It may not feel like it, but we dodged a bullet in 2011 when it came to unemployment.
Today’s report from the Bureau of Labor Statistics shows that the economy created 200,000 jobs in the month of December, bringing the annual net total to 1.6 million new jobs for the year. The private sector created 212,000 jobs in December, meaning there were 1.8 million more private sector jobs in December than there were at the beginning of the year.
The unemployment rate is now 8.5 percent, down from 9.4 percent in December 2010.
The bullet the nation dodged was the one that congressional conservatives aimed at the heart of the economy in the early months of 2011. A budget plan passed by House Republicans early in 2011 would have slashed close to a million jobs off the total had it gone into full effect, the Economic Policy Institute estimated last February.
A plan by the ultra-conservative Republican Study Group, which is packed with Tea-Party purists, would have been even more damaging. Its “cut, cap and balance” plan, which demanded $380 billion in budget cuts in fiscal 2012 alone, “would all but guarantee a double-dip recession,” Andrew Fieldhouse at EPI wrote, surely nullifying the job gains we’ve been able to experience this year.
Of course, the conservative argument is that cutting government spending is essential to allowing private sector growth. But that is simply false, especially in today’s economy. There is no rational argument that government spending is “crowding out” the private sector; the evidence lies in borrowing costs, which are at record lows for both government and the private sector. Liquidity is not the problem. The problem is a lack of demand in an economy in which, even with today’s jobs numbers, has more than 13 million people unemployed and another 8 million people working part-time when they want full-time work.
It’s worth looking at how the austerity economics that Republicans wanted to impose here in the U.S. continues to play out in Europe, where the conservative budget-cutters, egged on by the international bankster class, are seeing their supply-side fantasies turn into an unfolding catastrophe. Despite the wave of spending cuts and budget-balancing in the Euro zone countries, economists for major international banks are at least courting the likelihood of a double-dip recession in Europe this year.
It’s also worth looking back to the same period under President George W. Bush. The truth is that the nation right now under President Obama is experiencing an economic recovery that is substantially more robust than the one experienced under Bush at the same time in his presidency.
President Bush’s first year in office featured a recession and the attack of 9/11; he responded in 2001 with his first series of tax cuts. Starting from the beginning of the second year of his presidency through the end of the third year, however, there had been a net loss of 321,000 jobs. President Obama’s first year was dominated by the ripple effects of the financial crash, with the economy hemorrhaging hundreds of thousands of jobs a month for most of the first year of his presidency. But in the second and third years of his presidency, aided in part by the stimulus spending he signed into low in 2009, a slow recovery began to develop, resulting in a net increase of more than 2.5 million jobs in that period.
To be sure, that is not a job performance to pop champagne corks over. The impact of the Wall Street meltdown erased about 8 million jobs from the economy. To repair the damage to the job market and accommodate new would-be entrants to the job market, the economy would need to be creating an average of 400,000 jobs a month for the next three years. The economy only averaged about a third of that in 2011.
It did not have to end this way. Congress could have enacted legislation similar to the Local Jobs for America Act, or the more recently introduced Restore the American Dream for the 99 Percent Act. The latter legislation would have created as many as 5 million jobs over two years, making a substantial dent in our jobs deficit. At the very least, the aid to state and local governments proposed in the Local Jobs for America Act and similar bills sent to Congress by the Obama administration would have stanched the bleeding of public service jobs caused by state and local government budget-cutting. Since January 2009, as anti-tax conservatives took control of more statehouses, state and local governments have shed more than 600,000 jobs. (Another 14,000 jobs were cut by local governments in December.) The ripple effects of those job losses have put thousands more out of work in the private sector.
The fact that we have not had more robust jobs performance in 2011 can be laid almost completely at the feet of the conservatives in Congress. They were the ones who at the beginning of President Obama’s presidency created a climate hostile to the scale of recovery program that was actually needed to fill a $2 trillion hole blown into the economy by the financial crisis. It was they who insisted that nearly half of the Recovery Act program that was passed by Congress be diverted into tax cuts that were demonstrably less effective in stimulating the economy than direct spending would have been. It was they who then obstructed every effort by the White House and members of Congress to enact legislation that would complete the work the Recovery Act left undone.
There will be the usual statements today and on the campaign trail about President Obama’s allegedly failed record on jobs. We’ve been critical of President Obama as well, wishing he had showed his “we can’t wait” assertiveness much earlier. But the real economic failure of 2011 is the conservative austerity agenda that is acting as a shackle around the leg of an economy that would otherwise be sprinting instead of limping.