When Republicans Say They Can’t Create Jobs, Maybe We Should Believe Them
If you cut government spending, it helps the economy, right?
That’s what Republicans keep telling us, but it’s hard to see how this can possibly be true. The economy is spending. Government spending is demand. Reduce demand and boost the economy? It makes no sense.
And now we have a real world example of how cutting government spending, as Republicans argue, builds a gangbusters economy. As always, reality has a liberal bias.
Conservative Republicans have long clamored for government downsizing. They’re starting to get it — by default.
Crippled by plunging tax revenues, state and local governments have shed over a half million jobs since the recession began in December 2007. And, after adding jobs early in the downturn, the federal government is now cutting them as well.
States cut 49,000 jobs over the past year and localities 210,000, according to an analysis of Labor Department statistics. There are 30,000 fewer federal workers now than a year ago — including 5,300 Postal Service jobs canceled last month.
Cut spending, add to unemployment. “The public sector didn’t start to lose jobs right away,” says economist Heidi Shierholz of the Economic Policy Institute. “But then it did as the budget crunch really hit. State governments are not allowed to run deficits. So the private sector is expanding while the public sector is shedding jobs — to the tune of 35,000 jobs a month.”
So, as a consequence of reduced spending and congress’s (read “Republicans’”) failure to extend aid to the states, employment is treading water — as the private sector hires, the public sector fires. And the result is a counterproductive feedback loop keeping job growth stagnant. Republicans often argue that public spending “crowds out” private investment, but even if this were true, it again suggests a feedback loop without growth — cut government spending and private spending fills the void, but there’s zero growth in overall spending. After all, X-X+X=X or stasis. This is a no-growth policy that accepts the current status quo as the absolute best America is capable of.
Republicans really have no plan to stimulate job growth or the economy. And why should they? The fashionable belief among the GOP deepthinkers — especially among presidential candidates — is that government doesn’t create jobs. Logically speaking, this is the same as saying, “There’s nothing we can do.”
So it follows that the alternative jobs plan put out by a party that believes it can’t possibly create jobs would be a joke. Macroeconomic Advisers, LLC took a look at the GOP’s jobs plan and concluded that not only do nothing to help the economy, but the Balanced Budget Amendment provision they jammed in there would do a lot to hurt it.
“Without more detail on the Republican plan, we cannot offer a firm estimate of its economic impact in either the short or long run,” they concluded. “However, if what we do know of JTGA [the GOP’s “Jobs through Growth Act”] were enacted now, we would not materially change our forecasts for either economic growth or employment through 2013.”
“If actually enforced in fiscal year (FY) 2012, a [Balanced Budget Amendment] would quickly destroy millions of jobs while creating enormous economic and social upheaval,” they continued. “However, we believe no responsible policymaker would push the implementation of a BBA when the projected federal deficit is $1 trillion and the Fed is unable to offset much fiscal drag… A BBA would amplify cyclical swings in the economy. Furthermore, it likely would be abandoned or circumvented with the first recession after ratification, creating confusion and uncertainty over fiscal policy.”
So the Republicans’ “Jobs through Growth Act” should more honestly be titled the “Unemployment through Contraction Act.” It’s just a wishlist of items beloved by Republican dreamers over the years, with no real focus on job creation or economic growth. And why should they put forward a serious jobs plan? We’ve already established that they believe they can’t create jobs and, of course, the thing doesn’t have a hope in hell of ever becoming law anyway.
I guess the moral of this story is don’t listen to the job creation advice of people who tell you they can’t create jobs. Reducing spending is hurting our economy before our eyes and forecasters say that Republicans plans will only make everything much, much worse.
The Republican Party has been telling us over and over that they can’t create jobs and the evidence suggests that they’re absolutely right.
Louie Gohmert’s Brainless and Typically Republican Jobs Plan
By now, it should be obvious to even the most casual observer that Rep. Louie Gohmert is not burdened with the curse of genius. In fact, while there may be a lot of competition for the title of Dumbest Member of Congress, Gohmert is definitely a frontrunner. This is the guy who came up with the ridiculous “terror babies” conspiracy theory, who argued that President Obama was in league with the Muslim Brotherhood, and that passage of hate crimes legislation would lead to Nazism, legalization of necrophilia, pedophilia, and bestiality. This is one underachieving mind.
