Mission Accomplished: Tea-Publican ‘austerity’ has killed job growth

Posted by AzBlueMeanie:

Corporations are sitting on record profits, much of it held overseas from developing markets. Corporations are not creating jobs in America where corporations have been dismantling America's industrial base and outsourcing manufacturing capacity and jobs to those same developing markets for decades.

Corporations discovered during the Bush Great Recession that they could slash their American workforce and increase productivity from their remaining workforce to maintain and/or increase profitability. This is The new corporate business model: increase profits, not jobs that I have been posting about for more than a year now. Corporations have no financial incentive to hire new employees under this new corporate business model — those jobs are not coming back as long as this remains the business model.

Despite all the Tea-Publican rhetoric about how we need to reduce regulations on business and give more tax cuts to the "job creators" to create jobs, we now have a full decade of history behind these faith based supply-side "trickle down" GOP economic policies to demonstrate that these policies have been a complete and utter failure, they have been entirely disproved and discredited.

Deregualtion of the financial services sector led to the creation of casino capitalism on Wall Street where the banksters of Wall Street engaged in the greatest fraud ever perpetrated in the history of the world (securitized mortgages traded in unregulated shadow markets as bundled derivatives and the bets hedged against with credit default swaps), 'Robo-signing' dates to '98; home-sale problems mount – banks are still using these prctoces today Robo-Signing Redux: Servicers Still Fabricating Foreclosure Documents – American Banker, which was directly responsible for the hyper-inflated housing bubble that burst and nearly destroyed the world's financial system and the world's economy in late 2008.

The financial system was rescued only by a massive bailout of the criminal banksters of Wall Street by monetary policy from sovereign governments and the TARP fund here at home. The economic slide into another great depression was halted only by massive stimulus spending by governments, including our own.

These charts Jared Bernstein posted this week show the positive impact of the Recovery Act.

 

Here’s another image, showing what happened to the job market.

 

The economy and employment were falling off the cliff, then the stimulus started, and things got modestly better (the stimulus package was too small, as Paul Krugman and others have argued). This isn’t even controversial; economists agree.

Yet Tea-Publicans demonized these economic rescue efforts, preferring the economic policies of Herbert Hoover's Treasury Secretary, Andrew W. Mellon, who opposed any government action to stem the tide of plunging business activity and soaring unemployment. Instead, he urged a policy of supreme indifference (laissez-faire) — now the "invisible hand" of the free market.

“Liquidate labor, liquidate stocks, liquidate the farmers, liquidate real estate,” he said. “It will purge the rottenness out of the system,” he added, and values “will be adjusted, and enterprising people will pick up the wrecks from less competent people.”

We have now had a full decade of the massive Bush tax cuts which were sold to the American public on the promise it would lead to economic growth and job creation. These massive tax cuts accomplished neither. Bush On Jobs: The Worst Track Record On Record – Real Time Economics – WSJ. What it did accomplish was the largest redistribution of wealth upwards to the über-rich and the greatest income disparity since the Gilded Age, just before the Crash of 1929. inequality.org. And it resulted in the worst economic recession since the Great Depression. Heckuva job!

President Obama added the largest middle-class tax cut in history on top of the massive Bush tax cuts in 2009 as part of the Recovery Act. The stimulus was the biggest middle-class tax cut in history.

Taxes on "job creators" are much lower today than they were before the Bush tax cuts took effect in 2001, yet the number of employed Americans has dropped from 132.5 million to 131.2 million over the past decade. (At the same time, the population has increased by 27 million). This is a massive structural jobs deficit that will take years of above-average economic growth to remedy. Tax cuts do not create jobs. America simply cannot afford continuing the failed GOP economic policies.

Despite this demonstrated failure of GOP economic policies the American people, in a pique of anger, turned the keys to the government back over to the very people who drove the country into the ditch in the first pace in 2010. As H.L. Mencken observed, "Nobody ever went broke underestimating the taste of the American public." We are our own worst enemy, or as Pogo observed, "We have met the enemy and he is us."

