Economics

SUMMARY

Obama plans to go on the offensive regarding economic issues in 2012, on several fronts. He will highlight the improving economy, the improving job market, and the spectacular success of the auto bailout. He will hammer the Republicans for attacking unions and working families, for fighting efforts to control gas prices, and for clinging bitterly to their tax breaks for the rich and corporations. And he will also hammer them on Medicare and other health and budget issues, which we will examine in another article.

The Recession. Romney claims Obama made the recession worse, but in fact the recession ended six months after Obama took office. The economy has in fact improved since Obama took over and began cleaning up Bush’s mess. We have had increases in jobs, retail sales, stocks, exports, hiring, GDP, housing prices, and the deficit has gone down. The mortgage plan already helped hundreds of thousands of families save their homes.

According to the polls, the American people know that the economy collapsed because the Republicans gutted the SEC, so no real regulating was going on; some of Bush’s SEC lawyers weren’t catching crooks because they were too busy insider-trading. And going even further back in time, they know that the architects of our disasters are Reagan and both Bushes. Reagan launched us on 30 years of supply-side and the Laffer curve, with promises that his gigantic deficits would magically all balance out. He was dead wrong.

Clinton got us back into surpluses despite unanimous Republican opposition, and then Bush 43 came along and undid it all, actually piling on more debt with two unfunded wars, an unfunded tax cut for the rich, and an unfunded expansion of Medicare (and the worst wage gains since the Depression). And Obama’s every effort to clean up the Republican mess has been blocked by, you guessed it, Republicans.

Jobs. Over the past year, the private sector has added almost two million jobs, and Rust-Belt manufacturing is on the rise, which should steer some key electoral votes Obama’s way. Obama’s stimulus package saved or created three million jobs now, as the Council of Economic Advisers and even the Wall Street Journal acknowledged. The GOP, on the other hand, has been too busy trying to ban abortion and destroy Medicare, to generate any jobs programs; finally after many months and many bills attacking abortion and Planned Parenthood, the GOP got around to submitting a "jobs bill" consisting of the same old rehash of tax cuts and spending cuts.

The one effort they made originated early on was Eric Cantor’s “YouCut” program, itself an admission that the GOP needs ideas from voters on where to cut the budget because they lack the wit or the courage to make their own proposals; as a result of a voter suggestion, Cantor tried to force a vote to wipe out the Temporary Assistance for Needy Families Emergency Contingency Fund, which would have destroyed almost 200,000 jobs. Then Cantor went out to sell a “multi-tier jobs plan” which consisted of the same two tiers as always, cutting regulations and taxes for the rich and corporations; when he briefed it at a town hall, the audience slammed him and the rest of the GOP for wasting their time on nonsense like abortion, rather than coming up with a serious jobs bill.

Also from the House GOP: the Republicans introduced a plan to allow the federal government to replace three departing employees with only one new hire, which would actually reduce employment. Because the federal government is The Debbil. Health care services, the court systems, FEMA, food safety, the military….and incidentally the federal workforce is a smaller percentage of the population now, than at any time in forty years.

Meanwhile the GOP won't allow any Obama jobs bills to go through; Barbara Boxer submitted the latest Democratic plan, and Rand Paul sabotaged it with juvenile poison-pill amendments. Because fraternity pranks are more important than job creation.

So there are indeed growing signs that the GOP doesn't really want the employment picture to improve before the 2012 election. Republican Michael Barone admitted outright that although corporate America is sitting on a trillion in profits right now, they're holding off on hiring, to make Obama look bad and get Republicans elected.

And of course the GOP's monomaniacal focus on freezing the debt ceiling in place is distracting all of Washington from job creation. Because defending an artificial barrier with no meaning in the real world, is more important than creating jobs in the real world.

Two GOP governors, Rick Scott and Scott Walker, actually cost their states jobs by rejecting the high-speed rail projects. Even Republicans complained about it.

And we needn't wonder what a Republican president would do to the job market: the last time we had a Republican president, we had the slowest job growth of any administration since the Depression. And right now the GOP frontrunner is Romney who had an awful record on jobs both as governor and as chief of Bain Capital.

The GOP is also lying outright about Obama's earlier statements regarding the unemployment rate. He made no promises, notwithstanding the claims of the GOP.

The Auto Industry. Obama plans to make the auto bailout a key issue in places like Ohio, Indiana and Pennsylvania, and of course Michigan. The GOP, in the form of Daniels, Romney, Pawlenty, Gingrich. Ron Paul, Michele Bachmann and Huckabee, fought the bailout because they were willing to let the industry and its ancillary industries die. Here's Boehner in June 2009: “Does anyone really believe that politicians and bureaucrats in Washington can successfully steer a multi-national corporation to economic viability?"

Romney’s Times editorial, "Let Detroit Go Bankrupt", insisted that if Obama got his bailout, "you can kiss the American automotive industry goodbye" and “What is proposed is even worse than bankruptcy — it would make GM the living dead.” Perfect fodder for an attack ad -- in fact the Democrats are already attacking Romney on this issue. Romney's team is weakly parrying all this by pretending he had the idea first, but then Obama did the whole thing wrong. One Romney staffer insisted that Obama implemented Romney’s idea, but wasted taxpayer money by "not doing it sooner". Romney's stance on this has already been ridiculed by no less than the CEO of Chrysler, as well as Michigan Republicans, the guys Romney would need to win the state.

