble? And do it with the actual timing. I don’t know how Obama’s record will look in each case, but at least it will be an honest comparison, because you sure as heck can’t compare it to an economy like Reagan’s – where interest rates were at a peak, where private sector debt had a lot of room to run, and where Gov debt increased for the first time in decades, and no one cared or noticed until the end of his 8 years vs. the day he took office.
I like the Hoover analogy. Just as Hoover was no match for the the weight of the coming Depression, so Obama was swamped by the magnitude of what needed to be done. We’re headed for another recession whoever is elected, which will perhaps set the stage for a president who will have the opportunity and maybe the consensus to tackle the problems.
You’re moving the goal posts. First you said Cullen shouldn’t use the beginning of the recession to make his point and then you went and did the same exact thing! He’s being objective. You’re being ideological.
i said cullen should not blame the beginning of the recession on Obama. big difference. He’s responsible for what he is responsible for and it is disingenous to blame a couple of million jobs losses on someone who was just sworn in. “cherry pick” a date – a defensable date, otherwise you’re being idealogical.
As for comparing this recovery to Reagans or any non-debt-deflation recession – you’re bragging about a doctor who mended a broken leg to one who was trying to do a triple bypass. THAT is being an idealogue IMHO
What year did the GD non-farm trough occur?
“And that’s in large part because he had both houses of Congress and decided his priority was a healthcare bill.” Oh, yea……. the ol’ he was too distracted with healthcare to focus on the economy b.s……. right, because if Obama wasn’t so busy with healthcare, then Ben Nelson totally would have helped to pass more economic stimulus. What a completely f*cktarded post!!!
Comments like that say more about the writer than they do about my thoughts. Anyone who thinks the Republicans wouldn’t have been more open minded about other policy ideas (as opposed to what they view as the largest govt program EVER) are just being naive.
“Anyone who thinks the Republicans wouldn’t have been more open minded about other policy ideas (as opposed to what they view as the largest govt program EVER) are just being naive.” HAHAHAHAHAHAHAHAHAHAHA………. you must be referring to different Republicans. Because there’s no way you are talking about the ones who promoted a version of healthcare reform for the past 15 years that originated in the Heritage Foundation and was passed by a Republican governor in the state of Massachusetts………. and then promptly disclaimed any knowledge of or support for such policies once the black guy became president.
Forgot to add that the only saving grace the Democrats have is that one of the economic advisers for Joe Biden is actually a MMT supporter.. he’s like what Princess Leia said about Obi-Wan Kenobi at the begining of Star Wars, he’s our “only hope” as Princess Leai says, LOL
If Biden can get to the Oval Office with his MMT-supporting economic advisers or Bernie Sandes (also has economic advisers tho support MMT), it’s our best hope
Obama just spent the last 3 years crushing govt jobs which is the key policy lever of MMT. He’s implementing policy that is 180 degrees opposite of what you all would want….
“Obama just spent the last 3 years crushing govt jobs”. That is a really hard statement to defend. I suppose I know your belief/argument here. But stating the way you did is about as partison as it gets.
When did Obama crush government jobs? Federal employment is slightly up. Yes, State and local employment has gone down, but Obama had nothing to do with that. If anything, Obama delayed many of those job losses for 2 years with his so-called “Stimulus”. Most of that money went for preservation of State and local government union jobs. If that stimulus hadn’t been enacted, most States and localities would have been forced to break their unions back in 2009, and the job (and pension) losses would have been much much larger.
State and especially local governments massively porked up their workforces during the house price bubble from 1999-2006. That bubble was free money for jurisdictions that live off of property taxes. The bust hit them hard, and ZIRP is a double whammy to their budgets because of their massive pension costs. Obama had nothing to do with any of this.
Right…… who knew that we lived in a monarchy and Obama is responsible for everything that happens in this country. Keep on revealing yourself as a total douche, Cullen.
You lose an argument the second you start resorting to petty name calling and egregious misrepresentations. If the strength of your argument rests in demeaning other people then you should just retire from the argument business. You will NEVER lift yourself up by trying to tear other people down. Have a nice day.
And if the strength of your argument rests on fraudulent and/or misleading assertions………. and then you get your panties in a twist when called-out on such assertions, then you are…….. um, a total douche. Shalom, beeotch.
