During a complete collapse of the housing market, failure of the banking system, a credit crunch, and a collapse of the stock market, which led to an employment crisis that further collapsed the economy at the end of eight years of Republican leadership, Obama passed a stimulus that was the greatest turnaround in American history.
The House of Representatives passed the stimulus with a 246-183 vote, and zero support from Republicans.
The senate vote was 60-38. Three moderate Republicans supported the stimulus as the best way forward for America.
I believe that Republicans were wrong on jobs and the economy then and they are wrong on jobs and the economy now. Jobs numbers and GDP data show the stimulus that Republicans voted against did an amazing job (greater than Reagan's "morning in America") and this should have provided Obama the credibility needed when he asked for the American Jobs Act. Republicans obstruction of the American Jobs Act and a total of 17 jobs bills is responsible for the jobs numbers we see today.
Republicans were wrong on the stimulus and wrong in blocking the American Jobs Act. Today, we are suffering the consequences of their obstruction of Obama's jobs agenda.
Were the Republicans correct in their vote against the stimulus?
Jobs: More than 4,500,000 jobs added in 27 consecutive months of job growth.
The White House Chair of Economic Advisors released this video at the time interpreting the data that all charts were showing.
The month Obama took office we were losing 839,000 jobs.
The stimulus passed in February. Spending began to hit the economy in the third quarter 2009.
Within a year of Obama taking office we moved from losing 839,000 jobs in a month to adding 141,000 jobs.
This is a 980,000 job per month upwards swing.
Republicans believed the stimulus would not work for the jobs situation. Were they right?
Democrats wanted a larger stimulus. However, Republican Olympia Snowe was the deciding vote and would not support a larger stimulus.
John McCain shortly before this time was saying, "The fundamentals of the economy are strong."
Was McCain right?
Rush Limbaugh went as far as to claim that Obama's election caused the 2008 job losses.
GDP: Economic output changes as the stimulus hit the economy
Bureau of Economic Analysis reports were used to inform the decision and dialog.
January 30, 2009: the "advance estimate," showed the economy decreased 3.8%.
February 13 2009: the stimulus passes. Structured to fix that level of problem.
February 27 2009: the second estimate shows the economy decreased 6.2%.
The latest revision as the numbers were crunched from the collapse in greater detail showed the economy collapsed -8.9%.
By the third quarter 2009 as full stimulus dollars hit the economy the Bureau report showed growth of 3.5%.
This represents a 12.4% swing in the economic output of America.
The stimulus was not designed to fix a problem that deep, but it turned the entire economy around and we have been growing ever since.
Compare the size of the move to Reagan's "morning in America," when in 1983 GDP grew 7.2%.
While Reagan faced a long lasting recession; Obama faced a recession + a housing crisis + a financial crisis, which culminated in a massive employment crisis.
Reagan's 7.2% growth occurred on top of an already growing economy. Despite conditions being much more perilous at the time, Obama's growth was a complete turnaround - a 12.4% swing in the American economy - moving from collapse to growth.
I trust Obama's economic policy because it produced the greatest turnaround in American history. Republicans still say the stimulus failed even though we gained 4,500,000 jobs since it was passed.
Based on the numbers, were Republicans right?
Forward to Obama's Next Job Proposal: The American Jobs Act
September 8 2011: Obama proposed the American Jobs Act. Mostly tax cuts (297 billion dollars) and some spending to generate demand that business leaders told Obama they required to trigger hiring.
Obama believed the economy wasn't growing fast enough and noted that signs of a slowing Europe and China were appearing and that it may impact the fragile US economy. Obama proposed to grow and insulate the economy from those challenges. (By November 2011 US companies were already beginning to feel the impact of Europe's problems.)
Forty-five percent of Americans wanted their members of Congress to vote for it 32% wanted leaders to vote against it according to Gallup polls.
Moody's economist Dr. Zandi believed it would create 1.9 million new jobs. Others went as further and stated it would create up to 4.3 million jobs. Some were not particularly for it, but felt it would be better than nothing. If Zandi, who often gets bipartisan support, was right then that would have been about 158,000 extra jobs per month in 2012. (Over a decade the plan was deficit neutral and led to a reduction of the deficit by a total of 9 billion dollars according to the CBO.)
According to economists it might even prevent a 2012 recession.
When a wide range of economists are surveyed - some believe we would have seen growth to the high end, others to the low end. This would be expected because economists have liberal and conservative bents like anyone else. So if you look at the median number of job creation estimates of this bill you get a less rosy picture. The American Jobs Act uses the full pallet of options for job growth that each theory offers (Keynes, Hayek...etc). Tax cuts, infrastructure investment, and other spending are put together in a "kitchen sink," approach.
Some spending helps prevent teachers and other public servants from being fired. While they may inevitably be laid off in the future if revenues can not keep them employed, wouldn't laying them off during the crisis be like throwing gasoline on a fire?
Government layoffs during the crisis were most heavy in 11 Republican states. With zero Government layoffs unemployment would be around 7.2% today.
Here is Obama at the joint session of Congress proposing the American Jobs Act.
Republicans blocked this and nearly every part of it as it was broken into 16 smaller bills and brought to Congress one at a time.
Do Republicans have it right on Jobs and Economic Growth?
Based on their interpretation of the stimulus results, I conclude no.
The stimulus was a clear and strong success for America.
Based on Republicans blocking 17 different jobs proposals put forward by Obama, I ask, did Republicans obstruction help grow the economy?
Are we better off having by having Republicans in Congress blocking jobs legislation?
Based on where we are today, I conclude no.
I think we needed the tax cuts and spending in the American Jobs Act.
Would we have been better off following the lead of the President we elected to fix the problem?
There are plenty of opposing views. Bloomberg reports show a less rosy picture of the bill. History shows that the American Jobs Act compares to many previous Republican proposals.
Today's context is that Americans lost 39% of net worth during the financial crisis and foreclosures peaked last summer. (Each foreclosure takes about three years to pass through the system.) So Americans feel broke as a result of the damage of Republicans policies and we will suffer the dead weight for years to come.
What are your views on how to create jobs? What do you think will work best? How do we get out of this mess?