Workers. As the appalling Wisconsin fight showed, the Republicans have declared war on the unions because they give too much money to Democrats. The Wisconsin battle involved public sector employees – teachers, and now police and firemen too – but the GOP wants to tackle all the unions. In Ohio Kasich laid off thousands of public workers and took away some collective bargaining rights, angering policemen, firefighters, teachers and their families: by huge margins, Ohioans want the union law repealed and they want to block GOP attempts to cut the minimum wage. In Indiana Mitch Daniels attacked collective bargaining too. Tim Pawlenty has a long history of attacking union workers, slashing union pensions in Minnesota, accusing government employees of launching a "silent coup", and implying that Minnesota's police, firemen and teachers don't really work for a living.

Romney is, again, seemingly at war with one of his many home states, Michigan. He doubled down his bets by arguing, in Michigan, that Jennifer Granholm was a failed governor and that the UAW bought Obama's election win in 2008.

Wherever the GOP has attacked the unions, Obama will be there to scoop up all those union votes – and that includes a number of swing states. There will be added impetus, because union leaders are dragging Democrats into the fight: the unions have said they’re getting out there organizing in a big way for 2012, but they’re not handing blank checks over to the Democrats; candidates who are lukewarm on labor issues will get lukewarm labor support.

Gas prices. The Democrats are fighting against oil speculation, price fixing and unnecessary oil company subsidies. The GOP is blocking them every step of the way: in fact they are trying to cut the budget for the watchdogs who hunt speculators. And the American people know who’s to blame: 90 percent of Americans, even the Republicans, blame prices on the oil companies and Wall Street. Americans For Prosperity, financed by oil money, are fighting a rearguard action by claiming that prices are high because of Obama's regulations, while Haley Barbour goes even further and claims Obama's raising prices deliberately (how?) to reduce consumption.

Taxes. Obama cut your taxes, and shares the inclination of most Americans to eliminate Bush’s tax breaks for the rich. But that of course does not account for the GOP's love affair with the rich and corporations. They are working to lower tax rates on the rich to the lowest levels in eighty years.

The Republicans are willing to destroy Social Security, rather than tax the rich and corporations.
The Republicans are willing to wipe out Medicaid and Medicare for the disabled and children, rather than tax the rich and corporations.
The Republicans are willing to screw over seniors, rather than tax the rich and corporations.
The Republicans are willing to shut down the government and permanently damage America’s fiscal credibility in the global money markets, rather than tax the rich and corporations.
The Republicans are willing to dump crushing taxes and debt on the middle class in the middle of a recession, rather than tax the rich and corporations.
The Republicans are willing to force our cops and firemen and teachers to scrimp and to lose their rights and their pensions, rather than tax the rich and corporations.
The Republicans are willing to defy the repeatedly expressed will of the American people on the tax issue, rather than tax the rich and corporations.
The Republicans are willing to mortgage our future, rather than tax the rich and corporations.

I think even Inspector Clousseau could see the pattern emerging here….

Pawlenty and other Republicans argue incessantly that tax cuts always create more jobs, which history has proved to be abundantly wrong. So, a quick reminder about the facts of history. Reagan tripled the debt with tax cuts for the rich and then raised taxes eleven times to try to clean up the mess. Job creation didn't skyrocket until Clinton raised taxes over GOP opposition. Bush 43 doubled the debt; his tax cuts for the rich didn’t create jobs; his job creation was the worst since Hoover; and we still haven't paid off Bush’s wars. None of these tax cuts for the rich paid for themselves; tax cuts for the rich cause debt. And today, federal taxes are at their lowest rates in decades, as the rich pocket the money we need to prevent catastrophe.

Pawlenty is in fact leading the way with a ridiculous plan to triple the size of Bush’s tax cuts, which would add $7 trillion to the debt. He claims it will cause economic growth. The idea was so absurd that even Fox’s Chris Wallace slapped him around, pointing out that the only time we had that kind of growth recently was after tax increases. Meanwhile Pawlenty's GOP allies want to create territorial a tax system which will allow corporations to hide money overseas, and never pay taxes on it. Thus, even less tax revenue, and even more debt.

Steve Benen made an excellent observation regarding the Peggy Noonan meme that Obama made the economy worse. “Four years ago, the economy was shrinking, and now it’s growing. Four years ago, the nation was losing jobs, and now it’s adding jobs. Four years ago, money was going to Wall Street, and now I’ve made sure Wall Street paid us back. Four years ago, the American auto industry was on the verge of collapse, and now it’s starting to flourish. Four years ago, the deficit was getting worse, and now it’s getting better. Four years ago, Osama bin Laden was targeting America and her allies, and now he’s dead. Four years ago, we were sending more troops to Iraq and Afghanistan, and now I’m bringing them home with their heads held high. We’ve come too far to turn back now….”

Kos made another observation: conservatives say that the three necessary elements to strengthening the economy are low tax rates, profits for the people who create the jobs, and spending cuts -- but all three factors are at their lowest levels in decades, and it isn't working.

Actually, when you look at the totality of Republican efforts, you could easily make the argument that the GOP has declared war on the middle class: blocking efforts to create jobs, declaring war on unions, threatening Medicare and Social Security, demanding tax cuts for the rich which the middle class will be forced to pay for....

Our site also has another article reviewing Obama's prospects in the Rust Belt, and all these issues will play a role in that part of the country. You can reach it in this link.