Who is the smallest Government spender since Eisenhower? - Barack Obama - Forbes magazine

[Bill USA]

4. to understand why we are still in this Republican Economic Dystopia, you need a few more facts...

Last edited Mon Jan 7, 2013, 08:21 PM - Edit history (2)

On the day of Barack Obama's innauguration, the leaders of the Republican party decided they would engage in a campaign of obstruction of everything Obama would try to do. Mitch McConnell declared that the top priority of the Republican party was to see that Barack Obama was not elected to a second term. To that end, the Republicans set records for filibustering legislation. They have fought everything Obama tried to do to produce a recovery from the economic disaster they created. (see "Why Washington is tied up in Knots" - Time http://www.time.com/time/magazine/article/0,9171,1966451,00.html ) , (Republicans Filibuster Everything: http://www.huffingtonpost.com/bob-cesca/republicans-filibuster-ev_b_2018663.html )


President Obama's first legislative act to repair and rebuild the economy from the Great Recession, the American Recovery and Reinvestment Act (ARRA), was filibustered by the Republicans such that Obama had to agree to downsize the stimulus by converting 38% of it to tax cuts in order to win two Republican votes to get the bill passed. At the outset of a depression, people worried about whether they would have a job in six months will not spend a tax cut, but will save it our use it to pay down their debt. Either way, that portion of the ARRA converted to tax cuts would not be stimulative to the economy. The Republicans knew this. That?s why they demanded a large portion of the stimulus be converted to tax cuts. This resulted in the original stimulus being smaller than it should have been (without the conversion of 38% of the stimulus to tax cuts the stimulus would have been 61% LARGER (1/(1-.38) = 1.61).

In the Budget Battle of 2011 the Republicans threatened to force a closure of the Government if the Democrats didn't agree to cuts to domestic programs. In the Debt Ceiling extension battle, the Republicans threatened to force a U.S. default on its debt if Obama didn't agree to significant cuts in Government programs - in that same fiscal year. These domestic spending cuts lead to states laying off policemen, fireman, teachers and other public servants - adding to the number of already unemployed. The Wall Street Journal published an article which pointed out that if it weren't for cuts to Government domestic programs, the unemployment rate would be a full percentage point lower than it was at mid-year 2012 ("Unemployment Rate Without Government Cuts: 7.1%", WSJ, May 8, 2012).

The threat of a default on the U.S. debt lead Standard and Poor's to the extraordinary step - never before taken - of downgrading the United States Credit rating. (Standard and Poors cited among the causes for the unprecedented step "political brinksmanship and public policymaking being less stable, less predictable":

"The political brinksmanship of recent months highlights what we see as
America's governance and policymaking becoming less stable, less effective,
and less predictable than what we previously believed. The statutory debt
ceiling and the threat of default have become political bargaining chips in
the debate over fiscal policy."

United States of America Long-Term Rating Lowered To 'AA+'
Due To Political Risks, Rising Debt Burden; Outlook Negative, Standard and Poor?s, 05-Aug-2011]
http://www.standardandpoors.com/ratings/articles/en/us/?assetID=1245316529563

The Republican party's threats of Government default and Government closure have so concerned businesses that they have held off hiring full-time permanent workers, keeping the unemployment rate elevated and restraining the recovery. Businesses have been sitting on a five trillion dollar hoard of cash and have refrained from hiring back more people. Businesses do not want to hire full-time permanent people, only to lay them off in six months. Not knowing how far the Republicans might go to kill the recovery, businesses rather than hiring more people, have been making more use of over-time and contract labor ("The $5 Trillion Stash: U.S. Corporations' Money Hoard Is Bigger Than the GDP of Germany", The Atlantic, July 18, 2012; "Cash-Hoarding Companies Neither Spend Nor Lend, Fouling Economy Further", Huffington Post, July 12, 2012).

Any appraisal of the success of President Obama?s economic policies that leaves out the fact that these policies prevented the economy from collapsing even further and reaching an unemployment rate of perhaps 11%, or higher, is incomplete and invalid. The Congressional Budget Office report concluded that President Obama?s economic policies, in fact did just that ("Estimated Impact of the American Recovery and Reinvestment Act on Employment and Economic Output From October 2009 Through December 2009", CBO, February 23, 2010 and ?CBO: Unemployment would have topped 11% without stimulus", USA Today, 2010-02-23).

The Republican filibustered and prevented President Obama's American Jobs Act from being passed. Moody's Analytics concluded this bill would have raised the GDP 2%, increased employment by about 2 million jobs and lowered the unemployment rate about 1% (Analysis of the Obama Jobs Plan, Moody's Analytics, Sept 9, 2011). So, a decrease of the unemployment rate of 1% prevented by the Republicans and an increase in the unemployment rate of 1% caused by Republican demands for more domestic spending cuts to preclude a Government Default and Government shutdown had a significant negative impact on the recovery. The total impact of these acts of legislative sabotage is an unemployment rate that is 2% points higher than it would have been had Obama been able to more fully realize his policies of stimulating the economy out of this Republican Trickle Down Deregulation disaster. The cited efforts to sabotage the stimulus notwithstanding, the CBO has concluded that the unemployment rate without the ARRA, would be 3% points higher than it is now.

The Republicans filibustered and killed the Small Business Jobs and Tax Relief Act, which an independent economic analysis concluded would have created about 1 million jobs, most of which would have been created in small businesses, http://www.remi.com/remi-study-on-s-2237-small-business-jobs-and-tax-relief-act-for-democratic-policy-and-communications-center (See REMI study).

Were it not for the Republicans' strategy to go 'all out' to fight everything Obama tried to do to fix the economic disaster that they created we would have been well on our way out of this Republican Dystopia a couple of years ago.

More: Without GOP Unemployment would be below 6%: http://www.dailykos.com/story/2012/07/08/1107585/-Without-GOP-Unemployment-would-be-under-6