Saturday, January 10, 2015

Puncturing right-wing bubble BS on Obama's record

I got a comment on an older post where I pointed out the absurdity of Scott Walker's administration trying to take credit for Wisconsin job growth while conveniently leaving out the (bigger) job gains the rest of the nation is seeing from the Obama Recovery (bizarrely, the original post is from August 2013). This person disagreed with my assessment of it being the "Obama Recovery", so I'll address these questions and concerns in this post. Naturally, this rightie chose to remain Anonymous, like most bubble-boys do, because having the guts to put your name behind a claim means we can check your track record and see how right (or likely wrong) you have been over time. But let's go over the claims by one by one.

"The Obama recovery? WTF?
You mean the Republican Recovery, which started after they took control of Congress in 2010 and ended the failed runaway deficit spending of the Democrats by enacting the Budget Control Act of 2011 and creating the Oil Shale Boom."

Uhh, I wouldn't be talking much about the "oil shale boom": these days, with oil crashing like it is, and it's equally silly to claim that any change in policy has happened in the last 4 years that led to this (as far as I know, there's been no new policy at all). But we certainly can check the claim of "runaway deficit spending of the Democrats" with the actual numbers from the CBO. These numbers come from Page 156 and 157, giving historical data on the federal budget, and we'll start with fiscal year 2007, which is when the economy began to stall out. We'll start by going through Fiscal Year 2011, which started on October 1, 2010, so it will include all of the "out-of-control spending" when Dems controlled Congress.

Nominal federal spending, FY 2007-2011
2007- $2.729 trillion
2008- $2.983 trillion (+9.3%)

Obama becomes president
2009- $3.518 trillion (TARP, stimulus passed during here +17.9%)
2010- $3.457 trillion (-1.7%)
2011- $3.603 trillion (+4.2%)

Given that a sizable amount of FY 2009 is the result of policies passed while George Bush was still president, and because of the increase in stabilizers and other actions that were taken as a result of Bush's Great Recession, I don't know how you charge a lot of that increase to Obama. You see that total spending in the final Dem-controlled budget in FY 2011 is barely any different than the amount in FY 2009 (up a total of 2.4%, less than the cumulative rate of inflation for those two years).

Now let's see what's happened with spending in the last 4 fiscal years (including the current FY 2015).

Nominal federal spending, FY 2012-2015
2012- $3.537 trillion (-1.8%)
2013- $3.454 trillion (-2.3%)
2014- $3.504 trillion (+1.4%)
2015- $3.750 trillion (proj.) (+7.0%)

Looks like the first two years continued the austerity that we saw in the previous two years, but government spending has increased in the last two fiscal years, with a big increase scheduled for this fiscal year. Interestingly, job growth from October 2013 to the present day has been the best in the last 15 years, which sorta shoots down the theory that GOP budget-cutting is what's causing the Obama jobs recovery, doesn't it?

In fact, the decrease in the deficit in recent years is more a function of higher revenues resulting from more people working than any cut in spending.

Federal revenues as % of GDP
2007- 17.9%
2008- 17.1%
2009- 14.6%
2010- 14.6%
2011- 15.0%
2012- 15.2%
2013- 16.7%
2014- 17.5%
2015- 18.3% (proj.)

Yes, spending as a percentage of GDP went higher in FY 2009, from 20.2% to 24.4% (that'll happen when the economy goes into free-fall), but it had declined to 23.4% by FY 2011, and continued to drop over the next 3 years, ending up at 20.3% in 2014- no different than we were 6 years prior to that. Revenues finally recovered past 2008 levels as well, and while spending is projected to expand to 20.9% of GDP for 2015, there will be an even larger jump in revenues, up by 0.8% to 18.3% of GDP. This should be somewhat obvious, but people working and paying taxes tend to do the most damage when it comes to reducing a deficit- a whole lot more than cutting spending and services, and inhibiting economic growth in the process.

And now for Mr, Rightie's other claim.

"Obama & the Dems get credit for 3 years of 10% unemployment and sinking Social Security into the red 5 years ahead of schedule by not collecting 1/2 of the Payroll taxes for two years in the single worst economic policy of the 21st century.

3 years of 10% unemployment? One look at the BLS historical figures (which were just updated yesterday) shows that we had exactly ONE MONTH of 10.0% unemployment, in October 2009. Unemployment had already dropped to 9.2% by January 2011, and the spending cutbacks of 2011-2012 didn't speed that drop too much, as unemployment was still at 8.0% when Obama was sworn in for his second term in January 2013. In the two years since (when Dems cut into GOP majorities in the House and expanded their advantage in the Senate), the unemployment rate has gone down by 2.4%, back to pre-financial crisis levels. Don't think you can credit GOP "budget-cutters" for that one, kid.

Now if this guy didn't like the cut in Social Security tax rates by about from 2011-13, then WELCOME TO THE PARTY, PAL! No, it wasn't by half as this guy implies- it was more like 1/6, since they cut employee-only rates by 1/3 (the 6.2% total stood for employers through this time), but I also believe Social Security should be shored up as a priority. In fact, I think the cap on earnings that Social Security are taxed should be raised if not entirely abolished, to guarantee those earned benefits for the next generation, particularly in a time of fewer pensions from a person's job.

Reducing the Social Security tax rate wasn't what I would have done in late 2010, but it didn't bankrupt the system by any stretch (it still is projected to pay full benefits for the next 18 years with no changes). And reducing that date of the end of full benefits by 4 years (not 5) is far from the worst economic policy of the 21st Century. That "honor" goes to Bush's tax cuts, especially the second ones in 2003 that reduced capital gains and dividends, stretching inequality and encouraging Wall Street gambling that helped lead to the 2008 crash and the huge deficits that resulted.

Lastly, "Obama = failure."

Far from it, basement boy. In fact, if Obama was Republican, you'd be wanting to put him on Mount Rushmore for pulling the nation out of the Great Recession, having a booming stock market, and reducing the deficit. ADMIT IT. Obama's presidency has succeeded in a much larger way at fiscal conservatism than Reagan ever has.

You can argue whether the president did the right thing or not (and I'm not a fan of a few things this guy has done, particularly his friendliness to Wall Street and free traders), but the argument better be based on reality. This guy's argument was not, much like the arguments of most right-wingers, now that I think of it.

1 comment:

  1. "Obama & the Dems get credit for 3 years of 10% unemployment and sinking Social Security into the red 5 years ahead of schedule by not collecting 1/2 of the Payroll taxes for two years in the single worst economic policy of the 21st century."

    But the real refutation of this latter point is that the payroll tax holiday of calendar years 2011 & 2012 was bipartisan as well as having zero effect on the Social Security Trust Fund.

    In fact, Republicans were more for it than Democrats were.

    If you read that law, page 14 of the pdf, Section 601 (e), you'll see that the Social Security Trust Fund was depleted by the grand factor of zero on account of the payroll tax holiday through transfers from the general fund (the extension a year later merely amended the ending date without changing the funding source).

    So together with the unemployment claim none of the negatives attributed to Democrats is true.