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Who can we blame for job losses?

job_losses_before_and_after_obama's_policies.png

"Obama's America," tweets Republican political consultant Patrick Ruffini, linking to this map of economic devastation.

Fairly or not, Ruffini raises an interesting question: How much unemployment can we blame on the Obama administration? Economist Rob Shapiro dug into some Bureau of Labor Statistics data and came back with the best numbers I've seen on the subject. He separated job losses into two buckets: Those that happened before the stimulus, which was Obama's major effort to deal with joblessness, and those that happened after the stimulus. Here's what he found:

From December 2007 to July 2009 – the last year of the Bush second term and the first six months of the Obama presidency, before his policies could affect the economy – private sector employment crashed from 115,574,000 jobs to 107,778,000 jobs. Employment continued to fall, however, for the next six months, reaching a low of 107,107,000 jobs in December of 2009. So, out of 8,467,000 private sector jobs lost in this dismal cycle, 7,796,000 of those jobs or 92 percent were lost on the Republicans’ watch or under the sway of their policies. Some 671,000 additional jobs were lost as the stimulus and other moves by the administration kicked in, but 630,000 jobs then came back in the following six months. The tally, to date: Mr. Obama can be held accountable for the net loss of 41,000 jobs (671,000 – 630,000), while the Republicans should be held responsible for the net losses of 7,796,000 jobs.

We can argue about how much of the job losses should really be pinned on Republicans or Republican policies, of course. Financial deregulation happened under Bill Clinton, for instance. And it's hard to hold George W. Bush solely responsible for a global financial crisis. But insofar as the job losses go, it's hard to credibly blame this White House for the vast, vast majority of them.

That said, though this wasn't Obama's economic crisis, it is his economic recovery. There's a fair question as to whether another set of policies could've led to faster job growth over the last year or so. And the recent shakiness in the recovery is cause for concern on that front. So it's worth looking at Shapiro's proposal to strengthen the recovery, too:

First, create jobs by expanding an Administration initiative already in place: Deep cuts in the payroll tax for employers who expand their workforce. Second, shore-up the weak housing market and stabilize falling home prices with a long-overdue, new initiative: A loan program for homeowners with mortgages in trouble, modeled on federal student loans, to bring down foreclosure rates. Third, prepare tens of millions of Americans for the jobs the economy will begin to create once it’s back on track: Provide grants to community colleges to fund free computer training for any American adult who walks in and asks for it. And fourth, put in place some long-term deficit reduction to head off higher interest rates when the economy does begin to expand again.

By Ezra Klein  |  August 12, 2010; 2:23 PM ET
Categories:  Economic Policy  
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Next: The next Christina Romer

Comments

Here's a chart of monthly stimulus spending and job creation: http://bit.ly/aszP9K. The correlation is amazing.

Posted by: BenDaniels | August 12, 2010 2:58 PM | Report abuse

That's a pretty god awful proposal.

I'm all for blasting the economy with massive fiscal stimulus, but the reason we are in this mess is that we had a lot of sectors that were on wildly unsustainable paths.

They need corrections. If we're going to spend money, let's do something useful, like SUPAHTRAINS or a broadband infrastructure or a green economy or a robot-based agriculture. Anything. Anything but reinflating those bubbles.

The whole "spend a bunch of money while shrinking the deficit" also makes me question.

Posted by: eggnogfool | August 12, 2010 3:12 PM | Report abuse

Actually he hits the full trifecta:

(1) Tons of tax cuts!

(2) Tons of new spending!

(3) And get rid of the deficit!

Posted by: eggnogfool | August 12, 2010 3:15 PM | Report abuse

Thank you, thank you...finally the mainstream media is providing credible FACTS that help Americans understand the situation. Your reporting is greatly appreciated!

Posted by: BernatvorBernadette5 | August 12, 2010 3:19 PM | Report abuse

Extending George W. Bush's term to July, 2009 to fake the numbers and justifying it as "under the sway of their policies" is a complete bunch of crap, especially since I'm sure that Shapiro doesn't give Bush any credit for TARP or for the bridge loan to the auto industries so that they wouldn't tank before Obama was inaugurated. Lies, Damned Lies and Statistics.