The strength of my argument rests on simple facts that were laid out. You didn’t like the argument due to political biases so you lashed out in ad hominem form that is typical of someone with a limited argument. Well played, sir.
If “Obama just spent the last 3 years crushing govt jobs ” is what you call “facts”, then please tell me……… what color is the sky in your world?
The govt shed 700K jobs under Obama’s watch. Maybe you don’t like the term “crushed”. So insert your own term where you expose your ideologically based bias and spin -700K as some sort of great positive….Try to do it without calling me a name if you can.
I don’t have a problem with “crushed”… I have a problem with “Obama crushed”. So, like I said previously… we don’t live in a monarchy and you might consider taking a course in civics (rather than crowing about the difference between currency issuers vs currency users for the 900th time). And if you were truly the centrist, neutral party that Jason Hun suggests you are, you might actually discuss which policies would address this government employment issue that you have identified and then determine which side of the political aisle is the better advocate for such policies. But that would entail actually growing a pair and taking a side in the debate… its much more safe to play the centrist card and just hit both sides… reality be damned.
Ah yes. Because it takes real brass balls to root hard for two losing positions. You know, the fact that you’ve been forced to choose between two parties doesn’t mean you have to just pick the side that is the lesser of two evils. You’re allowed to say “both parties suck and I don’t support either one”. Picking the lesser of two evils doesn’t make you a big man or mean you have brass balls. It just means you’re settling for something that we shouldn’t be forced to settle for. If that’s “enough” for you then fine. It’s not adequate for me though. I think we deserve more than these two pathetic parties and their leaders who don’t know anything but the ideology they spread. But I guess my rejection to conformity and stepping in line with the rest of the crowd makes me a coward in your book….fine by me.
Ziggenpuss, psychology studies show that you have the best chance of persuading neutral 3rd parties as well as the other side if you present you facts/data/evidence without resorting to insults or name calling the people you are addressing
Once you namecall/insult the people you are addressing, people dig in their heels & ignore your data/evidence & ‘double-down’ on their original views
This is why scientific conferences, evidence is presented neutrally (as well as during PhD oral exams…
and why lawyers never insult the jury or judge/magistrate & never directly namecall/insult the other side either.
Oh, please. Biden our best hope? LOL If that is the case, we might as well all shoot ourselves now.
Unfortunately, Biden’s economic advisers (as well as Bernie Sanders) are the only ones with a clue close to Monetary Realism/MMT.
He lacks charisma but at this point I don’t care about charisma & more about economic results, which MR/MMT is the best solution & have MUCH better results
Biden’s economic advisers have been overruled by Obama’s economic advisers so hopefully Obama can be done with his 2nd term so that Biden can inherit & do much better with his own economic team.
The worst are the Republicans, who want to go back to a gold standard
&
both Romney/Ryan pledged support for supporting a Balanced Budget Amendment into the constitution, any of which would KILL the US economy -and they are stupid enough to waste energy & gridlock trying to pass them
Many of the state job losses would be less if state governors hadnt gone all Tea Party and refused the federal stimulus funds. Much of the stimulus dollars were intended to keep teachers and policeman from being fired but the governors took obstructionist routes.
Still, Obama clearly is not on board with the sectoral balances aspect of govt deficits and surpluses or he wouldnt be channeling Bill Clintons surplus and govt debt reduction years…….. sad.
Refused stimulus funds??? The only significant funds that were refused were for specific big projects that would have required the state to put up even more of its own money, especially in later years. Also, those rail projects could not be plausibly sustained on ticket revenue once built, and would require permanent subsidies forever. The Governors of NJ and FL were right to refuse to participate in such bad malinvestments.
This comment chain is fascinating. Cullen provided a rigorous, fact-based, un-biased analysis of the US jobs “market” with complete transparency, objectivity and not a trace of ideology.
And the left jump all over him because they do not like the ‘answer’ that the objective analysis provides. They want the answer to be supportive of their ideology, w/o regard to the facts.
This is precisely the problem with our ‘politics’. People start with an answer, based on their ideology, and then work backwards.
There are ‘right’ and ‘wrong’ answers when it comes to certain macro and micro economic questions, and it has nothing to do with ideology. For example, the minimum wage. Does a minimum wage restrict entry level, least-skill employment opportunities? Yes. Liberals will vehemently dispute this because they start with an ideological answer, which is “NO”, and work backwards. The proper way to approach this quesion (and most others) is to separate POLICY from COMPASSION. So, e.g. sound policy would eliminate the minimum wage, but the democrats compassion would rightly cause them to call for some sort of charitable wage supplement (one that does not interfere with work incentives) based on their laudable compassion. And guess what; a lot of republicans would agree with democrats based on compassion (though not policy).
