Subject: [big campaign] New Huff Post from Creamer-If You Like the Recession, You'd Love Speaker Boehner
From: [email-masked]
To: [email-masked], [email-masked]
Date: Mon, 11 Oct 2010 00:40:46 -0400 (EDT)
List-Id: <bigcampaign.googlegroups.com>

If  You Like the Recession, You’d Love “Speaker  Boehner” 
Last week’s  employment report served to reinforce the utter bankruptcy of 
Republican  economic policy – and the absolute necessity of remembering the 
lessons of the  last century of economic history. 
The private sector job market is slowly stumbling out of the economic  
ditch into which it was steered by the policies of the Bush Administration.  
Sixty-four thousand private sector jobs  were created by the economy last month 
– well short of what is necessary to  allow the job market to achieve 
lift-off velocities and long-term sustained  growth – but a least a positive 
number.   
But that growth was entirely offset by the loss of 159,000 government  
jobs.  Some of them were temporary  census jobs.  But the bulk –  including the 
loss of 26,000 teachers – came from layoffs caused by the fiscal  crunch of 
state and local governments.  State and local governments cut jobs at the 
fastest rate in almost 30  years.  The loss in jobs would have  been even more 
massive if Democrats in Congress had not passed a bill to aid  state and 
local government before they adjourned for the August recess.  That bill was 
passed over virtually  unanimous Republican opposition. 
The Republicans have traditionally offered four major elixirs as their  
prescriptions for economic growth: 
1) Cut taxes – especially for the  wealthy.  In fact, of course,  tax 
breaks for the rich are mainly about giving more money to the Republicans’  major 
constituency – the wealthiest of our citizens.  The fig leaf they have used 
to cover  this self-serving policy used to be described as “supply-side” 
economics: the  idea that if you give the wealthy and big corporations more 
money they will  automatically invest it in new economic ventures that 
generate jobs.   
Of course this proposition completely ignores actual economic  history.  
The Bush tax cut policy  was in place for much of the last decade.  But his 
administration created net increase of zero new private sector  jobs – zero.   
In fact, of course, it is still in  place today – due to expire at the end 
of the year, unless Republicans have  their way – and it has done absolutely 
nothing to create new jobs.  In fact, just the  opposite. 
Right now, corporations and the rich are rolling in cash.  Why don’t they 
invest it, expand  capacity and create jobs growth?  Simple.  There is not 
enough  demand.  To have economic demand you  need consumers who want to spend 
money.  But tax cuts for the rich have just turbo charged the overall 
tendency of  our economy – and especially the overgrown financial sector – to 
concentrate  more and more money in the hands of the top 2%.  And that means 
there is less and less  for ordinary people to spend on goods and services 
and not enough demand to  entice all of those corporations to expand and hire 
more workers, which in turn  further depresses demand. 
And what is even worse, tax cuts for the wealthy deprive the government  of 
funds that it can use to jumpstart demand and end this vicious cycle -- 
which  leads me to prescription number two. 
2). Cut government  spending.  It should be lost on  no one that the 
proximate cause of the reduction in employment last month was  layoffs by state 
and local governments. Much of the fiscal pressure on state and  local 
government came from the end of funding from the original federal stimulus  bill 
which was opposed by most Republicans.  Of course the Republicans also worked  
long and hard to stall the additional $22 billion aid package for state and 
 local governments that finally passed Congress in August. And they assured 
that  the package proposed by Democrats was cut in half before it could get 
the 60  votes needed to get out of the Senate.   
In fact, cutting  government spending before the private sector has 
achieved sustained job growth  is a recipe for economic disaster.  
Long-term structural federal deficits that are too large in relation to  
the total Gross Domestic Product (GDP) can in fact create a drag on long-term  
economic growth.  They can create  upward pressure on interest rates that 
can choke economic activity. And by  over-stimulating the economy they can 
also cause inflation. 
But that is not our problem today.  Just the opposite.  Interest  rates in 
general are at their lowest in decades – as are the interest rates for  
government debt. And the problem today is not inflation in our currency, but the 
 much more pernicious problem of potential deflation. 
