Home > Economics, Election 2012, Right-Wing Slime, The Obama Administration > Try Something Different This Time

Try Something Different This Time

August 25th, 2012

Upon the eve of the 2012 elections, the economy is not doing well. Why is this the case?

After Obama’s election in 2008, Republicans announce a policy of obstructing progress and reform, saying that it “works for” them. They fight against the Stimulus, eventually watering it down to the point where it is far too ineffective. They fight against health care reform, watering down that as well, costing billions and offering alternatives that would balloon the budget and cost massive numbers of jobs. Instead of focusing on how to fix the economy they broke, they instead focus on sloughing off blame on Obama for doubling unemployment and losing millions of jobs, while fighting to maintain the policies which decimated the economy in the first place. Republicans fight equal pay, fight minimum wage increases, fight unemployment benefits, fight stimulative spending. Republicans announce that their primary goal is not jobs or fixing the economy, but making Obama fail so they can retake the White House. Republicans force the extension of Bush tax cuts, proven to significantly deepen the deficit while being poison to job creation. Upon gaining control of the House, Republicans fail to act on jobs, instead focusing on things like restricting abortions. Republicans instead push for cuts, admitting that it would kill jobs. Republicans repeatedly put “nuclear options” into play, sometimes over severely ideological issues like Planned Parenthood. Republicans pass budgets that promise job losses. Republicans threaten defaulting on the debt, causing the US credit rating to be downgraded for the first time in history. Republicans kill Obama’s jobs bill, even though it offers $250 billion in tax relief. Republicans finally offer their own “jobs” bill which essentially includes deeper tax cuts for corporations and elimination of regulations governing pollution and corruption, none of which would create jobs.

So now, four years later, the economy has not yet recovered from the devastating effects of the Republican policies that led to the effective depression we suffer from today.

Republicans point at Obama and shout, “Look what he did!!

Yes, the president owns the economy, for better or for worse. All the media plays into this, acting as if Republican policy to essentially sabotage the economy somehow does not exist, and only Obama is to answer for it.

That may be a political reality. But it is not reality.

Had Obama been free to do what he wanted, the economy would look far different than it does today. Obama may own the economy, but he was far from alone in creating it.

The key point: Republicans have been far more destructive to the economy, even openly stating goals which work against economic recovery, again openly admitting their goals in this are to gain political power.

The answer to this is not to reward them with more power.

The answer is to give that power, definitively this time, to Democrats, even just for two years, so we can see what Democratic policies would reap without Republicans poisoning everything.

If, after two years, things don’t improve, we can try something else. But the idea that Democrats have tried and failed, or that Obama has tried and failed, are fiction.

But that’s just reality. My apologies.

  1. Troy
    August 26th, 2012 at 03:00 | #1

    “If, after two years, things don’t improve, we can try something else.”

    We’re gonna need a bigger boat . . .

    As I’ve posted here dozens of times, the systematic imbalances of our economy have been building up since 1980 if not earlier.

    The baby boom was aged 18-34 in 1980 — prime working age! So much of our economic path has been driven by that reality of required expansion.

    In 2020 the baby boom will be aged 58-74 — prime retiring age! So much of our future economics will be dominated by THAT reality of required resource shift to the retired.


    is a graph of our past from 1980. Blue line is per-capita government spending, while red line is per-capita systemic (consumer + business + government) debt take-on (year-on-year).

    This graph’s red line shows the two credit events — mid-1980s and the Bush Boom.

    Adding mortgage debt take-on in green:


    shows how much of the red line’s growth was due to the housing bubble (about half — we borrowed $4000/yr for every man, woman, and child during the height of the bubble).

    Note how the mortgage credit bubble died and the timing of the recession. This graph:


    shows the correlation much better.

    blue line is change in jobs and red line is quarterly change in consumer debt.

    During the 1990s we had job growth without much debt take-on, but after the dotcom crash, the recovery was tightly coupled with consumer debt take-on, nearly entirely from new mortgage money. We were literally borrowing against our houses to get by!

    And what’s worse, tons of interventions were made to make houses go up in price — the 2001-2003 Bush tax cuts gave more money to people to bid up the cost of housing, interest rates fell from 8% to 5%, which similarly empowered people to bid up the price, and regulators stopped policing the mortgage business, allowing them to put anyone they wanted into suicide loans (which came with “affordability” terms like negative amortization and stated income qualifications) — suicide lending was the third part of the puzzle that drove the housing boom, especially 2004-2006.

    Changing the chart to 2000-2012:


    and adding government deficit spending (green) shows how fiscal policy softened the shock of the loss of the housing bubble money machine.

    Also, in 2011 the Fed dumped $800B+ into the economy, which also apparently helped a bit:


    The bottom line though is that this is a profoundly broken economy, and financial parasites like Rommey who make money without creating actual physical goods and services are a large part of the problem.

    The top 5% of the country is collecting 33% of the national income!

    Just in numbers (5, 33) the brain really can’t understand how broken that is.

    One out of twenty people collecting one out of three dollars.


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  2. Kensensei
    August 27th, 2012 at 04:03 | #2

    A great post, Luis. Very definitive of our current political-economic situation. This is the message Democrats really need to be driving home.

    The GOP has been a unrelenting destructive force on the implementation of the policies designed to strengthen the middle class and re-start our stalling economy.

    We need to focus our attention on the arsonists, not on the fire-fighters.

    I agree that two years of non-obstructionism, although just a start, is really all it would take to make a significant impact. Just give us two years to try to make a concerted, realistic and sincere impact on the economy without this constant blaming and gaming nonsense in Washington.

    Stand out out of the way and let the adults deal with the problem head on.

    If after those two years the economy has not turned around, you all on the Right can go back to your Bush era cronyism and deregulation…


  3. Troy
    August 27th, 2012 at 15:30 | #3

    is really all it would take to make a significant impact

    LOL, I don’t see it.

    In my above I didn’t EVEN get into the headwinds we’re going to be facing this decade and next.

    Our massive baby boom is going to be 50% on Medicare in 2020 — between 2012 and 2015 SS and Medicare costs are going to rise by $150B/yr, if we raise taxes to pay for this (and we should) that will be the same cost as the Bush tax cuts.

    And between 2015 and 2020 SS and Medicare are going to rise ANOTHER $300B PER YEAR. That’s another $2000 per every worker in the country, just to keep the programmed spending we have.

    We just can’t soak the rich to meet these payroll tax burdens, since we first need to raise taxes on them to bring the ~$1.2T/yr deficit we’re running under control. The top 10% make a lot of money, but if we doubled their taxes (impossible apparently but bear with me) we’d only get $600B/yr in additional revenue, half the deficit.


    Trade deficit’s still messed up:


    half of that is oil, and price action there isn’t going to be helping us any, not unless China stops growing and Europe falls into a massive depression.

    The economy is fundamentally broken and only bullshit is holding it together now.

    Things are fixable, but not without immense pain — the pain of higher taxes on everyone. We are a nation of children so that’s not going to happen this decade.

    Pretty sure I don’t want to be around for what IS going to happen.

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