Don’t Let Republicans Make The Economy Even Worse!

Dave Johnson

Congress is coming back to Washington, and the Republican agenda of obstructing efforts to help jobs and the economy will continue. But in the next weeks they will make the economy worse with threats to shut down the entire government over Obamacare and blow up the debt-ceiling hostage – demanding the government take even more money out of the economy, all so a few wealthy people can be even wealthier. These things will make our jobs and growth problems worse, not better. We have to rally to stop them.

Friday’s Jobs Report

Friday’s jobs report was not so great, and prior months’ gains were revised downward. The modest job growth was mostly in low-paying sectors, such as restaurant workers. The categories of jobs that would bring an opportunity to restore a strong middle class continue to show the weakest growth.

Dean Baker explains, in “Economy Added 169,000 Jobs in August, but Downward Revisions Cloud Picture,”

Downward revisions of 74,000 to the prior two months’ data … bring the rate of job growth over the last three months to just 135,000 … well below the average of 184,000 a month over the last year.

The small drop in the unemployment rate was due to people leaving the labor force … The duration measures of unemployment all showed increases in August. … the number of people counted as discouraged workers was above its year-ago level for the third consecutive month.

Not such good news in that report, is there?

On Friday Paul Krugman wrote about the bigger picture – the failure beyond this bad jobs report – in
“Years of Tragic Waste.” He wrote that we needed – and by extension what we will need – is “a big enough push for job creation … postponing fiscal austerity and tax increases until the private sector was ready to take up the slack.” The result?

“[W]e would be a richer nation, with a brighter future — not a nation where millions of discouraged Americans have probably dropped permanently out of the labor force, where millions of young Americans have probably seen their lifetime career prospects permanently damaged, where cuts in public investment have inflicted long-term damage on our infrastructure and our educational system.”

Do we want to be “a richer nation, with a brighter future?” Or do we want to be a nation of demoralized people fighting over low-wage jobs, with crumbling infrastructure, too few teachers, too few colleges and crushingly expensive universities? That is a prescription for a very poor economic future. That is where Republicans are taking us with their obstruction and cuts.

Republicans Obstructing Job Efforts

So the job news isn’t great, the downward shift in wages continues, and Republicans continue blocking efforts to help. They continue to insist on cuts in programs that help the vulnerable and unemployed. They refuse to fund infrastructure programs that would create millions of jobs. They filibustered good bills like the Bring Jobs Home Act that would end tax breaks for companies that send jobs out of the country – because the bill would pass. They filibustered the American Jobs Act – 2 million jobs in that one – because the bill would pass. They refuse to allow a House vote on currency reforms that bring back thousands of factories and millions of jobs – because the bill would pass.

Again and again, Republicans obstruct efforts to provide jobs and help the unemployed. They refuse to let states hire back teachers and restore funding to colleges and universities. Teachers and colleges and universities help the economy! They even refuse to let the country just maintain its infrastructure because this would mean using federal money to create so many jobs. A modern, maintained infrastructure helps the economy!

This chart, from Wonkblog’s “Government jobs are (still) the problem,” shows how the reduction of the number of public employees is hampering the jobs recovery. Approxmately 737,000 public-employee jobs have been lost since the 2008 crash, while government hiring boosted previous recoveries. “Indeed, the state and local pullback is one significant reason that this recovery has been weaker than those in the past.”

Next Up: Republican Shutdown And Debt-Ceiling Threats

And now congressional Republicans are getting ready to hurt government, obstruct and hostage-take even more. This will make the economic situation even worse.

First up, the threats to shut down the government over Obamacare. Republican leadership has been whipping up “the base” for years with scare stories about the damage that the Affordable Care Act (ACA) or “Obamacare” will do to the economy and even to people’s freedoms. And the base believed them. So now that the ultimate evil draws near, “the base” is asking why the Republican leadership is not going all out to prevent the Obamacare Apocalypse.

The Republican base knows that the House has the power to pass budgets, and they can just refuse to pass any budget that includes Obamacare. So they are insisting that their representatives refuse to fund the government – “Hey we hate government anyway don’t we? Government just ‘takes money out of the economy,’ doesn’t it?” – and they threaten that any Republican representative who votes to fund the government will face an unbelievable backlash. Also, they have money from the likes of the Koch brothers, and the Heritage Foundation and other big anti-government conservative names backing them.