In this situation, the Republican argument that cutting government  
spending will help create jobs is kind of like a doctor telling you that the  
solution to your anorexia is to go on a diet and get more exercise.   
3). Cut back on the regulation of  corporate behavior.  That  certainly 
worked well during the Bush years.  Pretty much everyone acknowledges that  the 
deregulation of the financial sector was mainly responsible for the 
reckless  behavior of the big Wall Street banks that threw the economy into free 
fall and  cost eight million Americans their jobs late in 2008.  Republican 
proposals to allow Wall Street  and other big corporations to resume their 
orgy of recklessness and greed are a  recipe for another major financial 
collapse – not long-term economic  growth. 
4). Use monetary, instead of  fiscal, policy to increase the money supply 
and lower interest rates.  Republican economists of the  Monetarist School 
that was once headed by University of Chicago right wing icon Milton Friedman  
have contended for years that the perils of the business cycle could be 
dampened  virtually entirely by using monetary policy.  So, the argument goes, 
you don’t have to  use fiscal policy – the spending of government – to 
restore economic  health.   
The problem is that while the Fed has the ability to make important  
mid-range course corrections in the direction of the economy, monetary policy  has 
shown itself incapable of dealing with an economic catastrophe of the  
magnitude that happened in the fall of 2008.  The Fed has exhausted virtually 
all of  the tools of monetary policy and the economy is still barely creating 
new  jobs.  Interest rates have been  lowered about as far as they can go.  
The Fed has massively expanded the money supply.  It probably can take 
additional steps to  make credit more available, but no one thinks that monetary 
policy by itself can  turbo charge employment growth. 
In other words then, every one of the four major Republican prescriptions  
for economic growth has demonstrated itself to be ineffective – or downright 
 poisonous – in the real world of today’s real economy.  
But Republicans continue to bray on about the need to cut taxes, cut  
spending and cut regulation as if it were not as plain as the nose on your face  
that these proposals have proven themselves utter failures.  
So why haven’t the Democratic  policies of President Obama been able to 
restore employment to its pre-recession  levels?  The answer is simple: not  
enough of a good thing. 
First and foremost, those policies did in fact prevent another Great  
Depression.  They brought the  economy out of a death spiral.  The  non-partisan 
Congressional Budget Office and most other mainstream economists  agree that 
the first stimulus will in fact create or prevent the loss of 3.5  million 
jobs.  Had it not been  passed the job losses caused by the financial 
collapse would have increased by  50%.  
In fact, even a cursory look at the numbers – and the economic trend  lines 
– before and after President Obama took office, shows a stark contrast  
between the Bush and Obama eras.  
Private sector job losses  increased steadily from February, 2008 until 
January, 2009.  In October, 2008 over 700,000 jobs were  lost.  In December, 
2008, 680,000  jobs were lost, and job losses peaked at almost 800,000 in 
January, 2009.  
The month after President Obama took office private sector job losses  
steadily began to shrink – accelerated by passage of the stimulus bill in March, 
 2009.  Private sector job growth  turned positive in October 2009, dropped 
into negative territory again in  November and it has been positive ever 
since.  
Manufacturing job losses accelerated steadily from December, 2007 until  
they peaked at 280,000 jobs lost in the last month of the Bush Presidency,  
January, 2009.  Since then they  steadily declined and for the last seven 
months the economy has actually created  over 180,000 new manufacturing jobs – 
owing both to the stimulus bill and the  auto industry rescue plan that were 
both assailed by the  Republicans. 
Retail sales dropped precipitously from $373 billion in August, 2008  until 
it bottomed out at $335 million in December 2008.  Since President Obama’s 
took office, it  has increased steadily back into the range of $365 billion. 
GDP growth went from a negative  4.0% in the third quarter of 2008 to a 
negative 6.8% in the fourth quarter of  2008.  Then the losses began to  abate 
after President Obama took office and dropped to a negative .7% in the  
second quarter of 2009 after the stimulus bill was passed. It has been in  
positive territory ever since. 
