Obama’s Economic Triumph

[Auburn85 434]

http://www.thedailyb...ic-triumph.html

Michael Tomasky

It’s increasingly clear that the president has steered the country back from the brink—and, in the process, exposed (yet again) the central lie of conservative economics.

This Friday morning will bring the new jobs numbers. If recent months and indicators are any sign, the news will be at least pretty good, and maybe really good—

remember, the last several months have all been revised upward by significant amounts after the initial estimates. Yes, there is still a ways to go. But everything is moving in the right direction. The president and his people jumped the gun pretty badly in 2010 with their talk of “Recovery Summer.” But 2013 might finally be Recovery Summer. And by next summer, most experts say, the unemployment rate really will be back down to the normal range. In other words, the Republicans are about out of chances to do what they’ve been trying to do since Barack Obama took office—i.e., wreck the economy. Now more than ever, Obama has to ignore these people and get through the next three-plus years just trying to make sure they can’t screw up the economy any worse than they already have.

Let’s first review some recent economic news. Consumer confidence is at a five-year high. Personal debt is back to normal levels, which is a big deal. Housing investment is up, real-estate prices are rebounding everywhere, the stock market is breaking records. The political-economic news has been no less comforting to the right. Kenneth Rogoff and Carmen Reinhart’s arguments against higher deficit-spending have been debunked. And as winter melted into spring, with oddly little commentary, Obama soared past George W. Bush in the net job-creation sweepstakes: Obama has now created a net positive of more than 1.6 million jobs in four-and-a-half years, which is better than Bush’s mark of 1.08 million in all eight of his years.

Many economists believe that things would be going even better right now without the austerity imposed on us by the Republicans who run the House of Representatives. It is true—and this is one point on which liberals, me included, haven’t been entirely consistent—that “austerity” also includes the higher taxes on the rich achieved through the fiscal-cliff deal, and the end of the 2 percent payroll tax holiday. So Obama does bear some responsibility for those particular forms of austerity, although the budget cuts the GOP insisted on have had considerably more negative impact on the economy than the tax increases.

But here’s another point about those tax increases that arguably outweighs the austerity point, or is certainly far more important in historical terms: when you raise taxes, duh, you increase revenues. And so the deficit is going to tumble this year to its lowest level since 2008 ($845 billion or even lower, the way things are going), and next year to a level barely more than 2 percent of GDP, which is a level at which it’s not even worth worrying about. The deficit is going down because revenues are going up, and revenues are going up, the Congressional Budget Office says, “because of the growing economy, from policy changes that are scheduled to take effect during that period, and from policy changes that have already taken effect but whose full impact on revenues will not be felt until after this year (such as the recent increase in tax rates on income above certain thresholds).”

This is huge. Republicans, as we know, have spent years saying that raising taxes doesn’t increase revenues. It’s an argument that sits at the very core of supply-side theory. It’s been an absolute article of faith. They tried to say this when they passed the Bush tax cuts, and they’ve tried to say it since. But they were just lying. The Bush tax cuts cost the treasury $1.3 trillion by the low estimates and $1.8 trillion by thehigher ones. They continued to make these claims long after the facts were in, but facts never stopped them, of course.

So let’s review. The only thing the Republicans have done to the economy since 2001 is make it worse. The tax cuts did not generate the great surge of activity that was predicted. Against Republican predictions and conservative economic belief, they drained the treasury. Later, GOP-led deregulation nearly destroyed the global economy. Then, when the new guy tried to rescue the economy, they opposed everything he tried. Today, with indicators clearly on the right track and clearly suggesting that more stimulus would help the recovery, they of course oppose that, too.

Obama isn’t going to get anything out of these people. He’s just going to have to Heisman them—stiff-arm them, keep them out of the way, prevent them from doing more damage. No grand bargain. That’s obviously over. No entitlement talks or concessions. And on the debt ceiling, Obama should push them right to the wall. The Republicans want more budget cuts and/or entitlement “reform” in exchange for raising the debt limit later this summer or early in the fall. But in an improving economy, and with the public aware that we’ve already endured deep budget cuts, Obama should be sitting in the catbird’s seat.

