One party is threatening the recovery far more than the other is

[ProSense]

The Morning Plum: One party is threatening the recovery far more than the other is

Posted by Greg Sargent

It’s been widely pointed out by liberals that much of the discussion of fiscal issues conducted by supposedly “neutral” reporters actually does take sides in a pernicious way. It often treats it as a given that near term deficit reduction is a good thing — sometimes even cheerleading for that outcome – when in fact there is an actual policy dispute over this point, with many arguing that immediate deficit reduction is destructive to the recovery, and that dealing with the deficit should be deferred until the economy is stronger.

And that’s why today’s big New York Times piece quoting a range of economists arguing that Washington’s deficit obsession has proven a drag on the recovery is so important and welcome. The piece states clearly and unequivocally that the consensus view among economists is actually the one that’s often marginalized — i.e., that short term deficit reduction and spending cuts hurt the economy:

The nation’s unemployment rate would probably be nearly a point lower, roughly 6.5 percent, and economic growth almost two points higher this year if Washington had not cut spending and raised taxes as it has since 2011, according to private-sector and government economists.

After two years in which President Obama and Republicans in Congress have fought to a draw over their clashing approaches to job creation and budget deficits, the consensus about the result is clear: Immediate deficit reduction is a drag on full economic recovery.

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But the simple fact remains that even if Obama continues to flirt with deficit-obsessed rhetoric and continues to push for some spending cuts, he wants more stimulus spending and wants deficit reduction to be balanced via higher revenues from the wealthy, while Republicans are pushing solely for still more spending cuts. The Times comes as close as possible to flatly stating that one side’s approach is far more threatening to the recovery than the other’s is:

In all this time, the president has fought unsuccessfully to combine deficit reduction, including spending cuts and tax increases, with spending increases and targeted tax cuts for job-creation initiatives in areas like infrastructure, manufacturing, research and education. That is a formula closer to what the economists propose. But Republicans have insisted on spending cuts alone and smaller government as the key to economic growth.

Today, Obama will travel to Texas, where he will renew the push for more stimulus spending. At the same time, House Republicans are expected to pass a measure that would allow the Treasury to pay off bondholders without a debt ceiling hike, a move designed to set the stage for Republicans to try to use the debt limit to extort still more spending cuts....The shrinking deficit shows clearly that Congress could very easily be spending more to alleviate the unemployment crisis without hurting the country’s near term fiscal outlook. But Congress isn’t doing that. And so, it’s often said that “Washington’s” deficit obsession is holding the recovery back, which is certainly true. But it’s worth stating as clearly as possible that according to the broad consensus of economists, one party is far more of a threat to the recovery than the other is.

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http://www.washingtonpost.com/blogs/plum-line/wp/2013/05/09/the-morning-plum-one-party-is-threatening-the-recovery-far-more-than-the-other-is/

KRUGMAN: Bad news for Dr Evil fans: Days of 1 TRILLION $$$ deficit-OVER-In fact-deficit falling FAST
http://www.democraticunderground.com/10022817494

Here's the thing, President Obama has talked about cutting the deficit, and his efforts have worked. At the same time, he has offered stimulus to create more jobs. The key is that his proposals were paid for, but Republicans still blocked them.

To give an idea of just how much Republican belligerence is slowing the recovery, here's Krugman a year after Republicans blocked the President's 2011 jobs proposal:

The Jobs Program That Wasn’t

Macroeconomic Advisers on the American Jobs Act, proposed a year ago:

We estimate that the American Jobs Act (AJA), if enacted, would give a significant boost to GDP and employment over the near-term.

-The various tax cuts aimed at raising workers’ after-tax income and encouraging hiring and investing, combined with the spending increases aimed at maintaining state & local employment and funding infrastructure modernization, would:
-Boost the level of GDP by 1.3% by the end of 2012, and by 0.2% by the end of 2013.
-Raise nonfarm establishment employment by 1.3 million by the end of 2012 and 0.8 million by the end of 2013, relative to the baseline

Of course, it that had happened, Obama would be more or less a lock for reelection. Instead, having blocked the president’s economic plans, Republicans can point to weak job growth and claim that the president’s policies have failed.

http://krugman.blogs.nytimes.com/2012/09/08/the-jobs-program-that-wasnt/

Obstruct and Exploit

By PAUL KRUGMAN

Does anyone remember the American Jobs Act? A year ago President Obama proposed boosting the economy with a combination of tax cuts and spending increases, aimed in particular at sustaining state and local government employment. Independent analysts reacted favorably. For example, the consulting firm Macroeconomic Advisers estimated that the act would add 1.3 million jobs by the end of 2012.

There were good reasons for these positive assessments. Although you’d never know it from political debate, worldwide experience since the financial crisis struck in 2008 has overwhelmingly confirmed the proposition that fiscal policy “works,” that temporary increases in spending boost employment in a depressed economy (and that spending cuts increase unemployment). The Jobs Act would have been just what the doctor ordered.

But the bill went nowhere, of course, blocked by Republicans in Congress. And now, having prevented Mr. Obama from implementing any of his policies, those same Republicans are pointing to disappointing job numbers and declaring that the president’s policies have failed.

Think of it as a two-part strategy. First, obstruct any and all efforts to strengthen the economy, then exploit the economy’s weakness for political gain. If this strategy sounds cynical, that’s because it is. Yet it’s the G.O.P.’s best chance for victory in November.

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http://www.nytimes.com/2012/09/10/opinion/krugman-obstruct-and-exploit.html

The strategy was part of Republicans' plan to make Obama a one-term President --- obstruct the recovery and them claim that the President's policies have failed. The impacts of Republican sabotage can be seen at the state level.

