Unemployment matters, but Romney is still an idiot

By Nicholas Wilbur

I hate when Mitt Romney... speaks.

If he's not lying about a lie he lied about not lying about, he's either making shit up or flailing around like a walrus in a triple lindy competition.

Last Friday, he blessed us with this statement: "Just this week, President Obama's closest White House adviser said that 'unemployment rates or even monthly job numbers' do not matter to the average American."

The funny thing about Romney's crazy talk is that "Obama's closest White House adviser," David Plouffe, never said "unemployment rates or even monthly job numbers" do not matter. What he said was this:

The average American does not view the economy through the prism of GDP or unemployment rates or even monthly jobs numbers. People won't vote based on the unemployment rate, they’re going to vote based on: "How do I feel about my own situation? Do I believe the president makes decisions based on me and my family?"

For the 90.8 percent of the American labor force that is employed, I think this statement is pretty accurate. And yes, it's still accurate even for the 9.2 percent who aren't. (Especially if they're Republicans, because Republicans don't believe it's the government's job to find Joe Six Pack a job.) But even Plouffe is only telling part of the story.

Everyone likes to cite facts and figures showing that no incumbent president (except for the Gipper and FDR) has ever been re-elected with an unemployment rate above 6 percent.

Unfortunately for stupid people who believe the stupid shit other stupid people say, the unemployment rate actually isn't a dominant factor in the big picture of national elections.

What matters, as the Political Animal Steve Benen pointed out a month ago, is progress. If things are improving, if unemployment is falling, statistics are irrelevant.

Unemployment peaked at 10.8 during Reagan's first term, but it fell to 7.2 by the 1984 election. Unemployment grew to 7.8, up from 5.2, when George H.W. Bush sought re-election. That's why Reagan was re-elected and H.W. wasn't. And that's why Obama will glide to victory in 2012 while Romney will be stuck in the unemployment line during the day and burning unsold copies of his shitty book to heat his home at night.

After peaking at 10.1 in October 2010, unemployment fell to 8.8 percent by March 2011. Then the GOP took over.

We were promised big changes when Republicans won majority control over the House of Representatives in the 2010 midterm elections. For six months now they've bitched and moaned and done everything they could to overturn every bill Obama has signed. What they didn't do, and what Democrats will surely highlight throughout the 2012 campaign, is create a jobs bill – or a job. Unemployment declined consistently for a year and a half until Republicans took over the House. Now, for two consecutive months, it has risen.

The obstructionists have entered the building.

Expect mass evacuations sometime around November 2012. 

(Cross-posted at Muddy Politics.)

Bush tax cuts cost $329,220 for each job created

Guest post by Publius

The Bush tax cuts cost $329,220 for each job it created. That, according to the math recently employed by The Weekly Standard in its analysis of the cost per job from Obama’s stimulus package.

The Weekly Standard argued that because the overall cost of the stimulus to date is $666 billion, and the number of jobs created since the stimulus was passed (according to the low estimate by the Council of Economic Advisors) is 2.4 million jobs, the cost per job from the stimulus equals $278,000 per job. The Weekly Standard went on to note that we could have simply written a check for $100,000 to everyone whose employment was allegedly made possible by the stimulus and come out $427 billion ahead.

Sounds pretty bad, right?

Well, using the exact same formula, the Bush tax cuts passed in 2001 were estimated by the Joint Committee on Taxation to cost about $864.2 billion from 2001-2008 (the first year of the Bush tax cuts through the last year of his presidency). During that period, according to The Wall Street Journal, 2,625,000 jobs were created. That comes out to a total cost of $329,220 per job under the Bush tax cuts. And that’s if we assume that every single job which was created during Bush’s presidency was attributable to the Bush tax cuts (pretty unlikely) AND if we exclude the costs of the 2003 tax cut (estimated to cost another $350 billion over 10 years). We could have written a check for $100,000 to each person who “allegedly” had their job created by the Bush tax cuts and saved $600 billion, but they wouldn’t have received it because the check was instead delivered to really wealthy people.

My point isn’t that the Obama stimulus was good because the Bush tax cuts were bad. Instead, my point is that the math employed by The Weekly Standard is absurd. This example highlights the absurdity.

It’s wrong to suggest that the sole purpose of the stimulus was to “buy jobs.” If that was the sole purpose, then yes- the cost would arguably have been $278,000 per job. As White House spokesperson Liz Oxhorn noted the other day, however:

[The Weekly Standard] study is based on partial information and false analysis. The Recovery Act was more than a measure to create and save jobs; it was also an investment in American infrastructure, education and industries that are critical to America’s long-term success and an investment in the economic future of America’s working families. Thanks to the Recovery Act, 110 million working families received a tax cut through the Making Work Pay tax credit, over 110,000 small businesses received critical access to capital through $27 billion in small business loans and more than 75,000 projects were started nationwide to improve our infrastructure, jump-start emerging industries and spur local economic development.

The concept of the stimulus was grounded in Keynesian economic theory- government countercyclical spending is critical to countermand the effects of a recession. Increased government spending increases GDP, frees up capital and, consequently, creates jobs. Jobs are part of the benefits of stimulus. They aren’t the direct purchase.

By most metrics, the stimulus was a success. According to the CBO, the stimulus increased GDP by 3.1%. It added as many as 3.6 million jobs to boot. It gave us new factories, roads, bridges, and other infrastructure which we benefit from each day. Boiling all of this down to a cost per job is just silly.

The Weekly Standard would also be wise to note that about $288 billion of the projected $747 billion stimulus came in the form of tax cuts (about 38.5% of total spending), despite the fact that according to many prominent economists (such as Mark Zandi), tax cuts are far less stimulative than other types of spending, such as food stamps, unemployment benefits and infrastructure spending (all of which Republicans opposed).

If The Weekly Standard wants to argue the stimulus could have been more effective, it won’t find many on the left who disagree. If it wants good ideas on how to make it more effective, step one is to stop believing tax cuts are the best solution to all economic ills.

(Cross-posted at The Fourth Branch.)