There’s a lot that I’m sure Obama would like to do that he’s never going to have a chance to do. A carbon tax or cap-and-trade regime is probably not going to happen. Ditto comprehensive, progressive tax reform. But he is going to be the president who led the country back from the edge of economic disaster and who managed to get a tax increase that helped disprove (yet again) the key trickle-down falsehood.

And, if the economy keeps growing at the pace of the past year, he stands to leave office having created several millions net jobs. That pace is 169,000 jobs per month. Multiply that by the 42 remaining months, and you come up with 7.1 million, on top of the 1.6 million net jobs already created. Those sure aren’t Clinton numbers. But they sure aren’t Republican numbers either. And the American people will know this.

[jj3jordan 2,125]

With all these private sector jobs created, why doesn't the unemployment rate go down?

[RunInRed 16,992]

It has ...

It peaked at 10% in October, 2009. Currently, the unemployment rate sits just north of 7%.

[autigeremt 6,970]

It has ...

It peaked at 10% in October, 2009. Currently, the unemployment rate sits just north of 7%.

What is the REAL unemployment rate? That's what I'd like to know.

[DKW 86 7,726]

So many have quit looking for work is the only way the rate has dropped this low.

There are roughly 7M of the 2008 workers unemployed today. Add in five years of high school and college grads and then subtract out the deaths and retirements, We might have a total employable population of 152M or so.

[AUDub 11,424]

http://www.calculatedriskblog.com/2013/04/labor-force-participation-rate-update.html

[AFTiger 282]

http://townhall.com/columnists/johnstossel/2013/06/05/austerity-myth-n1612692/page/full

Europe's struggles prove that "austerity" fails!

So say the Big Spenders.

With a condescending sigh, they explain that Europe made deep cuts in government spending, and the result was today's high unemployment. "With erstwhile middle-class workers reduced to picking through garbage in search of food, austerity has already gone too far," writes Paul Krugman in The New York Times.

One problem with this conclusion: European governments didn't cut! If workers pick through garbage, cuts can't be a reason, since they didn't happen.

That doesn't stop leftists from complaining about cuts or stop Europeans from protesting announced austerity plans. But if austerity means spending less, that hasn't happened.

Some European countries tried to reduce deficits by raising taxes. England slapped a 25 percent tax increase on the wealthy, but it didn't bring in the revenues hoped for. Rich people move their assets elsewhere, or just stop working as much.

If politicians honestly want to boost their nation's economies, they should look to what happened in countries that bounced back from economic slumps.

Iceland was hit by bank collapses -- but government ignored street protests and cut real spending. Iceland's budget deficit fell from 13 percent of gross domestic product to 3. Iceland's economy is now growing.

Canada slashed spending 20 years ago and now outranks the U.S. on many economic indicators.

Around the same time, Japan went the other way, investing heavily in the public sector in an attempt to jump-start its economy, much as the U.S. did with "stimulus" under President Obama. The result? Japan's economy stagnated.

The left now claims Japan didn't stimulate "enough."

In the U.S., politicians imply spending limits would be "cruel" because vital programs are "cut to the bone." But we are nowhere near bone.

Consider this family budget:

Annual Income ---- $24,500

Annual Spending ---- $35,370

New Credit Card Debt ---- $10,870

Existing Debt ---- $167,600

When I show that to people, they laugh and say the family is "irresponsible." They are dismayed when I point out that those are really America's budget numbers, with eight zeros removed:

Revenue ---- $2,450,000,000,000

Spending ---- $3,537,000,000,000

Deficit ---- $1,087,000,000,000

Debt ---- $16,760,000,000,000

Then people say: "That's terrible! We have to balance the budget."

Actually, we don't need to "balance" it. We just need to slow spending growth to about 2 percent a year, so the economy can gain on our debt. But politicians won't do even that.

I understand why. I ask people who say they are horrified by America's debt, "What would you cut?" Most have no clue. They just stare. Some say things like, "Don't cut education!"

C'mon. Federal bureaucrats spend $3.7 trillion! But most people can't think of anything to cut?

