Judging by the polls, many voters seem to think it's a coin-toss when it comes to jobs and the economy. As Stevenson and Wolfers write:
Watching Democrats and Republicans hash out their differences in the public arena, it’s easy to get the impression that there’s a deep disagreement among reasonable people about how to manage the U.S. economy.They're right. They cite a survey by the University of Chicago, showing 92 percent of top-ranked economists say the 'stimulus' lowered unemployment.
Nothing could be further from the truth.
In reality, there’s remarkable consensus among mainstream economists, including those from the left and right, on most major macroeconomic issues.
That's where this article starts. As you'll see, the success of the stimulus is just one of many 'consensus views' among economists. When you put them together, they make a clear, compelling case for sticking with the President's policies.
I focus here on 6 areas where economists agree:
The Recovery Act ('Stimulus') was a success, part of a historic turnaround.
The American Jobs Act should be passed at once.
The economy needs MORE federal spending, not LESS
Repairing and upgrading our infrastructure is job 1
Lower tax rates on top incomes make things worse, not better, as in:
The income gap, which fueled this crisis, is a big drag on growth.
Economists Agree: Obama Is Right On the Economy
1) The Stimulus Was a Success
The Univ. Of Chicago asked a panel of leading economists, Republican and Democrat, if the Recovery Act lowered unemployment. Nearly all of them, 92 percent, said that it had.
That's right, 92 percent of the most lauded, frequently consulted economists in America said the stimulus succeeded in reducing unemployment!
Job growth went from -800,000 per month under Bush to an average net gain of 160,000. That's a turnaround of nearly 1 million jobs per month! A historic achievement that gives tangible meaning to change we can believe in.
2) Building on Success: Economists Support the American Jobs Act
Moody’s Analytics estimated the American Jobs Act would create 1.9 million jobs and add 2% to gross domestic product.
The Economic Policy Institute estimated it would create 2.6 million jobs and protect an addition 1.6 million existing jobs.
Macroeconomic Advisers predicted it would create 2.1 million jobs and boost GDP by 1.5 percent.
Goldman Sachs also predicted it would add 1.5% to GDP.
3) Economists say Don't Stop Now: More government spending is needed, not less.
Policy advisers to Presidents Reagan, Bush and Clinton, Nobel prize winners, IMF and World Bank analysts, private forecasters, Goldman Sachs, Forbes...The Consensus is clear: our economy needs MORE Federal spending, not LESS. The UN's top economists warn austerity policies are pushing the world economy toward disaster. “Unemployment depends very much on demand. If you have no demand, you need government to step in with a huge program to stimulate the economy.”
4) Economists and Obama: US job 1 is repairing and upgrading America's crumbling infrastructure.
Bold, far-sighted government spending built the America we know today. Highways and airports, roads, bridges and waterways, levees and dams, waterways and seaports, phone lines and power lines, new sources of energy and a new power grid to deliver it. Our standard of living and decades of prosperity were built on that foundation. Today that foundation is crumbling.
Public Parks: C-
Drinking Water: D
Solid Waste: C+
Hazardous Waste: D
Inland Waterways: D-
America's Infrastructure GPA: D
The ASCE is calling for a 5 year, $2.2 trillion dollar program to repair, rebuild and update our infrastructure, beginning immediately. That's $400 billion a year, every $1 billion dollars of which will create 23,000 jobs. That translates into 9.2 million jobs a year.
Enough to bring the unemployment rate down to the 5.4% President Obama predicted was achievable.
That's before you count the job growth created indirectly, by the multiplier effect and sharp reductions in the cost of living and doing business in America. No other investment would do more to boost America's competitiveness.
The dollar cost of our failing infrastructure is so high, the return on that $400 annual investment will dwarf its cost. No wonder business economists around the world are urging America to make it. Investments with that rate of return make buying our debt very attractive.
Those costs include: transportation delays, energy waste, pollution, auto accidents, negative health impacts and rising health care costs, vast amounts of time lost to longer commute, increased costs of living and doing business, declines in tourism, declining competitiveness, needless loss of lives, homes and businesses to disasters like Katrina and Sandy.
