Voodoo vs. Can-Do

Republicans have seized upon disappointing May job totals as proof that President Obama’s economic program has failed — but you could as easily make the case that the numbers prove Republican voodoo economics has failed.

The Bureau of Labor Statistics reported that only 54,000 jobs were added to the economy in May, far below the monthly average of 182,000 new jobs added in the first four months of 2011. The private sector added 83,000 jobs, less than a third of what it did in April, but the layoffs of 28,000 public-sector employees by financially strained state and local governments brought the overall numbers down. The official unemployment rate rose to 9.1%. When underemployed and discouraged workers were added, the broader U-6 rate fell slightly to 15.8%.

House Speaker John Boehner (R-Ohio) said June 3, “One look at the jobs report should be enough to show the White House it’s time to get serious about cutting spending.”

The Hill reported June 5 that freshmen House Republicans are sticking to their guns on the need for immediate spending cuts in light of the dismal jobs report.

Presidential wannabe Mitt Romney joined in the argument that President Obama inherited an economic mess, but made matters “worse” When that was fact-checked, and proven false, Romney stuck with the talking points.

But White House economic adviser Austin Goolsbee (who is returning to teaching at the University of Chicago) noted on CNN’s State of the Union on June 5 that “one month is not a trend. And the last six months we’ve added 1 million jobs in the economy. The last 15 months we’ve added 2 million jobs. ... So I think that the president’s plan ... it has been working. We have been adding jobs significantly over the course of this year. We faced a stiff headwind and this was a tough month, but I don’t think that we should abandon the idea that what we need to do now is get the private sector stood up.”

“The May jobs report should have provided the sort of stiff kick that is needed to revive discussion of additional stimulus,” Dean Baker wrote at The New Republic’s website. “Instead it seems to have barely shaken Washington’s ongoing obsession with deficits.” That obsession may bring on another Great Depression.

The 2009 stimulus package did not achieve its goal of reducing unemployment to 8%, which Republicans have repeatedly cited as evidence that the stimulus didn’t work, but MediaMatters.org noted that independent analysts have confirmed that the stimulus significantly raised employment.

The nonpartisan Congressional Budget Office estimated that the stimulus increased the number of people employed, as of the second quarter of fiscal year 2010, by “between 1.4 million and 3.3 million.” A March 2010 study in the Wall Street Journal found that 70% of economists surveyed said the stimulus “boosted growth and mitigated job losses.” And a February 2010 survey of 203 members of the National Association for Business Economics found that 83% “believe that GDP is currently higher than it would have been without the 2009 stimulus package.”

If we can conclude anything about spending cuts, Jed Lewison noted at DailyKos.com June 3, the anemic jobs report came the month after Boehner agreed to a funding bill that he said represented “an historic amount of cuts” in order to “create a better environment for job creators in our country.” The very next month, job creation dropped from 232,000 to 54,000.

AFL-CIO President Richard Trumka noted that nearly two years into the recovery, the unemployment rate has risen to 9.1%. “Even more startling, the average duration of unemployment rose to 39.7 weeks – the longest ever, demonstrating the prolonged pain of this recession.

“While the wealth in our society has flowed to a handful of rich Americans, working people have endured years of hardship. And now, instead of doing what is necessary to stimulate the economy, invest in jobs, and restore consumer confidence, too many in Washington continue to clamor for harmful spending cuts to advance their own political interests.”

Recall that in January 2001, the federal budget was balanced for the first time in decades and the Congressional Budget Office forecast surpluses totaling $5.6 trillion by 2011. A decade later, the Washington Post noted, the national debt is larger, as a percentage of the economy, than at any time in US history except for the period after World War II.

But Republican rhetoric notwithstanding, domestic spending programs that help the poor and middle class aren’t running up the national debt. Most of the deficit is due to wars and tax cuts that disproportionately benefited the rich. The Center on Budget and Policy Priorities reports that two policies dating from the Bush administration — tax cuts for the rich and wars in Iraq and Afghanistan — accounted for $2.6 trillion of the national debt through 2008 and another $500 billion in 2009. Citizens for Tax Justice estimated the tax breaks cost $2.5 trillion through 2010. The National Priorities Project estimated the wars cost $1.2 trillion through May.

The American Recovery and Reinvestment Act, which offered assistance to the unemployed, cash-strapped state and local governments, tax cuts and spending on infrastructure and other projects, along with smaller measures to spur recovery and aid the unemployed, are projected to account for $1.1 trillion in deficits through 2011, but most of that spending expires in June. However, the tax cuts and the wars are projected to account for almost $7 trillion in deficits from 2009 through 2019, including debt service costs.

So we are living outside of our means, but that’s the cost of running an empire. Working people are paying the cost of making the world safe for corporations. The Bush administration borrowed the money to pay for the tax cuts and wars from the Social Security Trust Fund and now Republicans don’t want to pay the money back. Instead, they are calling for working people to work longer and they’re not sure we can pay for Medicare coverage for seniors, much less provide health care for the rest of the population.

The US recovered after World War II by investing in education and retraining of returning servicemen, giving them access to affordable mortgages and maintaining markets for American goods overseas with the Marshall Plan that rebuilt Europe and Japan. Congress also increased the top marginal tax rate to 91% to give millionaires a strong incentive to plow their profits back into their businesses and create more jobs. The economy boomed and unions helped establish a middle class that was the envy of the world.

We can do it again, but we can’t cut our way back to prosperity.

In the meantime, don’t let your Republican friends forget that their caucus in the House of Representatives voted 235-4 for a budget that included phasing out Medicare by cutting off guaranteed health benefits for the next generation of seniors. The only Republicans who voted against killing Medicare — and that is, in fact, what the Republican leadjers intend to do — were Walter Jones (N.C.), David McKinley (W.V.), Ron Paul (Texas) and Dennis Rehberg (Mont.). The Republican budget, which also slashes Medicaid, education and jacks up middle-class taxes, passed 235-193. Then Senate Republicans voted 40-5 for the Republican budget, including the Medicare cuts, but the measure failed 57-40.

Among Republican senators running for re-election who voted to do away with Medicare are Richard Lugar (Ind.), Roger Wicker (Miss.), Dean Heller (Nev.), who also voted for the House budget before he was named to replace disgraced former Sen. John Ensign, Bob Corker (Tenn.), Orrin Hatch (Utah) and John Barrasso (Wyo.).

Republicans still hope to regain the majority in the Senate next year, with Democrats defending 23 of the 33 seats up for election, including two independents who caucus with the Dems, and five incumbent Dems as well as Joe Lieberman are retiring. But the Republican overreach on privatizing Medicare after just last year solemnly promising seniors to protect it may be the ammo Dems need to put Republican incumbents on the run and perhaps pick off a few of those seats. If there ever were a year for a progressive populist insurgency, this would be it. — JMC

From The Progressive Populist, July 1/15, 2011


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