Over $17.5 trillion of household wealth was wiped out from the third  
quarter of 2007 until the first quarter of 2009.  Then after the stimulus bill 
was passed  it began to rebound.  Households  have now regained 35% of the 
wealth lost in the last two years of the Bush  Administration – a gain of 
almost $6 trillion. 
We still have an enormous way to go to achieve sustained long term  
economic growth, but let’s remember that in 2008 the economy fell into the  deepest 
recession it has faced in 60 years.  The last time Republican policies led 
us  to such a downturn in the early 1930s, it took the public sector 
spending of  World War II to return the country to sustained economic growth.  
Roosevelt, of course, was not lucky enough to have the  benefit of the economic 
history he himself would write.  He experimented with substantial economic  
stimulus – but not nearly enough to get the economy into a self-sustaining 
cycle  of long-term growth.  In fact, in  1938, he was convinced by his own 
deficit hawks to decrease spending and the  result was a new downturn in 
employment and a shrinking GDP.  Roosevelt was not able to muster the  country’s 
political will to apply the massive amounts of governmental stimulus  
necessary until Emperor Hirohito made it a matter of national survival by  
attacking Pearl Harbor.   
During World War II the  public sector not only powered the beginning of a 
cycle of sustained economic  growth, it did so while tax rates on the rich 
were near confiscatory levels –  91%.  So much for the dampening  effects of 
taxes on the wealthy.  These expansionary policies began a period of 
sustained economic growth  that would last 40 years and create the modern American 
middle class.  
I’m a pilot.  To make an  airplane fly, you have to get it up to a critical 
speed that allows the lift  created by the wing to offset the force of 
gravity.  Once you achieve that velocity, the  plane can rotate off the runway 
and fly away.  But if it never achieves that speed, it  will never take off.  
 
The same is true with sustained economic growth.  Until the economic growth 
achieves a  velocity adequate to assure that jobs are being created faster 
than natural  population growth; until enough wages are flowing into the 
pockets of ordinary  consumers to allow them to start spending at a pace where 
businesses will invest  and expand employment, the economy will keep rolling 
down the runway, but never  take off. 
The only force powerful enough to get the economy to takeoff speed is  
government stimulus.  
In an airplane you never reduce power until you achieve that critical  
velocity needed to take off.  The  same should be true with the economy.  If you 
want the economy to pick up enough speed to achieve  self-sustaining 
growth, you keep revving up the engine of fiscal stimulus until  it lifts in the 
air.  Then – and  only then – can you begin to back off on the power. 
In early 2009 America needed a much larger economic  stimulus that the 
Republicans – and some deficit hawk Democrats – would allow  Congress to pass. 
To get 60 votes in the Senate, conservative Democrat Ben  Nelson and 
Republican Susan Collins insisted that the stimulus bill be  substantially reduced 
in size.  And  the threats of the deficit hawks had already convinced the 
Administration to  reduce their stimulus proposal to levels well below what 
many Administration  economists believed were necessary.  But the 
Administration needed to pass some stimulus and to their credit,  they did.  Now we need 
 more. 
Let’s be clear.  The reason  we needed – and still need – such a large 
amount of stimulus is that the Bush  economic policy had driven us into the 
deepest economic ditch since the Great  Depression.  We need a lot of  economic 
firepower to get us out of that ditch – more than has been necessary in  60 
years. 
So to escape a period of long-term  economic stagnation, we need an major 
shot of additional stimulus now.  But we will never get it – at least in  the 
near term – if Republicans take control of one of the houses of Congress.  
Instead we will get Republican prescriptions for the economy that are not  
just worthless -- but toxic.  We  will get policies that will endanger our 
children’s futures and our competitive  position in the world.  
Robert Creamer is  a long-time political organizer and strategist, and 
author of the recent  book:  Stand Up Straight: How  Progressives Can Win, 
available on _Amazon.com._ 
(http://www.amazon.com/Listen-Your-Mother-Straight-Progressives/dp/0979585295/ref=pd_bbs_sr_1?ie=UTF8&s=books&qid=1213241439&sr=8-1
)  

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