And yes, the right makes this same mistake as well, i.e. not separating sound policy from questions of compassion and charity.
“This comment chain is fascinating. Cullen provided a rigorous, fact-based, un-biased analysis of the US jobs “market” with complete transparency, objectivity and not a trace of ideology.
And the left jump all over him because they do not like the ‘answer’ that the objective analysis provides. They want the answer to be supportive of their ideology, w/o regard to the facts.”
As someone who’s desires transparency, and objectivity, I’d love to see this kind of treatment done for the years 2000-2012.
His analytical approach is clearly shown in the article. You could simply extend his analysis back to 2000. All the data is public.
Doh! Yes it is. Below is the link for 2000-2012
Result: It looks like Private Enterprise has not really created any net jobs at all in the past 12 years.
This is during periods of Republican control, during periods of Democratic control, and during periods of mixed control.
Apparently, business is failing our country, regardless policy differences.
http://research.stlouisfed.org/fred2/graph/?utm_source=research&utm_medium=website&utm_campaign=data-tools
Sorry, messed up the FRED link. This one should work, I hope.
http://research.stlouisfed.org/fredgraph.png?g=afx
Do you want to analyze 2000-2008 so you can decide whether to vote for George Bush? Or are you just trying to compare one bad president to another for the sake of fairness?
I’m interested in analyzing the years 2000-2008 as well as the Obama years because I suspect that the prior 8 years leading up to the Great Recession were *terrible* for net job creation which is what is compounding the difficulties that we’re seeing here.
In other words, I suspect that our private sector has been terribly failing to create net jobs not for 4 years, but for 12, and were it not for government jobs created during the Bush years, we would be in even more worse a jobs situation than we are now.
Also, I as a lefty, I honestly don’t know any other lefties who think this is a good economy or a good jobs performance. Everyone I know is saying it’s terrible, but the alternative is worse.
I’m not sure the alternative *is* worse. We were going to have to pay the piper either way, and delaying the pain just made it worse.
Choice #1) Prop up uncompetitive sectors with subsidies, increase government jobs, etc.
Choice #2) Let the recession hit earlier, and let the market do its work.
Of course hindsight is 20-20, but stimulating the economy when we *need* a recession leads to more pain down the road. It makes for bigger recessions, later.
In Bubble World, prices and incentives were distorted. How much healthier would the economy be now, without 10 years of malinvestment in housing and useless college degrees? And because of this malinvestment and the resulting bad debt, we’re stuck in a balance sheet recession.
I’ll add that if there are areas where the gov’t can actually spend productively, I’m all for that.
~signed, a pro-market liberal
“I’m not sure the alternative *is* worse. We were going to have to pay the piper either way, and delaying the pain just made it worse.”
I hear that a lot, but there’s no real way to prove the claim because it’s an appeal to an alternate reality as truth. There’s always the option that delaying the pain didn’t make it worse, or the option that delaying the pain made it worse *for all of us* but not as bad as it would have been for *many* of us. Ie. More of us are suffering, but there are fewer of us suffering as deeply as we would have.
And, IMO, the alternative is definitely worse if you are gay and wanting equal civil rights or a woman wanting control over your womb independent of the opinions of a (mainly) bunch of grumpy old white men. The government in power does more than fiscal things, although those matters are the focus of this site.