So it should come as no surprise that he has idiotic ideas about what will and won’t create jobs. In a headline-chasing maneuver, Gohmert filed a bill titled the “American Jobs Act” before Democrats filed the President’s bill by the same name. So now dems can’t pass Obama’s bill — unless they change the name to something like “American Employment Act” or the “Jobs for America Act.” That should really set them back about thirty seconds. What a crippling blow from a procedural grandmaster.
But it’s not Gohmert’s pointless poaching of the title that’s so demonstrative of his idiocy — although it’s not a bad one. It’s his bill itself. Two whole pages legislation is all it takes to get America back to work, according to Gohmert. And it’s what’s in this simplistic legislation that shows the true depth of Representative Gohmert’s intellectual capacity.
The Texan lawmaker’s measure would eliminate the 35 percent corporate tax to spur job creation in the private sector.
Gohmert says that he’s talked with CEOs of corporations, who moved their companies to China because “the number one reason, every time was the 35 percent corporate tax; China has 17 percent corporate tax — if you move a big corporation (to China),” then they can reinvest money into the company.
That’s right, a 100% free ride for corporations. Of course, this is stupid.
The two-page bill changes the tax code to replace any mention of the current “35 percent” tax rate with “0 percent.” Corporations are already sitting on trillions in cash, so cutting their taxes would likely do very little to help the economy, but would balloon the deficit by depriving the government of about $300 billion in revenues annually. As the CBO found, cutting taxes on businesses “typically does not create an incentive for them to spend more on labor or to produce more, because production depends on the ability to sell output.”
So lowering taxes won’t create jobs, because demand does not depend on supply. Imagine my shock at this discovery.
“Nothing’s more pathetic than the GOP doing the bidding for corporate America while pretending to be on the side of the little guy,” a senior House Democratic aide told The Hill. “Republicans who want to put more money in the pockets of billionaire CEOs instead of helping to put people to work is just wrong.”
Think we’ve reached the bottom of Gohmert’s idiocy? Sorry, but it is bottomless. Gohmert has also been pushing an argument argument that shows he doesn’t even understand what job creation is. A provision in the Obama plan calls for an end to discrimination against the unemployed, which is actually becoming a real problem. Gohmert thinks the ban would be the worst thing ever.
“We have created in this bill a newly protected class, not on race, creed, color, sex — not even sexual orientation, this is a new one,” he recently told Sean Hannity. “It’s not religion, it’s a prohibition of discrimination in employment on the basis of an individual’s status as unemployed. By golly, if you apply for a job and you’re unemployed and you feel like you got discriminated against and not hired because you were unemployed, see a lawyer. You’ve got a claim under this bill.”
Here’s the thing; if you hire someone who’s already employed, you’ve created zero jobs. I mean come on, it’s freakin’ simple math. If the number of unemployed stays the same, you haven’t created a job, you’ve just given someone a different job. It’s not the same thing at all. Yet here he is, defending the so-called “job creators” from actually having to do something crazy like create jobs. The unemployment discrimination ban in Obama’s plan should be a no-brainer — which goes along way toward explaining why the brainless Louie Gohmert is against it.
But how far away from the rest of his caucus is Gohmert on this? Not very. This is all just rightwing economic flateartherism taken to it’s logical extreme. If Republican economics works, then Gohmert’s plan should really work. Cut taxes, employment skyrockets. Never mind that a decade of experience is telling us right now that this isn’t true at all. And it should create jobs by allowing employers to continue to avoid creating jobs. Because we don’t want any of those burdensome, job-killing regulations.
Yes, it’s stupid. Yes, it’s backwards. Yes, it ignores realities, factual data, recent history, basic math, simple logic, and common sense. And that’s why it’s just so damned Republican.
Obama Jobs Plan Modest, Already Compromised
If early reports of President Obama’s job speech are accurate and the choice for reinvigorating the economy is “go big or go home,” it’s looking like the President has opted to go home. As Paul Krugman pointed out a few days ago, the problem with the initial stimulus package wasn’t that it was ineffective, but that it was too small to repair all of the damage caused by the Bush crash. In short, it may have saved us from a depression, but that’s about all it was capable of doing.
So never let it be said that this administration is capable of ignoring past mistakes. If at first you don’t succeed, try again — fail better. When you need a hoist to lift the economy, get a stepladder and hope for the best. Still, it’s not all bad.
According to people familiar with the White House deliberations, two of the biggest measures in the president’s proposals for 2012 are expected to be a one-year extension of a payroll tax cut for workers and an extension of expiring jobless benefits. Together those two would total about $170 billion.
