“Little Evidence” To Support Claim That Taxes And Regulations Are Hurting Job Growth

Washington Post: Economists Find “Little Evidence” That Regulations Have A Significant Impact On Overall Employment. According to the Washington Post: “Economists who have studied the matter say that there is little evidence that regulations cause massive job loss in the economy, and that rolling them back would not lead to a boom in job creation.” [Washington Post, 10/19/11]

McClatchy: “Little Evidence” To Support Blaming “Excessive Regulation And Fear Of Higher Taxes For Tepid Hiring.” As reported by McClatchy: “Politicians and business groups often blame excessive regulation and fear of higher taxes for tepid hiring in the economy. However, little evidence of that emerged when McClatchy canvassed a random sample of small business owners across the nation. ‘Government regulations are not ‘choking’ our business, the hospitality business,’ Bernard Wolfson, the president of Hospitality Operations in Miami, told The Miami Herald. ‘In order to do business in today’s environment, government regulations are necessary and we must deal with them. The health and safety of our guests depend on regulations. It is the government regulations that help keep things in order.’” [McClatchy, 9/1/11]

Wall Street Journal: “Scant Demand, Rather Than Uncertainty Over Government Policies,” Is “The Main Reason” For Slow Recovery In Jobs Market. From the Wall Street Journal: “The main reason U.S. companies are reluctant to step up hiring is scant demand, rather than uncertainty over government policies, according to a majority of economists in a new Wall Street Journal survey. […] In the survey, conducted July 8-13 and released Monday, 53 economists—not all of whom answer every question—were asked the main reason employers aren’t hiring more readily. Of the 51 who responded to the question, 31 cited lack of demand (65%) and 14 (27%) cited uncertainty about government policy. The others said hiring overseas was more appealing.” [Wall Street Journal, 7/18/11]

• Former Reagan Adviser: “Regulatory Uncertainty Is A Canard Invented By Republicans” And Unsupported By The Facts. According to former Reagan adviser Bruce Bartlett: “These constraints have led Republicans to embrace the idea that government regulation is the principal factor holding back employment. They assert that Barack Obama has unleashed a tidal wave of new regulations, which has created uncertainty among businesses and prevents them from investing and hiring. No hard evidence is offered for this claim; it is simply asserted as self-evident and repeated endlessly throughout the conservative echo chamber. […] In my opinion, regulatory uncertainty is a canard invented by Republicans that allows them to use current economic problems to pursue an agenda supported by the business community year in and year out. In other words, it is a simple case of political opportunism, not a serious effort to deal with high unemployment.” [New York Times, 10/4/11]

• Regulatory Expert: “Current Rhetoric About Regulation Killing Jobs Is Nothing More Than Not Letting A Good Crisis Go To Waste.” From ProPublica: “‘The issue in regulation always should be whether it delivers benefits that justify the cost,’ said [Roger] Noll[, co-director of the Program on Regulatory Policy at the Stanford Institute for Economic Policy Research]. ‘The effect of regulation on jobs has nothing to do with the mess we’re in. The current rhetoric about regulation killing jobs is nothing more than not letting a good crisis go to waste.’” [ProPublica, 9/21/11]

AP: “Most Economists Believe There Is A Simpler Explanation” Than Regulation For Slow Job Growth: “There Isn’t Enough Consumer Demand.” From the Associated Press; “Is regulation strangling the American entrepreneur? Several Republican presidential candidates say so. The numbers don’t. […] Labor Department data show that only a tiny percentage of companies that experience large layoffs cite government regulation as the reason. Since Barack Obama took office, just two-tenths of 1 percent of layoffs have been due to government regulation, the data show. Businesses frequently complain about regulation, but there is little evidence that it is any worse now than in the past or that it is costing significant numbers of jobs. Most economists believe there is a simpler explanation: Companies aren’t hiring because there isn’t enough consumer demand.” [Associated Press, 10/12/11, emphasis added]

Wall Street Journal: Businesses Need “A Burst In Demand Strong Enough To Propel Hiring.” As reported by the Wall Street Journal: “Forecasting firm Macroeconomic Advisers, which sees growth at a 2.3% pace in the second half of this year and 2.8% in 2012, expects firms to keep banking strong profits. But even if businesses remain strong enough to make it through a slowdown, they may have to wait longer for a burst in demand strong enough to propel hiring. ‘The biggest problem is that their order books are thin,’ said Macroeconomic Advisers chairman Joel Prakken. ‘They need fat order books to add people. They need fat order books to buy machines.’” [Wall Street Journal, 8/29/11]

