When Obama took office, the United States was losing around 750,000 jobs a month. The last quarter of 2008 saw an annualized drop in growth approaching 9 percent. This was the most serious downturn since the 1930s, there was a real chance of a systemic collapse of the entire global financial system, and unemployment and debt—lagging indicators—were about to soar even further. No fair person can blame Obama for the wreckage of the next 12 months, as the financial crisis cut a swath through employment. Economies take time to shift course.
But Obama did several things at once: he continued the bank bailout begun by George W. Bush, he initiated a bailout of the auto industry, and he worked to pass a huge stimulus package of $787 billion.
All these decisions deserve scrutiny. And in retrospect, they were far more successful than anyone has yet fully given Obama the credit for. The job collapse bottomed out at the beginning of 2010, as the stimulus took effect. Since then, the U.S. has added 2.4 million jobs. That’s not enough, but it’s far better than what Romney would have you believe, and more than the net jobs created under the entire Bush administration. In 2011 alone, 1.9 million private-sector jobs were created, while a net 280,000 government jobs were lost. Overall government employment has declined 2.6 percent over the past 3 years. (That compares with a drop of 2.2 percent during the early years of the Reagan administration.) To listen to current Republican rhetoric about Obama’s big-government socialist ways, you would imagine that the reverse was true. It isn’t.
The right claims the stimulus failed because it didn’t bring unemployment down to 8 percent in its first year, as predicted by Obama’s transition economic team. Instead, it peaked at 10.2 percent. But the 8 percent prediction was made before Obama took office and was wrong solely because it relied on statistics that guessed the economy was only shrinking by around 4 percent, not 9. Remove that statistical miscalculation (made by government and private-sector economists alike) and the stimulus did exactly what it was supposed to do. It put a bottom under the free fall. It is not an exaggeration to say it prevented a spiral downward that could have led to the Second Great Depression.
Monday, January 16, 2012
A Tory For Obama, Again
Andrew Sullivan makes the case for Barack Obama's re-election. Since the election's likely to be (or had better be) decided on the basis of which candidate has the better chance of boosting GNP growth and getting Americans back to work, here's Sullivan's argument on the economy: