Kill the economy, win the White House
Published 10:24 am Thursday, September 27, 2012
The U.S. economy was tanked because of 40 years of living on credit, uncertainty in the global economy, technologies of efficiencies, and a congress incapable of acting. But the current cause for economic woes lies with the Republican Party. Republicans are so intent on defeating the president for re-election that they have purposely sabotaged the country’s economic recovery. For Democrats, the smoking gun is when Mitch McConnell said:
“The single most important thing we want to achieve is for President Obama to be a one-term president.”
This leads to the conclusion that Republicans will do anything—including slowing the economy—in order to hurt Obama. Considering that the president is held responsible, and not the out of power party, it’s not a bad political strategy.
There is circumstantial evidence to make the case. Republicans have opposed a lion’s share of stimulus measures that once they supported, such as the payroll tax break, which they were forced to pass this year. Unemployment insurance has been held up by Republicans and used as a bargaining chip for even more tax cuts. During previous recessions, Republicans have supported loose monetary policy. Not this time. Republicans have attacked the Fed for even considering policies that focus on growing the economy and creating jobs.
Since the stimulus passed, Republicans have made no effort to draft job creation legislation. Instead, they continue to pursue austerity policies, which historical data suggest does little to create jobs. Just look at what austerity has done for Britain and the rest of the European recovery.
Republicans have not proposed a single jobs bill that didn’t revolve around their solution for all economic problems: tax cuts. Still, one can argue that these steps are reflective of conservative ideology. If you view government as fundamentally bad, then stopping government expansion is—on some level—consistent.
The GOP forced us to keep the Bush tax cuts, which has reduced taxes to its lowest point since 1953. At the insistence of the White House, Congress also agreed to extend unemployment benefits and enact a payroll tax cut. Measures that provided a small, but important stimulus to the economy, but above all, maintained the key GOP position that taxes must never go up.
In 2011, federal spending cuts forced by Republicans took money out of the economy, and largely negated the effects of the stimulus bill.
The GOP’s refusal to allow legislation that would help states with their own fiscal crises (largely, the result of declining tax revenue) has led to massive public sector layoffs at the state and local level. In fact, since Obama took office, state and local governments have shed 811,000 jobs, which would cut the unemployment rate closer to 7%, not its current 8.2%. These cuts have a larger impact. When teachers are laid off, (200,000 have lost jobs), it means larger class sizes, and after-school classes being cancelled. So a policy that was intended to save “our children and grandchildren from ‘crushing debt’” is leaving them worse off for the future. In addition, with states operating under tighter budgets, it means less money for essential government services.
This is the most obvious example of how austerity policies are not only are harming the present, but also imperiling the future. The spending cuts on state and local levels are matched by a lack of fiscal expansion on the federal level. In fact, fiscal policy is now a drag on the recovery, which is the exact opposite of how it should work, given a sluggish economy.
This collection of slow-the-growth policies must also include last summer’s debt limit debacle, which Speaker Boehner has threatened to renew this year. This is yet another GOP initiative that undermines economic recovery. According to economists, over the entire episode, confidence declined more than it did following the collapse in 2008. Only after the crisis did consumer confidence stabilize, but employers held back on hiring, In addition, the debt limit deal also forced more unhelpful spending cuts on the country.
Since that national embarrassment, Republicans have refused to even allow votes on the President’s job bill. They dragged their feet on the payroll tax and even held up the transportation bill with poison-pill demands for environmental regulation. Yet, with all these tales of economic ineptitude emanating from the GOP, it is Obama who is bearing most of the blame for the country’s continued poor economic performance.
Whether you believe the Republicans are engaging in purposely-destructive fiscal behavior or are simply fiscally incompetent, it doesn’t matter. It certainly is bad economic policy that should be part of any national debate not only on who’s blame for the current economic mess, but also what steps should be taken to get back on track. But don’t hold your breath. Presidents get blamed for a bad economy and certainly, Republicans wont take responsibility for it. The obligation will be on Obama to make the case that it is the Republicans, not he, who is to blame—a difficult, but not impossible task.
In the end, what might be the worst part of all, is one political party is engaging in scorched-earth economic policies that are undercutting the recovery, possibly on purpose, and is forcing job-killing austerity measures on the states. They have paid no political price for doing so. If anything, it won them control of the House. Sabotage or not, it’s hard to argue with “success.” And it’s hard to imagine we’ve seen the last of it, whoever wins in November.