With the economic stall in Europe posing the number one threat to the our fragile recovery, the president took to the podium on Friday to brief Americans on the seriousness of the European situation and to call for Congress to pass his jobs package. In the process, he made an unexpected gaffe by declaring that “the private sector is doing just fine”—and prompted Mitt Romney to pounce on the one subject that offers his campaign hope.
The problem is that the president, while verbally clumsy, was substantively correct. The issue with our economy is jobs, not corporate profits. And as a private equity man with a net worth of a quarter of a billion dollars, Mitt Romney knows better.
For weeks now, Romney has attacked the president’s economic record at every turn. He’s even used the country’s sputtering jobs machine to cite Obama for “moral failure.”
But if the president misspoke, Romney misrepresents. Obama has a legitimate, if limited plan to increase employment. The Republicans do not.
Sadly, the president’s misstatement allowed Romney to dodge this fact and provided the former Massachusetts governor with another opening to advance a retread of his party’s discredited ideas.
Romney’s GOP believes that the solution to our current economic quagmire is to double down on trickle down economics—the washed-up, 40-year-old vision of prosperity where the way to wealth for the 99 percent is to concentrate resources amongst the 1 percent. But what Romney wants is exactly what led to the dangerous economic imbalance that sucked 8 millions jobs and $12 trillion of wealth from average Americans in a matter of months from 2009 to 2010. The result was a once-in-a-hundred-year economic crisis from which we have yet to recover.
During the maximalist years of trickle down economics, under the presidencies of Ronald Reagan and both Bushes, poverty—driven by joblessness—crept up to record highs. Moreover, wages remained stagnant and, according to Nobel Prize-winning economist Joseph Stiglitz, “most Americans today are worse off … [because] all of the benefits have gone to the top.”
Given this history, instead of wielding our collective economic pain to eviscerate the president’s jobs plan, Mitt Romney and his party would do better to formulate a Republican-based, new way-forward. As it stands, when it comes to strong jobs growth at decent wages, Mitt Romney and the GOP couldn’t hit a barn door with a banjo.
For the past two years, Republicans have staked their political future on attacking government workers—who are disproportionately middle-class, black people—and leaving them without work. They’ve stuck to this line in states around the country even as reduced public sector employment is widely identified as the second greatest threat to the U.S. economy, after the European crisis. When it comes to solving this critical piece of American joblessness, the GOP’s policies would only enlarge it.
Meanwhile, the contributions to our economy of these public employees are regularly disparaged. Many, including Rush Limbaugh, have consistently referred to teachers, firefighters and police as “free loaders.” Limbaugh said that they were like “those on government assistance” and derided them for “living solely off the private sector, which they hate.”
But race baiting can’t erase the truth: reversing employment losses in the public sector would largely turn our entire economy around and go a long way to addressing joblessness in the black community. It turns out that Barack Obama does have a plan for the black and brown jobs crisis after all, and it’s one that would go a good way towards fixing the overall jobs problem, too.
Obama’s Employment Plan
The president’s jobs plan centers on: 1) putting millions of people directly back to work to rebuild America’s tattered infrastructure and 2) providing money to states to rehire over 450,000 teachers.
According to Republican economist Mark Zandi, Obama’s jobs proposal would “add 2 percentage points to GDP growth [this] year, add 1.9 million jobs and cut the unemployment rate by a percentage point.”
If the Republicans had enacted the president’s employment legislation when he proposed it in 2011, rather than declaring it dead-on-arrival, the economy could have churned out 227,000 jobs last month rather than the anemic 69,000. This is the point that Obama was making when he tripped over himself on Friday: Americans need quick action on jobs.
The president’s verbal miscue allowed the GOP to evade blame for its economic failure and to attack Obama as wrong-headed on the economy. But the president is in fact correct. By almost any measure, the private sector has never been better.
Corporations are sitting on close to $2 trillion in cash. Profit margins are back to pre-recession levels, and profits make up a greater share of national wealth than at any point in 60 years. CEO pay is also at record levels, the highest since the Associated Press began measuring it in 2006. At almost $10 million a year, it would take “the typical worker … 244 years to make what a typical boss … makes in one,” the AP reported.