The people spoke on the condition of anonymity because the plan was still being finalized and some proposals could still be subject to change.
The White House is also considering a tax credit for businesses that hire the unemployed. That could cost about $30 billion. Obama has also called for public works projects, such as school construction. Advocates of that plan have called for spending of $50 billion, but the White House proposal is expected to be smaller.
Obama also is expected to continue for one year a tax break for businesses that allows them to deduct the full value of new equipment. The president and Congress negotiated that provision into law for 2011 last December.
OK, the payroll tax cut and unemployment benefits aren’t going to improve employment. These are already in place, so these are status quo measures. Both are necessary to keep the numbers from worsening, but they aren’t going to improve anything. Think of them as the cast on the broken leg; you need it to protect the healing bone, but by itself it doesn’t fix anything.
More interesting is the tax cut for businesses that hire unemployed workers. Normally, I’d argue that tax cuts don’t create jobs and I’d be right. No one is going to create a position just to get a one-time tax break. But a big problem in this job market is that some companies are actually refusing to hire unemployed people. Hiring people who are already employed results in zero job growth. The “jobs creation” that Republicans like to talk about happens when unemployed people get jobs, not when just anyone gets a job. It’s simple math; poaching workers from other employers is simply shuffling people from one place to another. Hiring unemployed jobseekers increases the number of employed people total. That’s what you want to do. Giving tax cuts to anyone who hires anyone — or worse, giving them to everyone and hoping they’ll hire someone, as Republicans suggest — won’t solve the problem. Targeted tax cuts benefiting employers who are solving the actual problem may.
Schools construction is a no-brainer. Which means the no-brain Republicans will be against it. Like the transportation bill, this would be guaranteed to increase employment in the short-to-medium term and boost consumer spending. And the “one year tax break for businesses that allows them to deduct the full value of new equipment?” Pointless unless you jam the word “American” in that sentence before “equipment.” We want to stimulate the American economy, not China’s. Unless this tax cut is likewise targeted to a problem, the only people who will really benefit from it will be a handful of importer middlemen who get their beaks wet.
Yet what we need — big public works projects, massive restructuring of the tax code to give the advantage to the poor and middle class again, protectionist trade policies — are all missing. You can argue that these are likely impossible given the political environment in Washington, but that’s just accepting Homer Simpson’s dictum that trying is the first step in failing. It also pretends that the only fights worth having aren’t fights at all, but guaranteed wins and gimmes. Politically speaking, if not economically, it may be better to lose good fights than to win easy ones. Or, in the case of this presidency, to fight at all. Two years of compromise and middle-of-the-road politics has gotten this president rock bottom approval ratings. Liberals don’t like him because he constantly refuses to fight for better solutions, instead weakening good ideas with compromise after compromise until they’ve been transformed into ineffective half-meansures. And conservatives don’t like him because… Well, because they’re Republicans; if he cured cancer, they’d hate him. Wouldn’t the wise thing to do be to abandon this approach altogether?
If the president were to roll out an ambitious economic plan and fight for it, then who would be to blame if the economy didn’t improve? Certainly not the president. He had an idea and Republicans refused to let him implement it, favoring instead a status quo of a weak economy and low employment.
And next time around it’d be that much more politically feasible to do something that would actually work. We need something that would actually work.
Note to the President: Winning Isn’t Everything, It’s the Only Thing
The good news is that President Obama is fixing for a fight on jobs.
President Obama has decided to press Congress for a new round of stimulus spending and tax cuts as he seeks to address the great domestic policy quandary of his tenure: how to spur job growth in an age of austerity.
Obama will lay out a series of ideas in a major address right after Labor Day, when he and a largely antagonistic Congress will return from vacation, the White House said Wednesday.
The president is thinking about proposing tax cuts for companies that hire workers, new spending for roads and construction, and other measures that would target the long-term unemployed, according to administration officials and other people familiar with the matter. Some ideas, such as providing mortgage relief for struggling homeowners, could come through executive action.
The bad news is that President Obama is fixing for a fight on jobs. White House chief of staff William Daley once said of the president, “He’s not someone to walk away from a tough fight.” Which is actually pretty true. The problem is that he seems more interested in ending those tough fights than in winning them.
If “trying is the first step toward failing” is Homer Simpson’s motto, “fighting is the first step toward caving” is Barack Obama’s.
