Saturday, June 2, 2012

Coulda, Shoulda, Woulda

For a monthly employment report that showed the economy adding jobs for the 27th straight month (and a net addition of more than 4 million jobs during that time), the way the mainstream media reported the news you would think we were in economic free fall.  The Huffington Post headline read "Total Mess" with a huge fireball graphic underneath it.  Politico said the jobs report "showed trouble" for the President and the New York Times said it was the "worst job data" in a year (I won't even get into what right wing blogs and websites said, but suffice to say, Obama. Kenyan. Foreign. Birth Certificate.  You know the drill).  So 69,000 jobs were added, no less an authority than the Wall Street Journal has observed that without massive public sector layoffs, almost exclusively at the state and local level, the unemployment rate would be 7.1%, but no matter - Republicans lined up to take a swing at the unemployment number piƱata and tagged Obama with all the "blame" for the economy's purported shortcomings.

Are they right?  Of course not.  Does it matter? Of course not. Why? Because the mainstream media is about finding fault, pointing fingers and assigning blame, and in this case, they are training their guns on 1600 Pennsylvania Avenue.  Regrettably, the Obama team has no one to blame but themselves because Republicans have deftly maneuvered the media (and, to a lesser extent, public opinion) toward the narrative that Obama "owns" the economy (even though he's not a despot), that tax cuts are the cure all (even though Obama signed off on a massive tax cut extension and included another one in the dreaded "stimulus" bill) and somehow, regulation is strangling the private sector (even though job loss has been in the *public* sector and Obama has promulgated fewer regulations in his time in office than Bush did at the same time in his first term).  I know, pesky and inconvenient details that no one seems to care about, but for the sake of accuracy and truth in the "public record" this shit matters. 

Consider the monetary stimulus that has been pumped into our economy.  The first stimulus, more formally known as the American Recovery and Reinvestment Act, was in fact roughly $787 billion; however, what Republicans, and many in the media neglect to mention, is that roughly $288 billion of that went to tax cuts for individuals and businesses.  Piled on top of those tax cuts was the Tax Relief, Unemployment Insurance Reauthorization & Job Creation Act of 2010, which, at $858 billion, extended all of the expiring Bush tax cuts, a payroll tax cut and "patch" to the Alternative Minimum Tax.  Indeed, of the $858 billion, only the 13 month unemployment extension, at a cost of $56 billion, was not tied to a tax cut or credit.

If you are scoring at home, under President Obama, more than $1 TRILLION in tax cuts and credits have been passed.  In fact, federal tax rates are at their lowest levels since prior to the Great Depression and the percentage of GDP drawn from taxes is at its lowest level since the early 1950s.  The idea that tax cuts have any connection to job growth should have been disabused by the fact that President George W. Bush passed massive tax cuts in 2001 and 2003, but at the end of his eight years in office, the only "net" jobs that had been created were in the public sector (another inconvenient fact the mainstream media skirts over). In fact, there was a modest amount of private sector job loss under Bush even though tax rates were low, massive government spending was poured into defense, national and homeland security and a new prescription drug benefit under Medicare was created. 

Some point to the time that was spent passing the Affordable Care Act as a missed opportunity where the Obama team should have been focusing on the economy, and there is some truth in that assertion.  But it was not going for universal health coverage that Obama should be faulted for, but rather, the manner in which he went about doing it. Republicans like to call the President divisive, in fact, the most divisive President in modern times, but the reality is, as with much of what Republicans say, the opposite is true. Like the ARRA, which was trimmed and reshaped in a vain attempt to garner meaningful bipartisan support, Obama was led around by the nose by the Chuck Grassleys and Olympia Snowes of the world as he allowed the health care debate drag out for months on end.  Senator DeMint may have wanted health care to be Obama's Waterloo, but what he got instead was Obama's Vietnam, a policy quagmire that the President was unable to extricate himself from because he had committed too much political capital to its outcome.  In the meantime, opposition to his Presidency solidified into hard core obstructionism that was leveraged into pouring hundreds of millions of dollars to win a low-turnout off year election. 