But the Senate has to pass any budget and the President has to sign it, so a budget that defunds Obamacare isn’t going to happen. If the House refuses to pass a budget that has Obamacare funding in it, and the Senate and President refuse to allow a budget that does not, the result is that there is no budget and the government will have to shut down. Literally. At first this will mean non-essential departments will close, but if this standoff continues for some time it really does mean the anti-government conservatives will get the chance to realize their dream.

Of course this would be harmful to the economy. Never mind all the things government does for the economy, news like this shatters confidence. Both consumer and investor belief that the economy is strengthening will vanish. Markets will drop, consumers will pull back, a recession is possible – even likely.

While a shutdown would be harmful to the economy, the debt-ceiling fight promises to be terrifically destructive not only to the country’s economy but to the world’s. The world financial system rests on the confidence that the U.S. government always honors its debts.

The last time this fight came up, consumer confidence plunged, and job growth and the economy slowed significantly – just from the fight, just because the Congress was actually discussing such a thing. Never mind the consequences if Republicans actually caused the country to default, which is exactly what they are threatening to do.

And what is their stated reason? They say that the deficit is “out of control,” that the Obama administration is engaged in “runaway spending” on things like the stimulus, and is proposing even more spending on things like fixing the country’s infrastructure, hiring teachers, and so on. Imagine! (Note, the deficit is down by more than 50 percent from the levels President Bush left behind, and government spending has risen less than 7 percent under Obama, after rising more than 75 percent under Bush.)

So Republicans are about to make the economy much worse – and we have to stop them.

What Worked And What Will Work?

As Krugman pointed out in Friday’s column, the stimulus, “inadequate as it was, stopped the economy’s plunge in 2009.”

Here is a chart I made a couple of years ago. It clearly shows the effect of the stimulus:

Bush-Obama-Jobs-Chart

The stimulus obviously worked. It reversed the death spiral. It took us from losing more than 800,000 jobs a month to (modestly) gaining (low-wage) jobs again. It worked, but was not enough, and we need to do more.

What To Do?

There are so many things we can do to restore job growth and help the economy recover.

First: Make it plain that the sequester is killing jobs. The sequester is costing us 900,000 jobs. Repeal it. The sequester is not even saving money; the cuts are actually costing money. For example, cutting Meals on Wheels is not only cruel, it sends hungry seniors to the hospital and to nursing homes, which costs far more than the cuts are “saving.”

Second: Eliminate all tax incentives for sending factories and jobs overseas! We actually give tax breaks to companies to move factories and jobs out of the country. Just stop doing this. And then fix the problem of “deferral” of taxes on profits made outside of the country, which actually gives companies a huge incentive to move jobs, factories and profit centers out of our country. (Dear Republicans, you say you are concerned about deficits, so repeal these tax breaks that hurt jobs and the country.)

Third: It is time to fix the infrastructure. Since the Reagan tax and government cutbacks, we have fallen over $3.6 trillion behind in badly-needed maintenance of our infrastructure, never mind modernizing. We have to do this anyway. It will create millions of jobs. It will mean a more competitive economy.

And finally: Protect the basics from benefit cuts: Medicare, Medicaid, Social Security, Food Stamps, Unemployment Benefits. Good-wage jobs are being moved out of the country and people are falling behind. The middle class is disappearing. We the People need help just to keep up. The fabulously wealthy are taking all of the gains as the economy improves, and have taken all of the gains of improvements in our economy (“productivity”) since we started the “free trade” experiment in the 1970s and 1980s. (In fact, if you factor in productivity gains, 40 percent of Americans now make less than 1968 minimum wage.) So We the People need OUR government now, more than ever.

If the Republicans can’t do something positive to create jobs we can at least rally to stop them from making it even worse in coming months.

Let’s stop Republicans from harming this weak economy. Call YOUR member of Congress and demand that they pivot to, as Robert Borosage wrote the other day, “a jobs agenda, making the investments we cannot avoid – in rebuilding our decrepit infrastructure, putting teachers and police back to work, and in renewable energy and energy efficiency.” If your Representative is a Republican ask them to stop the obstruction, stop this Obamacare defunding nonsense, and just raise the debt limit so the country can get to work.

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