CBO Director Elmendorf: “Primary Reason” For Persistent Unemployment Is “Slack Demand For Goods And Services.” From a blog post by Doug Elmendorf on CBO.gov: “Slack demand for goods and services (that is, slack aggregate demand) is the primary reason for the persistently high levels of unemployment and long-term unemployment observed today, in CBO’s judgment. However, when aggregate demand ultimately picks up, as it eventually will, so-called structural factors—specifically, employer-employee mismatches, the erosion of skills, and stigma—may continue to keep unemployment and long-term unemployment higher than normal.” [CBO.gov, 2/16/12]

The Economy Has Added 4.7 Million Private-Sector Jobs In The Last 31 Months

The Private Sector Has Added 4.7 Million Jobs Over 31 Consecutive Months Of Private-Sector Growth. The following chart shows the monthly change in private-sector jobs dating back to January 2008:

[BLS.gov, accessed 10/5/12; MSNBC.com, 10/5/12]

Consumer Confidence Is At Its Highest Level Since September 2007. According to Bloomberg News: “Confidence among U.S. consumers unexpectedly jumped in October to the highest level since before the recession began five years ago, raising the odds that retailers will see sales improve. The Thomson Reuters/University of Michigan preliminary October consumer sentiment index increased to 83.1, the highest level since September 2007, from 78.3 the prior month. The gauge was projected to fall to 78, according to the median forecast of 71 economists surveyed by Bloomberg News.” [Bloomberg News, 10/12/12]

Massive Monthly Job Losses Obama Inherited Have Turned To Steady Private-Sector Growth

Bush Recession Was So Severe That Economy Was Still Shedding Over Three-Quarters Of A Million Jobs Per Month Through First Few Months Of President Obama’s Term. According to the Bureau of Labor Statistics, the economy shed 839,000 jobs in January 2009, 725,000 in February 2009, 787,000 in March 2009, and 802,000 in April 2009, for a four-month average of 788,250 lost jobs per month. [BLS.gov, accessed 5/3/12]

Since The Recession Ended In June 2009, The Private Sector Has Added 3.5 Million Jobs While Public-Sector Employment Has Fallen By 569,000. According to the Bureau of Labor Statistics, there were 107,933,000 private-sector jobs in June 2009, and 111,499,000 private-sector jobs in September 2012, an increase of 3,566,000 jobs. The BLS also reports that there were 22,570,000 Americans working in the public sector in June 2009, and 22,001,000 working in the public sector in September 2012, a decrease of 569,000 jobs. The private-sector gains and public-sector losses add up to a total increase of 2,797,000 jobs. The following chart shows the cumulative private-sector job gains and public-sector job losses since the recession officially ended in June 2009:

[BLS.gov, accessed 10/5/12; BLS.gov, accessed 10/5/12; NBER.org, 9/20/10]

• Conservative AEI: The Public Sector Has Shrunk, But Private-Sector Growth Is Above Average. From American Enterprise Institute scholar Mark J. Perry: “In the second quarter of 2012, ‘public sector GDP’ decreased -1.44%, and that was the eighth straight quarter of negative growth for total government spending, averaging -2.88% per quarter over the last two years. In contrast, there have been 12 consecutive quarters of positive growth for private sector GDP averaging 3.07% per quarter in the three years since the recession ended, which is slightly higher than the 2.8% average growth rate in private real GDP over the last 25 years.” [AEI-Ideas.org, 7/31/12]

New Data Shows Positive Net Job Growth Under Obama – Even Including Job Losses In Early 2009

Latest BLS Benchmark Shows “Net Job Growth…During Obama’s First Term.” According to the Huffington Post: “The Labor Department on Thursday morning quietly released a new benchmark for payroll employment in the U.S. It turns out that with the revision, there has been net job growth — not much, but more than nothing — during Obama’s first term. According to the revision, total non-farm payrolls stood at 133.686 million jobs in August, up from 133.561 million in January 2009, when Obama’s first term began. Before the revision, payrolls were at 133.300 million in August. In other words, 125,000 jobs have been created, in total, during Obama’s first term, compared with a prior estimate of a loss of 261,000.” [Huffington Post, 9/27/12]

Many Small Businesses Are Eligible For Tax Credits Under The Affordable Care Act

Affordable Care Act Offers Tax Credits To Many Small Businesses. According to a report from Small Business Majority and Families USA: “Congress included in the Affordable Care Act a significant new tax credit for small business owners who provide their workers with health insurance. Under this new tax credit, businesses that have fewer than 25 full-time workers and average wages of less than $50,000 are now eligible to receive a tax credit of up to 35 percent of the cost of the health insurance that they provide for their workers. To qualify for the tax credit, small businesses must cover at least 50 percent of each employee’s health insurance premiums. In 2014, the size of the credit will increase to cover up to 50 percent of the cost of health insurance provided to workers.” [SmallBusinessMajority.org, May 2012]