And he’s already putting his caving foot forward, as he so often does. He proposes tax cuts and asking the super-committee to cut more than $1.5 trillion in spending cuts. You sweeten the deal after the prospect objects, not before. It’s the public option all over again — the president gives himself nowhere to retreat to but Republican territory. Unemployment and wage stagnation aren’t contributing factors to a bad economy, they’re the primary problems. They aren’t symptoms, they’re the disease. Solve those and everything else comes together — including increased tax revenues that drive down the deficit. Focusing on cutting spending means “living within our means,” yes. But these aren’t the means any sane person wants to live with and cutting spending in reaction to our current economic situation means accepting it as the status quo. The idea that cutting spending will magically create jobs is the purest BS anyone ever sold. It doesn’t even make sense. Yet Barack Obama plays along with the GOP, helping them sell this crap — a sales job which will, by the way, make it harder to do sane things in the future. All because it allows him to propose big things and settle for crumbs in the form of nearly useless half-measures. We need solutions — solutions Republicans don’t have and actually hate — but what we get are bumperstickers and bandaids and window dressing.
This is the reason that public approval of Obama’s handling of the economy is at a historic low of 26%. Yes, Republicans have blocked him at every turn, demanding things that aren’t helpful in the best cases and are actually damaging in the worst, but Obama’s been broadcasting his plays beforehand by countering arguments that have yet to be made. He deserves that 26%. Not because his ideas are bad, but because he himself makes it impossible to have those ideas carried out.
The GOP Agenda: Drive Down Job Growth, Depress Wages
Some time yesterday, I decided that I would write about the GOP’s anti-jobs agenda today. So I’m swinging through my feeds last night and I come across this — MSNBC’s Rachel Maddow stole my thunder.
Let Robert Frank’s final words from that interview be what you take away here; that the GOP’s focus on the deficit to the detriment of employment is a “criminal misdiagnosis of the problem.” I’d add that’s a deliberate misdiagnosis.
I’m going to disagree with Maddow on one point; yes, the Republicans’ efforts to kill jobs will hurt President Obama in the elections — but no, that’s not the only reason they’re trying to strangle off job growth everywhere it rears its head. This is, to a much larger degree, about cheap labor.
What happens during periods of widespread, extended unemployment? Wages are depressed. The law of supply and demand dictates that a surplus of a product drives down the price of that product. Labor, as much as it seems more like an institution, is a product. You sell it to your employer or, if you’re self-employed, you sell it to your clients. You’re selling your mind, your muscle, your talent, your skill set, and your time. In a good labor market, you stand a much better chance of getting what that mind, muscle, and time is really worth. In a bad labor market… Well, not so much.
Enter competition. In a tough labor market, flooded with a surplus of workers looking to sell their product, price is driven down. You take what you can get, because demanding what you’re actually worth makes you uncompetitive. If you’re self-employed, you’re priced out of the market. If not, no one is hiring for your skills at the wage you’re willing to accept. Supply and demand dictates that when ten people compete for the same job, the wage that job pays drops, because one of those ten will be willing to work that cheap. Multiply the jobseekers and the price drops further. Presto-chango, instant cheap labor.
And this also explains why Republicans are attacking public unions. Unions keep wages up, through collective bargaining. In this case, competition benefits the worker, not the employer. A worker can say to a prospective employer, “Gee, I don’t know… I can make more as a steamfitter for the state.” Employers have to compete with unionized shops and this works in the jobseeker’s favor. Get rid of collective bargaining or unions altogether and suddenly employers have all the control in setting wages and workers have none. Like they say, with unions you bargain — without unions, you beg. This is true even of people who aren’t unionized.
And, of course, there are the elections, as Rachel points out. Not only would high unemployment (theoretically) work against Obama’s reelection, but the collapse of organized labor would put Democrats in general at a disadvantage. This second point is something that Republicans are admitting openly, although with a sprinkling of propaganda and BS: e.i., Democrats are “in bed” with “Big Labor” and the only reason Democrats are running to the workers’ defense is so that they can keep getting campaign contributions.
It pays to remind everyone that when the Citizens United ruling came down, Republicans defended it by saying that unions would help offset corporate cash. It was a ridiculous argument; labor has nowhere near the money that multinational corporations have. But it also pays to notice that Republicans are now trying to do away with organized labor, so that previous argument is dead. Republicans, by their own admission, are trying to kill off the one thing standing between us and full corporate dominance of elections.