$400 billion dollars a year is nothing.
Then there's the cost of a construction industry that has been losing 7 workers for every 1 who finds a job. Two million or more unemployed is probably conservative.
A good share of the funds in President Obama's Recovery Act went to 'shovel ready' infrastructure projects, which contributed to its postive impact on job growth as well as putting infrastructure on the nation's agenda at the start of his term. Again, not a single Republican vote. Every subsequent infrastructure spending bill was blocked by united Republican opposition.
When it comes to government spending, Republican enthusiasm is limited to spending on the military – Romney wants $2.2 trillion more. We already spend more than the rest of the world combined. Countries like China that are growing their middle class and positioning themselves to thrive in the 21st century economy are making their largest investments in – you guessed it – infrastructure.
Infrastructure spending creates more than twice as many jobs as defense spending.. There are a number of studies on this.
Infrastructure versus military spending. The contrast couldn't be more dramatic, or the choice more obvious to any real businesman. The trillions of dollars the Bush administration spent – off the books – on two wars have no return. The money's spent, you're left with nothing.
5) Lower Tax Rates on Top Incomes – The Problem, Not the Solution
Tax cuts on top incomes likewise produce no return. A study by the Congressional Research Service reviewed tax, investment and growth data beginning in 1945, the first year for which they're available. Their analysis showed tax reductions on top incomes do not increase investment or growth.
In fact, growth has consistently been more robust during periods when top tax rates were higher.
Instead of making the economic pie larger, the CRS found, reductions on top tax rates change how the pie is sliced, concentrating income at the top.
6) Obama Is Right: Our Economy Grows More When We're Growing Together.
The effect of income inequality on economic growth is negative. That's the conclusion of a number of studies that have closely examined this issue, including studies by the International Monetary Fund, the OECD (a body representing the world's wealthiest countries), and leading academic economists.
The world's greatest authority on the subject is Nobel prize winner and former Clinton adviser Joseph Stiglitz, who writes:
“Inequality is now far higher than just 30 years ago. The top 1 percent today gets around 20 percent of the nation’s income — twice what it did two decades ago. The top 0.1 percent’s share has almost tripled. Disparities in wealth are even greater.Professor Robert Reich, Secretary of Labor under Bill Clinton, points out that income inequality in America peaked in 1929 and in 2007 – just before massive economic contractions.He has a lot of company. In fact, you'd have to stop reading the newspapers not to see this connection being made, again and again and again.
“But inequality, especially of the U.S. variety, is bad for growth. The country grew faster in the decades after World War II — when it was also growing together, with all groups seeing increases in income. But those at the bottom were growing the most.
“By comparison, growth since 1980 has been slower, as the share of the bottom and middle has diminished. That means that those in the middle, ordinary Americans who work for a living, let alone those at the bottom, are getting a smaller slice of a pie that is smaller than if we had continued growing as we did postwar. The net result is disheartening: Most Americans are worse off today than they were 15 years ago.”
The International Monetary Fundwarns that income inequality makes the economy more fragile, periods of growth shorter, and recessions more frequent. Conversely, reducing inequality increases the span of economic recovery, stabilizing the economy. The IMF estimates that a 10% reduction in income inequality extends periods of sustained growth by 50%.
This is where we came in.
President Obama's policies are as needed in our time as President Roosevelt's were in his.
Roosevelt struggled for a time, too.
America didn't toss him out and send Hoover back to Washington.
We can rev up this recovery and bring unemployment down quickly, by:
1) Giving Obama a 2nd term, and
2) Putting pressure on Congress to follow his lead.
Fri Nov 02, 2012 at 12:33 AM PT: I just read in today's NYT: Senate Republicans have suppressed a report by their own Congressional Research Service, because the findings show that tax cuts for the rich don't boost the economy.
I reference that report in this piece.
Here's the NYT article about it being suppressed, if anyone's interested.
This easy to read article unpacks the stimulus revealing it to be the most ambitious and timely investment in America since the New Deal.
A great one to share.