When businesses face budget shortfalls, they can't just give speeches about how much they care about fiscal responsibility -- at least not for long. They must make real cuts. When they do, they often prosper. Years back, IBM and GE each laid off 100,000 workers. People were furious. But thanks to those cuts, the companies survived.

If the politicians don't know what to cut, they should just accept Sen. Rand Paul's proposed budget. Among other things, he would cut four Cabinet-level agencies: Commerce, Housing and Urban Development, Energy and Education. Why not? We don't need a Commerce Department. Commerce just ... happens. Education is funded by the states. The Energy Department gives money to politicians' cronies.

I'd go further than Paul. Why do we need an Agriculture Department? Agriculture is done by farmers, not bureaucrats. Why do we need a Labor Department? And so on. All those things are better handled by a free market. I wish we had a real free market in America.

Government recently revised its dire forecasts about America's coming bankruptcy. The numbers are a little better than once thought.

But make no mistake: As people my age retire and demand Medicare, America will eventually go broke.

The first step toward a solution is just being honest about the deep hole we're in -- giving up on the lie that governments elsewhere failed with "austere" budgets. They haven't.

[RunInRed 16,992]

Chalk up another positive jobs report...

http://www.bloomberg.com/news/2013-06-07/payrolls-in-u-s-increased-175-000-in-may-unemployment-at-7-6-.html

[AU64 10,122]

An interesting chart from the Fed. The recovery does not look so good if you consider this.

[jj3jordan 2,125]

Chalk up another positive jobs report...

http://www.bloomberg.com/news/2013-06-07/payrolls-in-u-s-increased-175-000-in-may-unemployment-at-7-6-.html

Isn't 7.6 an uptick? That's good?

[shabby 1,960]

Chalk up another positive jobs report...

http://www.bloomberg...nt-at-7-6-.html

Isn't 7.6 an uptick? That's good?

It's good when the jump is caused by huge increase of those entering the labor pool as was reported to be the case.

[japantiger 4,077]

You guys are just working too hard. We have the most sluggish recovery in the history of the US economy (240 years; the worst); unemployment continues at 7.6%; well above the long term unemployment trend; and we have the lowest labor participation rate since Jimmy Carter. I would love to work for you guys....I could turn in a big pile of s*** and tell you it's gold....and you'd buy it....I'd probably get an outrageous bonus!

[autigeremt 6,970]

Chalk up another positive jobs report...

http://www.bloomberg...nt-at-7-6-.html

Isn't 7.6 an uptick? That's good?

It's good when the jump is caused by huge increase of those entering the labor pool as was reported to be the case.

Huge jump? Really? Ha!

[shabby 1,960]

Chalk up another positive jobs report...

http://www.bloomberg...nt-at-7-6-.html

Isn't 7.6 an uptick? That's good?

It's good when the jump is caused by huge increase of those entering the labor pool as was reported to be the case.

Huge jump? Really? Ha!

"The household survey, used to calculate the unemployment rate, showed a 420,000 increase in the size of the labor force, exceeding the 319,000 gain in employment and pushing up the jobless rate from a four-year low." If that was the case each month we would be looking at over 5 million a year entering the work force. Thats pretty large in a historical context.

[RunInRed 16,992]

175K new jobs + upticks in previous months counts. It's continued forward momentum and the global markets reacted accordingly.

[japantiger 4,077]

The market reacted because the consensus was the economy is still crappy enough that the Fed would continue printing cash and dumping it on the market; not because the market is booming.

[autigeremt 6,970]

Unbelievable that this is even remotely a "huge" jump.

[RunInRed 16,992]

http://www.bloomberg.com/news/2013-06-09/u-s-expansion-poised-for-longevity.html

[80Tiger 906]

Chalk up another positive jobs report...

http://www.bloomberg...nt-at-7-6-.html

Isn't 7.6 an uptick? That's good?

It's good when the jump is caused by huge increase of those entering the labor pool as was reported to be the case.

So the inverse has to be true. All those months when people were leaving the work force and unemployment was going down, it was bad. In other words we have had a false unemployment number over the past months/years because people were leaving the work force. It is now trying to correct itself with people re-entering the workforce.