Saturday, February 4, 2012

Romney vs. Economic Reality

Ken O’Brien
Willard Mitt Romney said yesterday, “If people think the economy is going in the right direction they should vote for President Obama.”
Well, for the vast number of Americans the direction of the economy has more to do with employment (i.e. jobs) than with any other single factor.
Despite all the rhetoric and sniping from Republicans, there is no doubt that our current state of affairs occurred on their watch during the Bush Administration. In the lead up to the earlier quote, Romney said, “President Obama did not cause our economic problems, but his policies made them worse.”

Well, the facts simply don’t bear him out. The following chart shows monthly job creation from the last year of the Bush Administration (in red) to the most recent data from the Obama Administration (in blue).

Steve Benen - The Maddow Blog

If we focus on private sector job creation, the results are even more stark.

Steve Benen - The Maddow Blog

This is because the Republican focus on cutting spending has fallen most heavily on government employees at the federal, state and local level. That includes teachers, police and firefighters.
However, the Republican argument goes, things would have been better under our policies of cutting spending on social programs and increased shrinkage in the size of government. Government spending crowds out the private sector which is the only engine of true economic growth.
For most Americans it is hard to assess the validity of that statement. Ultimately it boils down to a question of what economic theories you embrace. Or does it?
The Obama Administration has managed to pursue an overall stimulative program despite Republican intransigence in Congress. The administration has had to compromise and has not been as aggressive as it or its liberal supporters would have liked.
But the impact of the policies which Republicans advocate can be demonstrated. Their nostrums of cutting government spending and fiscal austerity have been implemented throughout most of Europe since the 2008 meltdown. The following chart from the European Commission shows the comparative unemployment statistics for The European Union (27 countries), the Euro-Area (17 countries), Japan and the United States.

Click on picture for larger image

What is clear is that the policies followed by the United States have resulted in a more rapid recovery from the great recession than those advocated by Republicans and practiced by most European governments. So, Mr. Romney, I will follow your advice and vote for President Obama.


  1. Three comments.

    Greg Sargent over at The Plum Line had an excellent post on just this topic:

    The second is a simple macroeconomics statement. Economics 101. Demand is composed of three components: consumer demand, business demand and government demand. The Republicans who proprose cutting government demand at the time that consumer and business demand is depressed show a basic lack of understanding of economics. Either that or they are intentionally trying to tank the economy for political gain.

    Lastly, the Republicans have lied about everything President Obama has done or said. They have created a fictitional person that only exists in their own minds. Romney has been a proponent of that and has spent so much time lying that I don't think he knows how to stop or even knows what reality is at this point.

  2. Jim, I don't prefer Romney, or Obama at this point, but I think you're overstating it just a little when you say that "the Republicans have lied about everything President Obama has done or said."

    Everything? Really? C'mon. As a former Republican, it's this overblown rhetoric from both sides that turns me off to partisan politics.

    The Republicans haven't lied about everything Obama has said or done.

    If you still believe that, would it be fair to say in response that the "Democrats lied about everything President George W. Bush has said or done?".

    You seem reasonable, so hearing a statement like this is disappointing. I'm sure it was said in the heat of passion, but I believe you would admit that both sides "distort a majority of what the opposing party says."

    No one is man or woman enough in politics anymore to give credit where it's due.

    Obama was great in taking out bin Laden, as well as last weeks rescue with Seal Team Six. Great job!

    The economy is lagging, and yes, it predated him, but it's what he signed up for. It's time for him to stop looking backwards, look forwards, and do something.

    In Southbridge, we're used to being pick pocketed by our Town Councilors and Town Manager, so we're not as sensitive to it on the national scene. But the president is supposed to have enough smart people to help stimulate the economy.

    Bush and Obama have both put us where we are, and Obama could be a hero if he found a way to get us out of it. I haven't seen any signs, however ,that he's up to the task.

    Hopefully, he'll prove me wrong. Otherwise, he's just someone else that would have been better off as a Southbridge Town Councilor--in over his head.

  3. aka Jester

    “In a country well governed, poverty is something to be ashamed of.

    "In a country badly governed, wealth is something to be ashamed of.”

    - Confucius

  4. Dennis:
    You say the economy is lagging.
    Compared to what?
    Republicans have advocated policies that, when tried elsewhere, have failed.
    Romney says Obama has made things worse. Compared to what?
    Facts are facts, no matter how one attempts to twist or pervert them.
    When you argue about the hyperbolic rhetoric that is endemic to political campaigns you distract from the real issues of policy.

  5. Dennis: yes, I'm guilty of rhetorical hyperbole, but the Obama that the Republicans describe doesn't exist. Romney's current problem is that he has painted a picture of an Obama who is completely incompetent who's policies only cuase damage. When presented with evidence that the economy is improving he's unable to accept it. And yeah some of that may be just because you never want to say something nice about your political opponent.

    Ken: the economy is still running below capacity and will continue to do so. At the current rate of job growth we would need seven years to get to full employment. The ultimate cause of that is a lack of demand for goods and services. It appears that consumers are starting to go back to shopping. The question, and I haven't seen anything that points to it, is if businesses are starting to invest in themselves again. It's the virtuous cycle in economics. Money is spent on goods requiring more goods to be created putting more people to work who spend more money on goods... Things are getting better, but could be better still. What it says to me is that the stimulus put the breaks on an economy in freefall, but wasn't big enough to turn it around. If we go into an austerity mode which is what the Republicans would like then we'll kick government demand out at a time when it's needed. That will cause another recession. All we need to do is to look at England to see how that turns out. They cut government spending too early and put themselves into another recession.

  6. Ken, no comparison is needed, but let's compare it to, say, the economy during the Clinton administration?

  7. The only thing closely comparable is the economy inherited by Franklin Roosevelt - and apparently you would have deemed that as lagging in 1934.

  8. Hmmm...well, I respectfully disagree, but me gets the feeling that this argument is going downhill, so I shall stop it from my side.

  9. From observer
    Dennis, is Stephanie writing your material now?


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