The Tea-Publicans held the country hostage for an "austerity" plan of massive budget cuts in April. The Tea-Publicans held the country hostage again for more massive budget cuts in July. They are again threatening another hostage taking, massive budget cuts and continuing intransigence on raising taxes in the bipartisan Super Committee about to get underway. The effect of the GOP "austerity" is now impacting the economy with the intended result — Tea-Publican "austerity" has killed job growth. Daily Kos: Mission accomplished: Tea party Republicans took the economy hostage and killed job growth:

Steve Benen explains the August jobs report at the Political Animal – August job totals: Zero:

For the first time in six decades, the U.S. simply broke even — no jobs were lost in the overall economy, and no jobs were gained. The unemployment rate held steady at 9.1%.

The private sector gained 17,000 jobs in August, while the public sector lost 17,000 jobs due entirely to budget cuts at the state and local level.

It’s worth noting that the figures are skewed a bit by the Verizon strike, which has since been resolved. The labor dispute temporarily subtracted 45,000 jobs from the economy, so when that’s taken into consideration, the overall economy actually added 45,000 jobs in August, which was roughly in line with expectations. 

 Just to keep up with population growth, the economy should be adding over 150,000 jobs a month. To bring down the unemployment rate quickly, we’d look for 300,000 jobs a month or more. This report reinforces the impression that the economy is just stalled, waiting for someone to give it a boost.

It’s a boost, of course, that congressional Republicans are desperate to prevent.

Making matters slightly worse, the revised totals from June and July were both revised downwards.

* * *

[I]t is painful, and serves as yet another wake-up call to anyone who’ll listen: we have a jobs crisis, not a deficit crisis. If our political system were in any way sane, elected leaders would look at these numbers and conclude that the economy desperately needs an immediate jolt. Job creation should be the first, and arguably only, priority on the minds of policymakers.

Steve Benen continues at the Political Animal – Private-sector job creation deteriorating, too:

Overall, the U.S. economy broke even, adding/losing zero jobs in August, but as has been the case for a long while, the most noticeable gap is between the public and private sectors. Businesses added 17,000 jobs in August, while 17,000 jobs were lost in the public sector at the same time, thanks to budget cuts at the state and local level.

Those are, by the way, budget cuts Republicans are desperate to bring to the federal level.

* * *

[E]ven if the Verizon jobs are taken into consideration, the private-sector totals are still the weakest in over a year, and further evidence that the economy is in desperate need of a boost. It can’t get that boost, of course, because congressional Republicans refuse to consider anything other than austerity measures, which necessarily make unemployment worse.

And with that, here’s a different homemade chart, showing monthly job losses/gains in the private sector since the start of the Great Recession.

To drive this point home with another graphic, Political Animal – On the road to the ‘conservative recovery’:

Remember, the public-sector has lost nearly 600,000 jobs since the end of the recession. Here’s a great chart Matt Finkelstein recently put together to help drive the point home:

To put it mildly, this is a brutal drag on recovery — but it’s exactly the approach Republicans demand. As Matt Yglesias explained this morning, “The public sector has been steadily shrinking. According to the conservative theory of the economy, when the public sector shrinks that should super-charge the private sector. What’s happened in the real world has been that public sector shrinkage has simply been paired with anemic private sector growth. This is what I’ve called ‘The Conservative Recovery.’”

Layoffs at the state and local level were mitigated in 2009 by the Recovery Act, which saved thousands of jobs that would have otherwise been eliminated. Those funds have since been exhausted, and the public sector is back to making severe layoffs. This serves as a significant — and easily preventable — drag on the economy. It’s why David Leonhardt recently described as “an unforced economic error” — with all of the problems we can’t control, this is one problem we know exactly how to prevent.

The key take away to keep in mind:

Whenever new economic reports offer more discouraging news, the reactions from the right are always the same: (1) it must be President Obama’s fault; and (2) it’s time to try things the Republican way.

And the political world just goes along, refusing to acknowledge that we’re already [doing] things the Republican way. (emphasis added)

The Tea-Publicans are actively undermining the American economy with disproved and discredited GOP economic policies as part of a partisan political strategy that they believe will give them the White House in 2012 — that is, they believe the American public will once again reward them for taking the country hostage and destroying the economy. Kevin Drum posted an item about a month ago that summarized the GOP electoral strategy.

2001-2008: Republicans run economy into ditch.

2008: Obama elected.

2009-2011: Republicans respond by doing everything possible to prevent him from fixing things.

2012: Republicans use lousy economy as campaign cudgel against Obama.

2012: Republican candidate wins presidency (maybe).

It is up to the fickle American electorate to finally say "we don't get fooled again."