Sunday, July 29, 2012

GDP report- is GOP austerity sabotaging our recovery?

Lots of hype around this Friday's release of the 2nd Quarter GDP report, which showed real U.S. GDP growth at a 1.5% annual basis for April-June. And 1.5% growth isn't anything great, but it's also far from recessionary, and it seems to reiterate that the country continues in a slow but relatively steady recovery. As this chart shows, GDP bottomed out in mid-2009, and has continued to grow for the last 3 years, to the point where we're back above the level we were at when the Great Recession started, in early 2008.

You may remember that President Obama got some grief a few months back for saying the private sector was "fine" in comparison to the public sector, but he was right. Private sector GDP also has been growing in this time period, with more robust growth than the total GDP over the last 3 years, and it is also at higher levels than we were at 4 years ago.

So what's the problem and why are GOPs and others still able to complain about the economy? One reason is the lack of growth of wages and income, with gains in productivity being funneled more and more to 1%ers (most recently illustrated by the skilled worker shortage that is because of companies refusing to pay skilled workers a family-supporting wage. People aren't feeling the recovery because they're not having the GDP growth trickle down enough into their wallets... as if you needed more proof that trickle-down economics doesn't work.

But another reason is because of state and national policies from TeaBag politicians. Government spending in the economy grew in 2008 and 2009 as the recession came on and the stimulus was passed to slow the damage. But it peaked in 2010 and has since declined back where we were 4 years ago.

The corporatist/Bagger ideological commitment to cutting government spending (or changing who gets the money) has put a ceiling on the amount of GDP growth, particularly in the last 2 years. As this chart shows, increased government spending reduced the losses of the Great Recession (making it merely "disastrous" instead of "Atlanta in 1864"). But the government sector has cut back since 2010, turning the Government sector into a drag on economic growth instead of a boost, and it has kept a pretty good private sector recovery from spreading to the nation as whole.

Year-over-year GDP change, 2009-2012

The other interesting part about that chart is that you see 12-month private sector growth has been consistently between 2.87% and 3.57% for more than 2 years, but the total GDP has slipped in spots, in no small part due to government spending cutbacks demanded by right-wing politicians. In fact, government budget cuts have lopped off 1.1% of U.S. GDP, turning 3.3% private sector GDP growth into 2.2% U.S. GDP growth. We might be at 4% GDP growth if we were growing government instead of cutting it, and the added wages, employment, and consumption from government employees may well have offset the extra tax dollars used to increase the spending.

But that's not what Republcans want to see. Remember the words of U.S. Senate Majority Leader Yertle the Turtle (Mitch McConnell) in 2010?

Notice there's not a word in there about "improving the economy" or "getting Americans back to work." It's all about satisfying the ideological goals of fake think tanks like the Heritage Foundation, a natural partner for a GOP who seems to have a motto of "results and reality don't matter."

We also saw this in the Wisconsin Uprising, when then-Wisconsin Sen. Majority Leader (and now MINORITY Leader) Scott Fitzgerald let it slip that Scott Walker's Act 10 moves weren't about balancing the budget, but instead was being done to help Republicans in the voting booth in 2012.

Then these scumbags have the nerve to try to blame Obama for the "slow growth" in the nation. Well, the GDP numbers tell me that our economy is muddling along but continuing to expand, and it's being held back by European-style austerity in the public sector (ask the recession-plagued British how that's working out for them). Heck, imagine if we had leaders who were dedicated in restoring the balance between the 1%er taking class and the 99%ers who made it possible. We'd probably be in even better shape, and with the prosperity of increased GDP actually going to someone other than corporate plutocrats.

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