Krugman: Recession ‘gratuitous’ because if Congress created jobs program it ‘would all be over’

[ProSense]

23. Krugman has been making

the point about Congressional obstruction the impacts of austerity at the state and local level for a couple of years.

The Jobs Program That Wasn’t

Macroeconomic Advisers on the American Jobs Act, proposed a year ago:

We estimate that the American Jobs Act (AJA), if enacted, would give a significant boost to GDP and employment over the near-term.

-The various tax cuts aimed at raising workers’ after-tax income and encouraging hiring and investing, combined with the spending increases aimed at maintaining state & local employment and funding infrastructure modernization, would:
-Boost the level of GDP by 1.3% by the end of 2012, and by 0.2% by the end of 2013.
-Raise nonfarm establishment employment by 1.3 million by the end of 2012 and 0.8 million by the end of 2013, relative to the baseline

Of course, it that had happened, Obama would be more or less a lock for reelection. Instead, having blocked the president’s economic plans, Republicans can point to weak job growth and claim that the president’s policies have failed.

http://krugman.blogs.nytimes.com/2012/09/08/the-jobs-program-that-wasnt/

Obstruct and Exploit

By PAUL KRUGMAN

Does anyone remember the American Jobs Act? A year ago President Obama proposed boosting the economy with a combination of tax cuts and spending increases, aimed in particular at sustaining state and local government employment. Independent analysts reacted favorably. For example, the consulting firm Macroeconomic Advisers estimated that the act would add 1.3 million jobs by the end of 2012.

There were good reasons for these positive assessments. Although you’d never know it from political debate, worldwide experience since the financial crisis struck in 2008 has overwhelmingly confirmed the proposition that fiscal policy “works,” that temporary increases in spending boost employment in a depressed economy (and that spending cuts increase unemployment). The Jobs Act would have been just what the doctor ordered.

But the bill went nowhere, of course, blocked by Republicans in Congress. And now, having prevented Mr. Obama from implementing any of his policies, those same Republicans are pointing to disappointing job numbers and declaring that the president’s policies have failed.

Think of it as a two-part strategy. First, obstruct any and all efforts to strengthen the economy, then exploit the economy’s weakness for political gain. If this strategy sounds cynical, that’s because it is. Yet it’s the G.O.P.’s best chance for victory in November.

- more -

http://www.nytimes.com/2012/09/10/opinion/krugman-obstruct-and-exploit.html

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Notice that I said “government in America,” not “the federal government.” The federal government has been pursuing what amount to contractionary policies as the last vestiges of the Obama stimulus fade out, but the big cuts have come at the state and local level...We’re talking big numbers here. If government employment under Mr. Obama had grown at Reagan-era rates, 1.3 million more Americans would be working as schoolteachers, firefighters, police officers, etc., than are currently employed in such jobs.

And once you take the effects of public spending on private employment into account, a rough estimate is that the unemployment rate would be 1.5 percentage points lower than it is, or below 7 percent — significantly better than the Reagan economy at this stage.

http://www.nytimes.com/2012/03/05/opinion/krugman-states-of-depression.html

Here's the last jobs report:

The BLS reported this morning that the overall economy added 155,000 jobs last month, while the revised unemployment rate was unchanged at 7.8%. As is often the case, austerity measures undermined the employment landscape -- while America's private sector added 168,000 jobs in December, the public sector lost 13,000 jobs, including over 11,000 teachers. (President Obama's American Jobs Act was intended to prevent this, but congressional Republicans refused to vote on his proposal.)

http://maddowblog.msnbc.com/_news/2013/01/04/16347906-us-economy-adds-155k-jobs-in-december-jobless-rate-unchanged