States of Depression

By PAUL KRUGMAN

The economic news is looking better lately. But after previous false starts — remember “green shoots”? — it would be foolish to assume that all is well. And in any case, it’s still a very slow economic recovery by historical standards.

There are several reasons for this slowness, with the most important being the overhang of household debt that is a legacy of the housing bubble. But one significant factor in our continuing economic weakness is the fact that government in America is doing exactly what both theory and history say it shouldn’t: slashing spending in the face of a depressed economy...if it weren’t for this destructive fiscal austerity, our unemployment rate would almost certainly be lower now than it was at a comparable stage of the “Morning in America” recovery during the Reagan era.

Notice that I said “government in America,” not “the federal government.” The federal government has been pursuing what amount to contractionary policies as the last vestiges of the Obama stimulus fade out, but the big cuts have come at the state and local level...We’re talking big numbers here. If government employment under Mr. Obama had grown at Reagan-era rates, 1.3 million more Americans would be working as schoolteachers, firefighters, police officers, etc., than are currently employed in such jobs.

And once you take the effects of public spending on private employment into account, a rough estimate is that the unemployment rate would be 1.5 percentage points lower than it is, or below 7 percent — significantly better than the Reagan economy at this stage.

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http://www.nytimes.com/2012/03/05/opinion/krugman-states-of-depression.html

This is why Republicans in Congress and State Governorships have been working hard to sabotage the recovery.


http://www.democraticunderground.com/1002322208

It's a vicious cycle, and the 2010 election made it worse. Republicans blocked job-creating bill that also offered aid to states, and then Republican Governors cut jobs at the state level.

[annabanana]

1. This info must be repeated and repeated until, I guess, the corporations no longer think it

profitable to promote the market goose-ing, job killing agenda.

[ProSense]

2. Yup, it

"This info must be repeated and repeated until, I guess, the corporations no longer think it"

...should be repeated as much as the hype that Mitt would be good for the economy and Obama's re-election meant Armageddon.

OOPS: Financial Pundits Predicted The Stock Market Would Plunge Under Obama
http://www.democraticunderground.com/10022462260

Mitt's (and his allies) predictions sucked.

The lowest jobless rate since 2008
http://www.democraticunderground.com/10022792757

Update: Recovery Measures

by Bill McBride

<...>

At the worst point - in Q2 2009 - real GDP was off 4.7% from the 2007 peak...Real GDP returned to the pre-recession peak in Q4 2011, and has hit new post-recession highs for six consecutive quarters.



<...>

This graph shows real personal income less transfer payments...This measure was off 11.2% at the trough in October 2009...returned to the pre-recession peak in December, but that was due to a one time surge in income as some high income earners accelerated earnings to avoid higher taxes in 2013. Real personal income less transfer payments declined sharply in January, and were 3.3% below the previous peak in March.



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Industrial production was off over 17% at the trough in June 2009, and has been one of the stronger performing sectors during the recovery...industrial production is still 1.3% below the pre-recession peak. This indicator will probably return to the pre-recession peak in 2013.



<...>

Payroll employment is still 1.9% below the pre-recession peak and will probably be back to pre-recession levels in 2014.



http://www.calculatedriskblog.com/2013/05/update-recovery-measures.html

[annabanana]

3. pesky goddam FACTS. . .

pfft.

[ProSense]

4. Calling out Republicans isn't popular, huh? n/t

[NewJeffCT]

5. Part of the problem is

that even if the media splits the difference - Obama wants to combine deficit reduction/cuts & tax increases with stimulus (a centrist approach at best, though center-right is more accurate) and Republicans want only short-term deficit reduction through cuts, the media's beloeved "middle ground" is still pretty far right and out of whack with economists. And the Republican version actually leads to increased long-term deficits because of higher unemployment.

[ProSense]

6. I'd say

"Republicans want only short-term deficit reduction through cuts"

...Republicans want deficit reduction, period. Their goal is to shrink the government, eliminating some social programs and gutting others.

[bvar22]

7. If ONE Party threatens the "recovery" more than the other,

then, logically, BOTH Parties are threatening the "recovery,
but one more than the other.

After 30 years, I really want a Democratic party that represents the Working Class,
and fights FOR our economic issues,
not just threatens them less.


The OP agrees with Paul Wellstone in the following quote:
[font color=firebrick][center]"There are forces within the Democratic Party who want us to sound like kinder, gentler Republicans.
I want a party that will STAND UP for Working Americans."
---Paul Wellstone [/font][/center]
[center][/font]
[font size=1]photo by bvar22
Shortly before Sen Wellstone was killed[/center][/font]

[ProSense]

8. That's

"If ONE Party threatens the 'recovery' more than the other, then, logically, BOTH Parties are threatening the 'recovery,
but one more than the other. "

...rather brilliant!

Like Sargent states, and I reiterated, President Obama has talked about cutting the deficit, and his efforts have worked. At the same time, he has offered stimulus to create more jobs. The key is that his proposals were paid for, but Republicans still blocked them.

These proposals would have created millions of jobs. So yeah, Republicans obstructing the recovery (blocking all job creation and killing existing jobs) and Democrats proposing to create millions of jobs (albeit not enough) means "BOTH Parties are threatening the 'recovery, but one more than the other."

See, the level and nature of the threat matters.

[ProSense]

9. Chart:

http://maddowblog.msnbc.com/_news/2013/05/09/18149430-a-familiar-economic-foe

[Scurrilous]

10. K & R