But CEOs are not using their historic riches to generate enough jobs. Instead they are hoarding it. Despite the rebound in profits to pre-crash norms, businesses are spending 25 percent less on job creation than before 2008.
Even at these lower levels of employment investment, the private sector saw 27 months of job growth, with more than 4.3 million jobs churned out.
Still, this level is significantly less than what’s needed to plug the jobs hole. And it is especially insufficient against the backdrop of significant reductions in public sector employment.
Public Sector Job Cuts Are the Problem
Since President Obama took office, despite the stimulus, over 600,000 state and local jobs have been axed. These cuts have fallen disproportionately on schools and teachers. The Wall Street Journal estimates that if these jobs still existed the unemployment rate would be a full percent lower than it is today.
Public sector job cuts also disproportionately effect people of color and are pivotal to solving black joblessness.
According to Berkeley’s Center for Labor and Research, “the public sector is the single most important source of employment for African Americans.” Blacks are 30 percent more likely to be employed in the public sector and at wage levels more equal to whites than in any other sector. To a large degree, the jobs crisis amongst blacks is the jobs crisis in state and local government.
Obama’s plan seeks to reverse up to 80 percent of these cuts. Romney believes we should make the problem worse and add to the jobs downdraft.
After the president’s remarks on Friday, Romney stated, “Obama says we need more firemen, more policemen and more teachers. Did he not get the message…? It’s time for us to cut back on government.”
Romney’s record on jobs is, at best, controversial. Based on his leadership of Bain Capital, even Wall Street guru Jim Cramer says that “Mitt Romney is known as a jobs destroyer.” And during Romney’s tenure as governor, Massachusetts grew jobs at one of the slowest rates in the nation.
But this election, like all elections, is about the future. So the question is: What’s Romney’s plan to exit from the jobs crisis? Unfortunately, Romney’s roadmap out looks like the original roadmap in.
Romney proposes a return to prosperity through trickle down economics: fewer taxes, less regulation, smaller government and free trade. Congressional Republicans say that this plan is aimed at “job creators”—or, the wealthy—whom they argue will gush out even greater wealth for us all. This was precisely Reagan’s formula in the 1980s.
Trickle down economics (also known as Reaganomics) has been the foundation of economic policy for every GOP president since 1981, and for almost two generations, the wider Republican Party has viewed it as orthodoxy. They cling to it as some sort of an unquestioned first principle for which a fact-based re-evaluation is considered unthinkable. And the impact of their dogma on America has been calamitous.
During the last 30 years, the top 5 percent have gathered a greater share of national wealth than at almost any point in history, wages for average Americans have stagnated, and poverty has soared.
This gap between the massive increase of net worth at the top, alongside frozen—and often falling—wages for everyone else, created a lopsided economic foundation. Due to its inherent instability, the entire system imploded. This is precisely what the International Monetary Fund says happened here in 2008. For Republicans, it is a simple and inconvenient truth.
The Broader Republican Conundrum
So what is the Republican Party without trickle down economics? On this point, they are silent.
But even Romney doesn’t claim that his warmed-up, re-serving of it will add one new job to the U.S. economy. His only promise is that by 2016, unemployment will be 6 percent. Conveniently, this is precisely what the Office of Management and Budget says it will be, regardless of who’s in the White House, even if nothing changes.
Yet again, Romney’s jobs claim only highlights that the emperor has no clothes. In this light, his attack on the president suggests he’s only interested in cheap applause lines designed to mask a discredited economic policy.
Facing a time of unique peril, America needs a rich and vigorous debate between its two parties about its economic future. Presently, the argument is way too one sided.
Rather than hollow rhetoric, Romney would do better to lash out less and lead more. Unless he finds a way to retool and re-imagine the economic vision of his party, none of us will get the election debate this year that we both need and deserve.
Hello Colorlines.com community! My name is Imara Jones. I’ll be writing regularly in this space about economics and economic justice. My goal is to engage in a conversation about where the economy is now, where it’s headed and how to build a more prosperous, stable future from the ground up. To that end, I welcome and solicit your feedback, comments and ideas. Feel free to reach out to me here or on Twitter at @imarajones. Thanks for reading!