This analysis also ignores the Democratic control of the Congress since 2006 and pins everything prior to July 2009 as being purely the Republicans doing. In any event, it won't deter from the fact that Obama's announced justification for the stimulus was that it would keep the unemployment rate below 9% and by that measure it failed. You can argue about why it failed (too small versus Keynesian economics doesn't work), but that would first require Obama to take responsibility for the failure. Like all Presidents, he is loathe to do so (see George W. Bush and WMD's) and instead trots out the happy talk, ala Tim Geithner in the NYT:

http://www.nytimes.com/2010/08/03/opinion/03geithner.html?dbk

More fundamental is the question to what extent any specific President's policies can control the economy in the manner which he describes.

Posted by: jnc4p | August 12, 2010 3:29 PM | Report abuse

From the Shapiro piece:

"Of course, there’s also lots of finger-pointing about the economy, including the audacious claim that the fault for the high unemployment lies in the Administration’s economic policies, especially the stimulus. "

Talking about audacious, that's about as audacious a knocking down of a straw man that I've ever seen. Nobody has made the audacious claim that stimulus caused high unemployment. What people have claimed is that stimulus did not keep the unemployment rate below 8%, as Obama claimed it would.

And that 41,000 trick is the work of a total charlatan.

Posted by: bgmma50 | August 12, 2010 3:30 PM | Report abuse

Maybe one, though I'm not sure. I'd rather see public wporks/infratriucture projects. The country is falling apart, and good construction jobs would really help. Definitely not 2. The mortgage problem is just going to have to sort itself out.

Yes, yes, definitely 3--we need trained workers. And 4 depends on WHAT deficit reduction measures--higher taxes for the rich, yes. More cost-containment measures for health care, especially counseling for doctors on end of life issues, then pay them to consult with patients. But NO if you mean cutting Social Security benefits. How about cutting pension benefits for members of Congress? Most of them really don't need it, and as we all know, pensions make you lazy. Or something.

Posted by: Mimikatz | August 12, 2010 3:33 PM | Report abuse

Talk about selective statistical analysis! You should be ashamed for giving this space. NEW UNEMPLOYMENT CLAIMS in July were 484,000. I believe this is during Obama's tenure. How in hell can you claim that 484,000 job losses were under Bush?

Get serious!

CK

Posted by: ckessler55943 | August 12, 2010 3:42 PM | Report abuse

Talk about selective statistical analysis! You should be ashamed for giving this space. NEW UNEMPLOYMENT CLAIMS in July were 484,000. I believe this is during Obama's tenure. How in hell can you claim that 484,000 job losses were under Bush?

Get serious!

CK

Posted by: ckessler55943 | August 12, 2010 3:42 PM | Report abuse

@jnc4p:

when would you suggest it would make sense to start holding obama's policies accountable for the state of affairs?

Dems had congress since 2007, but nothing really happened for two years as Republicans still had veto authority. So we still had the full set of 2003-2007 policy in place when Obama took office.

Posted by: eggnogfool | August 12, 2010 3:50 PM | Report abuse

Down is up! Grass is orange! Increasing unemployment is the new success! See the exclamation points -- somebody at a college told me to put them there. Therefore, the statements must be true.

Post a silly message, get a silly response.

Posted by: rmgregory | August 12, 2010 3:56 PM | Report abuse

Democrats have controlled Congress since before the recession began.

Perhaps they can share in the job loss spoils? Every single dollar appropriated by the federal government since 2007 has had Nancy Pelosi's stamp of approval on it.

Posted by: JackIL08 | August 12, 2010 3:57 PM | Report abuse

Oh, I forgot to include a graph. http://tinyurl.com/2g4uhrq

Posted by: rmgregory | August 12, 2010 3:58 PM | Report abuse

shouldn't the right hand column be a negative number what with the whole "we've created "_X__" million jobs with the stimulus?"

Posted by: visionbrkr | August 12, 2010 4:00 PM | Report abuse

Can you ask Shapiro to create a chart showing job losses before and after mid 2003 when Bush and the Republican congress slashed taxes on capital?

From July 2001 to June 2003, the U.S. lost 2.2 million payroll jobs. From July 2003 to June 2005, the U.S. created 3.8 million payroll jobs. Also note that the post-Bush tax cut era actually saw net job creation, not a general lack of net job growth.