So, what’s the difference between whether Rachel Maddow is right about the motives behind Republican job-killing or whether I’m right about it? Permanence. If Rachel’s right, then after 2012, Republicans probably drop it to get reelected. If I’m right, high unemployment and low wages become the “new normal.” A permanently depressed job market, with the accompanying low wages, will help corporations be competitive in a global market. Want to compete with China? Then be China.
From now until 2012, the conversation should be about jobs. There’s a deficit problem, but there’s no deficit crisis. There is, on the other hand, a jobs crisis. Democrats should talk about little else — while making sure to point out all the jobs Republicans are actively and openly trying to kill.
And we — i.e.,you — shouldn’t shut up about it either. In letters to the editor, in gripe sessions with our friends, in comment threads and blog posts and in forums and on Twitter and Tumblr and Facebook and what-all, the dominant question should be, “Hey GOP, where are all the jobs?” and “Hey GOP, why are you killing jobs?”
In Wisconsin, that message is working. A Public Policy Polling survey finds that, if we had a do-over on the elections today, Democrat Tom Barrett would beat Scott Walker by seven points. And nearly all of that movement away from Walker comes from Republican voters.
It turns out that even GOP voters are starting to come to a basic truth; the best way to save jobs is to put elected Republicans out of theirs.
A Drastic Solution to a Phony Crisis
Another short one today. Here’s the Wisconsin Capitol rotunda, courtesy of Associated Press:
Thousands of protesters have been jamming the building daily, hoping to convince state lawmakers of the foolishness of Governor Scott Walker’s plan to basically dismantle most public employee unions. It’s a plan that moves the budget burden from those who can afford it, to middle class families. Not only is this incredibly unjust, but it’s a recipe for economic disaster, driving down consumer demand as thousands of public employees are forced to cut back drastically.
With this as the backdrop, I give you a must-read editorial in Madison’s The Capital Times:
[L]ike just about every other state in the country, Wisconsin is managing in a weak economy. The difference is that Wisconsin is managing better — or at least it had been managing better until Walker took over. Despite shortfalls in revenue following the economic downturn that hit its peak with the Bush-era stock market collapse, the state has balanced budgets, maintained basic services and high-quality schools, and kept employment and business development steadier than the rest of the country. It has managed so well, in fact, that the nonpartisan Legislative Fiscal Bureau recently released a memo detailing how the state will end the 2009-2011 budget biennium with a budget surplus.
In its Jan. 31 memo to legislators on the condition of the state’s budget, the Fiscal Bureau determined that the state will end the year with a balance of $121.4 million.
To the extent that there is an imbalance — Walker claims there is a $137 million deficit — it is not because of a drop in revenues or increases in the cost of state employee contracts, benefits or pensions. It is because Walker and his allies pushed through $140 million in new spending for special-interest groups in January. If the Legislature were simply to rescind Walker’s new spending schemes — or delay their implementation until they are offset by fresh revenues — the “crisis” would not exist.
So Scott Walker literally puts the state in the red paying back wealthy donors and cronies, then takes that deficit — that he created — and uses it as an excuse to screw working families. This isn’t just wrong, this isn’t just crony capitalism, this is corrupt. It may be legal corruption, but it’s corrupt all the same. Walker is taking money away from working families, so he can give it to special interests.
There isn’t a word that accurately describes how angry I am with this man right now.
I’m Sticking With the Union
This is the extent of my morning post today. I’m hitting the streets with a few thousand of my fellow Wisconsinites.
Public and private sector union leaders in Wisconsin are coming together to oppose Gov. Scott Walker’s proposal to take away collective bargaining rights for nearly all public employees in the state and force them to pay more for their pensions and health insurance.
Union leaders at a news conference on Monday said ending collective bargaining will weaken the middle class in Wisconsin. They are urging Walker to instead resume negotiations with the unions. Thousands of union members were expected to converge on the Capitol on Tuesday for a hearing.
Wisconsin State Journal:
“It is very possible that if the vote goes against public employees, we will witness something that hasn’t happened since the 70s: massive strikes,” [Mike Sacco, president of the WLEA local that represents UW and Capitol cops] writes. “This may be the only way to fight this ‘wartime’ mentality of the state. Only with mass unity of the teachers and all other public employees will we be able to beat back this aggression by the governor’s office.”
While I’m not a public employee, this just plain ain’t right. These are good people and good workers. They’ve been loyal employees and when their employer treats them like crap, someone has to stand up for them. Especially in this case, where the people of Wisconsin are the employer.
Scott Walker may think it’s fun to be a lousy, tyrannical boss. But I don’t. I’m going out to stand with my employees.