And therein lay the tatters of Obama's first term.  When the "tea party" arose and Republicans smartly invested significant resources into getting out its vote in 2010, Obama's fate was sealed. It is interesting that so many of his advisors had experienced the exact same thing in 1994 working for Bill Clinton yet seemed oblivious to the similarities between the two elections.  Nevertheless, because Democrats were timid in their assertion of power while Congress was still theirs, everything from a second stimulus bill to a debt ceiling increase were avoided because of political cowardice.  Of course, this helped little once ballots were cast in November - Democrats STILL got "shellacked" (to use the President's term) and had nothing to show for it. 
After the mid-terms, what the Obama team was left with were unenviable choices.  Having shown they had little appetite for a fight and because no budget had been passed before the election, they folded when Republicans refused to extend just some of the Bush tax cuts and bargained a weak compromise - first, not even matching the extension of unemployment benefits (13 months) to the tax cuts (2 years) and then, not getting a full year budget passed (it would be held hostage a few short months later). Another hostage lingered too because the debt ceiling was not raised, creating even more drama mid-way through 2011. 

Of course, once Republicans formally took control of the House in January 2011, they had little incentive to push any "stimulus" when stonewalling much of the first two years of Obama's presidency had proven so politically successful.  Instead, Obama was left to propose a jobs bill that had no chance of getting through Congress but would have been a great piece of legislation to have passed when Democrats were still in control. ARRA money that had helped states and localities avoid layoffs dried up and more than 600,000 public sector workers were laid off, adding, according to the Wall Street Journal, about 1% point to the unemployment rate. What Obama was left with was a calculated gamble that the combination of modest infrastructure investment and aid to states, when combined with the massive amount of tax side stimulus that had been passed in 2009 and late 2010 and traditional movement in the business cycle would jolt the economy out of its torpor and send us on a glide path to virtuous growth.  

For a while, it seemed as though this risk would pay off.  Unemployment slowly came down from slightly above 9% to just over 8% and a steady stream of strong monthly employment numbers suggested ballast was being placed under the economy, but whatever steam was in our engine appears to be fading.  It might be problems in Europe, China devaluing its currency, or the spring spike in oil prices, but whatever the reason, the Republican messaging machine is relentlessly pointing the finger at Obama even though they have done little to help Americans struggling with unemployment.  Indeed, because there are only 10 Republican Senate seats being defended and most Congressional districts have been gerrymandered to ensure incumbent re-election, Republicans have little to lose in "doubling down" on their obstructionism.  They have created a narrative environment where Obama is "blamed" for poor job numbers while they (Republicans) escape any accountability for the lack of progress.  Moreover, because of Citizens United, outside groups are committing literally hundreds of millions of dollars to amplify the anti-Obama message, especially in states where vulnerable Democratic Congressional incumbents may fear being connected too closely with the White House.

Republicans also know they run no risk of dropping below 40 Senators in November, so even if Obama successfully tars House Republicans as obstructionists and the Democrats re-take House control, Senator McConnell could just fall back on the same stonewalling strategy that proved so effective during Obama's first two years in office. In Republican calculus, the downside to a few more months of economic pain pales in comparison to the potential payoff - control of the White House and both houses of Congress - to enact any and all forms of conservative orthodoxy that the right wing funders have been salivating over - from greater deregulation to privatizing Social Security and Medicare. 

And for this, Obama must take most of the responsibility.  While we would like to think Republicans would have, at some point, acted like rational actors, the President's team was far too slow to pick up on the wave of obstructionism that has nearly crushed him. Having squandered much of the "super majority" he had on a moderate piece of health care legislation originally advocated by Republicans and right-leaning think tanks in the 1990s, the opportunity for meaningful government involvement in lowering unemployment was missed.  Having settled for a bare quarter of the loaf of stimulus that could have gone toward direct job creation, the more than $1 trillion in tax reductions have proven ineffective as long-term drivers for job gains and while everyone else runs in the opposite direction, Obama is left holding the steaming bag of shit.  

No comments:

Post a Comment