That produces a pretty chart too, but in each case you have to assume economic catastrophe would have continued as it was in the absence of policy.

But the business cycle is called that for a reason. Recessions end. We had been losing jobs for two years in each case - it would be shocking NOT to see job growth (although in the current case there hasn't been any significant year over year job growth just yet). Sometimes business cycles turn close to favored policy initiatives.

Posted by: justin84 | August 12, 2010 4:13 PM | Report abuse

See trend in long-term unemployed and discouraged workers. It's like, "Tough luck, you're on your own, bud."

Posted by: tuber | August 12, 2010 4:14 PM | Report abuse

The Dallas Fed weighs in:

Can the Nation Stimulate Its Way to Prosperity?

http://www.dallasfed.org/research/eclett/2010/el1008.html

Per the Fed:

"The key proviso is this: what might have been. Simply put, there’s no way to know how badly the economy would have performed in the absence of fiscal stimulus and no way to prove how many jobs would have existed without stimulus."

Posted by: marteen | August 12, 2010 4:40 PM | Report abuse

Perhaps control of the House of
Representatives is germane.

Posted by: drstanly1 | August 12, 2010 4:55 PM | Report abuse

Ezra would clearly defend Obama if he donned military garb and shot up a McDonalds with an AK-47.

Get a grip, Klein! Obama is the most radical leftist, the most corrupt and dishonest President since FDR, and the most incompetent since Jimmy Carter. No way he gets a second term.

Posted by: samadams25 | August 12, 2010 10:56 PM | Report abuse

Have not the Democrats been in control of both houses of Congress since 2006? How can Mr. Shapiro then claim that the job losses occurred under Republican "sway"?

Oh yeah, I get it, just making stuff up.

Posted by: NelsonMuntz | August 12, 2010 11:13 PM | Report abuse

This is perhaps the dumbest talking point there is and the chart at the beginning of the post is completely worthless. Pinning job losses (or job growth) on a president is just flat-out stupid.

Posted by: novalifter | August 13, 2010 11:05 AM | Report abuse

I really really hate to type this, but Schapiro's graph reminds me of supply sider empirics. The division between pre-stimulus and post stimulus is dated not when the bill passed but 3 months later when Obama's "policies could affect the economy." IIRC the stimulus began with reduced income tax witholding in April 2009.

The 6 months are the time until employment stopped tanking. It's not a huge difference another couple of months of employment decline wouldn't dramatically change the graph. However, it would make the legend accurate and not fraudulent.

I'd get Mathews on it STAT. Oh and I do like Schapiro's proposals. Although hell, just covering the state budget shortfall so they don't have to lay people off would be (as I learned from you) a huge step in the right direction.

By the way, you aren't going to go Krugman on me and delete long comments are you ?

Posted by: rjw88 | August 13, 2010 11:57 AM | Report abuse

Exports from our Country are out of balance with our Imports because we don't make anything anymore and Imports are shipped to our Country with no Tariffs.Because of MFN,WTO and NAFTA legislation that are all Free Trade Legislation we have high unemployment while the Corporations are making profits galore at the Cost of our Hard Working American jobs.Until we end all Free Trade Legislation our Country is on it's way to Feudalism.There is a Petition at the following link ( http://www.change.org/petitions/view/end_free_trade_now ) that I would ask you all to read and than sign.After signing the Petition it will be sent to your Senators,Member of the House and President Barack Obama."We the People" need to start this "Grassroots Movement" to let our Legislators know that we know that Free Trade is the reason for high unemployment and that "We the People" are not going to allow Free Trade anymore.You will never hear/read about Free Trade Legislation in the Main Stream Media nor will you ever hear a Legislator mention Free Trade because 90% of our Legislators are Corporatist.It's high time that "We the People" take back our Country from the Corporations that are in the pocket of all of the Corporatist in Washington.All of this Free Trade Legislation was passed and than signed knowing that it would be the outsourcing of Hard Working American jobs.Thanks,Greg Timmons,Parlin,NJ 08859-2114

Posted by: gptcruiser | August 16, 2010 10:51 PM | Report abuse

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