Hmmm… my take from CR’s post was that Barack Obama specifically was responsible for state and local job losses because he doesn’t understand that the federal government is a currency issuer and therefore has the leeway to provide aid to state & local governments because he should know that as a currency issuer the federal government can’t become insolvent unless it chooses to do so. As if he thought to himself, “nah, don’t really need to worry about state & local government employees today, they’ll be fine”. Did I miss something? The fact of the matter is that you don’t even have to understand MR or Wynne Godley to know that the federal government needed to bail out the states… Keynesian economics would call for the same thing; Krugman was shouting from the treetops that we needed Trillions in stimulus! It doesn’t matter what B-Rock’s understanding of economics is because there is no way in hell that he would have been able to get a package the size of what was necessary through the legislative process any damn way. And of course this is a partisan subject… the original post blames a sitting president for his perceived short comings, how could it not be? I just don’t see where this notion that the Pres left money on the table comes from… this idea that he had the option of supplying the states with a bailout but for some reason chose not to of his own volition is ridiculous… Put the blame on the freakin’ deficit hawks… just sayin’…
I wonder if Pres Obama would have done things differently if I’d gone to him in 2009 and said – “if you don’t do something more for the states you’re going to end up firing almost a million public sector employees over the next few years. That means you’re indirectly responsible for the firefighters, policemen, teachers, etc who the states will inevitably cut because the collapse in revenues will REQUIRE it due to the balanced budget amendments. Not to mention, if pvt employment doesn’t come back strong you’re totally effed in the economic department because this economy will look so bad in 2012 that there’s no chance you’ll get re-elected. So think long and hard about that healthcare bill and ask yourself if people want healthcare more than they want jobs. I’m pretty sure they’ll vote for the jobs. Ball’s in your court, boss.”
Do you think he would have done more to help the state and local govt’s with their issues? I sure do. But he had other priorities.
There are 12.8 million unemployed Americans.
Doesn’t Barack Obama know that as a currency issuer he could ask the Treasury to pay each one of those unemployed Americans a thousand dollars a week to go down to their local city hall and help with whatever needs to be done.
“In any moment of decision the best thing you can do is the right thing, the next best thing is the wrong thing, and the worst thing you can do is nothing.”
- Teddy Roosevelt
Forgive me, I don’t have exact numbers on hand, but I believe if I’ve learned one thing from you here (and I think I’ve learned a lot, thx btw) its the fact that unsustainable private sector debt directly resulted in the BSR, right? And, if I’m not mistaken, health care costs have outpaced inflation/ wage growth for years if not decades, right? Therefore the rate of growth in the cost of health care is directly contributing to the private sector debt load, right? Furthermore, the rising cost of healthcare disproportionately effects the middle and lower income brackets, right? Therefore, it seems logical to me that substantial reductions in the cost of healthcare (an area for which no solution has presented itself in 50 years) has a positive effect with regard to reducing the private sector debt burden. Am I off base here?
I will say that I do agree with you CR, if you could have sat down w/ the Pres in ’08, convinced him of the realities of sectoral balances, got him to buy in to MR, then convinced congress of the same thing, then convinced a majority of Americans the same thing; then we’d all be better off… I just think its flippant to say that pushing for healthcare reform and creating a recovery in employment are mutually exclusive ideas. Lower healthcare costs = reduction of the private sector debt load = more money staying in the pockets of private sector consumers = increased consumer spending = increased consumer demand = more jobs. Also, this post marks the first time I’ve ever thought (in nearly 2 years of reading this site every day) that I could guess which way your politics lean… just sayin.
Fair enough. But remember, when I posted this article a bunch of people said I was showing my true Democratic side.
http://pragcap.com/a-disturbing-trend-in-republican-convention-speeches
I’m part of the “cult of balance” as P Krugman once called us centrists. I’m perfectly happy being a member of that cult if I have to join one.
lol, touche
Yes, Obama made a big mistake for those 4 months in focusing on an important long-term issue (health care and its exploding costs despite no real productivity gains) instead of using this short window to push in a 2nd round of stimulus. Obama also made a big mistake in who he chose to appoint, as Byron Dorgan stated, “you appointed all the wrong people!” People like Peter Orszag, Tim Geitner and Larry Summers, not to mention listening too heavily to the political advice of those like Axelrod, Plouffe and Emannuel… and maybe Austan Goolsbee was in the wrong too (being a Chicago economist, I wouldn’t be surprised).
The inside accounts show essentially Christina Roemer being alone in advocating for more fiscal stimulus, while Larry Summers believing it would be a quick snap-back and that additional stimulus would be too politically difficult. Peter Orszag, being the OMB director and a Rubinite (along with Geitner), advocated for fiscal constraint. Larry Summers flipped in the Fall of ’09, but it took until January ’10 for Obama to stop listening to Orszag’s austerity advice, fear of bond vigilantes, etc. And then there was of course Obama advocating longer-term fiscal restraint, most popularly in the first 8 months of 2011.
But you do forget that Obama tried to push pretty hard for second rounds of stimulus in 2010. That possibility was interrupted by Scott Brown, who allowed obstruction on any issue facing economic stimulus. That’s why Harry Reid’s $200+ billion jobs bill that he proposed in January/February ’10 was whittled down to $35 billion by September (with excuse after excuse of the moderate Republicans like Snowe causing delays in exchange for filibuster-breaking support). There was also a bit of a Community bank bailout (“cash infusion to lend to small businesses”) as well as tax credits targeted to hire the unemployed.
And then there was the 2010 tax deal that begun the payroll tax holidays, and prevented taxes from going up and eating demand.
And then there was his advocacy for a $450 billion stimulus in September 2011, which included the states and local governments. And then there was Obama’s “You didn’t build that” speech that angered you and other conservatives that was taken hugely out of context. What was he talking about? Sending aid back to states and local governments to rehire.
So I don’t think you can criticize Obama for slashing the 650,000 government jobs (or not adding 350,000 as the economy should have). He certainly has tried, but no one has listened. Hindsight is 20/20 after all.
I also don’t think you can criticize Obama for the slow snapback. Being a fan of Keen, you should know that debt-deflation in recessions got worse after the Reagan recession in 1981 as private debt built up. Private sector job growth is higher in this recovery than in the Bush recovery (and no housing bubble so far!) and not far behind the 91 recovery.
Anyhow, my 2 cents.
And as Krugman also says……….. when the right wing declares that the earth as flat, Cullen will be among those holier-than-thou “centrists” who will proclaim, “views differ on shape of planet.”
You don’t need a cult, you need a party. (The Charlie Crist line from earlier this evening, “I did not leave the Republican Party – the Republican Party left me”, may apply.)
FYI, multiple studies on UK & Australia showed that mininum wage increases still resulted in lower unemployment rates/job growth
Australia has the highest mininum wage ($15/hr AUS$, equal to $20.25/hr $US) & unemployment still went lower down to about 4% as the economy boomed.
This also applies to China too, which saw unemployment decrease/jobs increase still even as they slowly increased miniwum wages.
Multiple reasons for all that of course (how much money supply increases to fund new jobs/enterprises, exports, imports, labor supply, etc)
Cullen, reducing the size of government payrolls, be they federal, state, or local is a fundamental component of the conservative movement in its current iteration. This is the stated goal of Grover Norquist’s anti-tax pledge that has been signed by 95% of congressional Republicans. The government functions on compromise… And when you are forced to compromise with a group whose stated goal from day 1 is to block your agenda and force you out of office (as opposed to, you know, backing policies that would put people back to work) you could not possibly hope to get everything you’re asking for. I, for one, do not believe for one second that the president had carte blanche to send enough aid to the states to cover the deficits that they had amassed by ’08. Also, remember that at the time Tim Pawlenty, Chris Christy, Haley Barbour, Bobby Jindal, and just about every other Republican Governor in the US (other than Schwarzenegger who by ’08 was begging for aid) was threatening to block aid to their states. Couple that with the fact that almost NOBODY in main street America has heard of the sectoral balances ideas of Godley and MR today, much less 4 years ago! The overwhelming majority of main street America then and now thinks that government debt is bad. This notion that state and local job cuts are the President’s fault is simply false. I for one believe the president got just about everything he could at the time and would be able to get even less in the current environment.
Reason they rejected aid was because of all the strings attached and the long term strain on the local tax bases.
Which is pretty typical anytime the FED Govt uses money as a carrot.
Here is 500 million to build a light rail or tunnel but you will have to pitch in 600 million AND pay for all the upgrades and maintenance and staff and pay this wage and only charge this much etc..etc.. strings attached via unfunded mandates.
A few select high-cost infrastructure projects that required states to put up money wouldn’t be as big of a deal had the states also received more money from the federal government.
but really, that kind of logic would also induce governments to never invest in roads – after all state and local governments have to pay for upgrades and maintenance. Unless you’re an Austrian, I’m pretty sure you wouldn’t advocate that.
Prudent expenditures are one thing and boondoggles are another. Here are a few recent one’s for ya:
“Considering the unprecedented fiscal and economic climate our State is facing, it is completely unthinkable to borrow more money and leave taxpayers responsible for billions in cost overruns.
Christie said the tunnel project costs “far more than New Jersey taxpayers can afford and the only prudent move is to end this project.”
NJ Gov Chris Christie
http://www.nj.com/news/index.ssf/2010/10/hudson_river_tunnel_project_is.html
“o First – capital cost overruns from the project could put Florida taxpayers on the hook for an additional $3 billion.
o Second – ridership and revenue projections are historically overly-optimistic and would likely result in ongoing subsidies that state taxpayers would have to incur. (from $300 million – $575 million over 10 years) – Note: The state subsidizes Tri-Rail $34.6 million a year while passenger revenues covers only $10.4 million of the $64 million annual operating budget.
o Finally – if the project becomes too costly for taxpayers and is shut down, the state would have to return the $2.4 billion in federal funds to D.C.
The truth is that this project would be far too costly to taxpayers and I believe the risk far outweighs the benefits.”
Florida Governor Rick Scott
http://www.flgov.com/2011/02/16/florida-governor-rick-scott-rejects-federal-high-speed-rail/
Gov. John Kasich says it makes no sense for the state to make long-term changes to a fiscally-damaged system for a one-time payment, spokesman Rob Nichols said. And the jobs department, which administers the state’s unemployment compensation system, is not seeking any changes, department spokesman Ben Johnson said. [...]
To receive the remaining two-thirds, the state would have to choose two options from among several: Allow people seeking part-time work to qualify for benefits, extend benefits to those in approved job training programs, increase the allowance for dependents, and provide benefits to people who leave work for certain family reasons, such as domestic violence or transfer of a spouse.
Ohio Gov. John Kasich
http://thinkprogress.org/economy/2011/08/22/300756/kasich-unemployment-benefits-makes-no-sense/?mobile=nc
So IMO, if the federal Govt want’s to use it’s 3rd leg status in the sectoral arena, it should more wisely limit the Strings Attached, if it’s intentions are really about Job creation and not political pandering.
I can’t post a graph, but here it is.
http://research.stlouisfed.org/fred2/graph/?chart_type=line&s1id=PAYEMS&s1range=10yrs
i meant to post this as a reply to joseph browning 10:55 am
enter PAYEMS and then reset range to 10 yrs
I got it. Thanks for reminding me that the information is available to all. Don’t know how that slipped my mind.
Bush and Obama have both been disasters.
David Leonhardt of the NYT (speaking on NPR’s ‘Fresh Air’) and other, presumably nonpartisan analysts have noted that the significant metrics in 2008 were worse than those at the start of the GD, and that the primary economic accomplishment in this administration’s first term was to prevent a continued descent into comparable depths.
Also at this critical point in the presidential campaign, comparison to what a Republican administration would have done/would do, seems entirely appropriate (as opposed to judging the current one in isolation).
I reluctantly agree with CR about the priority placed on health coverage reform. However, those who claim to value looking at objective facts first might note that if the American health care system were a corporation forced to compete with other multinationals in the global marketplace, it would have gone out of business or been forced to make radical reforms long ago. Longer term, nothing could be more critical to the nation’s economic and social well-being than improving the dismal cost effectiveness and evenness of access of that system
I think this highlights a structural problem in American politics more than anything.
The gears of this political system grind slow..there are too many representatives in the house and Senate…and the super majority law that exists today makes passing any major reform near impossible unless there is something in it for each member.
Not saying Obama is good or bad, but it doesnt matter how he feels, Congress will not pass a bill until every member has had its say and gets to put something in the bill. What you end up with with is shit like obamacare…and strange stimilus bills that send money to useless places. So eathier you pass something or you look like a fool having done nothing.
Its ridiculous to watch this playout. With presidents claiming that they are responsible for this or that when they are the whipping boy of congress. Reagan ,a republican president, was forced to raise taxes. Bill Clinton was the best republican president in recent memory. Under George Bush 2 the deficit and federal employment was sky high. I guarantee you whether its obama or romney…most congress members will be reelected…some of them are in their 80s.
The Founding Fathers intended it to be “Difficult” to get things done for a Reason.
We left a monarchy remember..
The supermajority law was enacted in the 90s
Oops scratch that last statement…im thinking about a state bill. The supermajority for passing laws, to my knowledge, is not in the constitution. Its a major debate in state and federal courts now
Whats interesting is that government spending has leveled off since 2010. Right when govt job losses accelerate downwards. From the way republicans portray him you would think Obama is spending like a drunken sailor: http://research.stlouisfed.org/fredgraph.png?g=aht