• More Than 3.2 Million Small Businesses Eligible For ACA Tax Credit. According to a report from Small Business Majority and Families USA: “Our analysis found that more than 3.2 million small businesses, employing 19.3 million workers across the nation, will be eligible for this tax credit when they file their 2011 taxes. In total, these small businesses are eligible for more than $15.4 billion in credits for the 2011 tax year alone, an average of $800 per employee.” [SmallBusinessMajority.org, May 2012]

ACA Requires Businesses With More Than 50 Employees To Provide Affordable Coverage Or Pay A Fee. According to a report from Small Business Majority and FamiliesUSA: “While the Affordable Care Act created this new tax credit to help small business owners and workers, it does not force these small business owners to provide coverage for their workers. There are no employer mandates in the law, and there are no employer responsibility requirements at all for businesses with fewer than 50 workers, which account for 96 percent of all firms in the United States. Starting in 2014, businesses with 50 or more workers that do not offer coverage or that offer only unaffordable coverage to their workers will be assessed a fee if one or more of their workers receives a federal individual premium tax credit to purchase coverage in an exchange.” [SmallBusinessMajority.org, May 2012]

Bush Policies And Recession – Not Obama’s Spending – Caused Debt To Skyrocket

Prior To President Obama’s Inauguration, President Bush Had Already Created A Projected $1.2 Trillion Deficit For Fiscal Year 2009. From the Washington Times:  “The Congressional Budget Office announced a projected fiscal 2009 deficit of $1.2 trillion even if Congress doesn’t enact any new programs. […] About the only person who was silent on the deficit projection was Mr. Bush, who took office facing a surplus but who saw spending balloon and the country notch the highest deficits on record.” [Washington Times, 1/8/09]

NYT: President Bush’s Policy Changes Created Much More Debt Than President Obama’s. The New York Times published the following chart comparing the fiscal impact of policies enacted under the Bush and Obama administrations:

[New York Times, 7/24/11]

Recession Added Hundreds Of Billions In Deficits By Increasing Spending On Safety Net While Shrinking Tax Revenue. The Center on Budget and Policy Priorities (CBPP) explains: “When unemployment rises and incomes stagnate in a recession, the federal budget responds automatically: tax collections shrink, and spending goes up for programs like unemployment insurance, Social Security, and Food Stamps.” According to CBPP: “The recession battered the budget, driving down tax revenues and swelling outlays for unemployment insurance, food stamps, and other safety-net programs. Using CBO’s August 2008 projections as a benchmark, we calculate that the changed economic outlook alone accounts for over $400 billion of the deficit each year in 2009 through 2011 and slightly smaller amounts in subsequent years. Those effects persist; even in 2018, the deterioration in the economy since the summer of 2008 will account for over $300 billion in added deficits, much of it in the form of additional debt-service costs.” [CBPP.org, 11/18/10; CBPP.org, 5/10/11, citations removed]

Over The Coming Decade, The Bush Tax Cuts Are The Primary Cause Of Federal Budget Deficits. The Center on Budget and Policy Priorities prepared a chart showing the deficit impact of the Bush tax cuts (orange), the Iraq and Afghanistan wars, the recession itself, and spending to rescue the economy:

[CBPP.org, 5/10/11]

CBPP: Bush Tax Cuts And Wars Are Driving The Debt. According to the Center on Budget and Policy Priorities:

The complementary chart, below, shows that the Bush-era tax cuts and the Iraq and Afghanistan wars — including their associated interest costs — account for almost half of the projected public debt in 2019 (measured as a share of the economy) if we continue current policies.

[Center on Budget and Policy Priorities, 5/20/11]

Spending Growth Under Obama Is Low

January 2009 (Pre-Obama): Federal Spending Projected To Spike To $3.5 Trillion Without Any Policy Changes. In January 2009, the Congressional Budget Office projected: “Without changes in current laws and policies, CBO estimates, outlays will rise from $3.0 trillion in 2008 to $3.5 trillion in 2009.” [Congressional Budget Office, “The Budget and Economic Outlook: Fiscal Years 2009 to 2019,” January 2009]

Accounting For Inflation And President Obama’s Impact On FY 2009, Spending Will Have Grown By Just 1.7 Percent From 2009 To 2012. According to Michael Linden, Director of Tax and Budget Policy at the Center for American Progress:

[I]n January 2009, before President Obama had even taken office, the Congressional Budget Office projected that federal spending would exceed $3.5 trillion for fiscal year 2009, half a trillion more than the government spent in 2008. Again, that was BEFORE President Obama event took office. It’s reasonable to use that number as our best guess at what spending would have been in FY2009 under ANY president. […]

Of course, the CBO’s projections aren’t perfect. They change as the economy changes and as laws change. Fortunately, CBO also tells us in subsequent reports how and why its previous estimates have changed. We can use that to understand how much of the total federal spending in fiscal year 2009 was attributable to legislative changes that occurred AFTER President Obama took office.

The answer is that out of a total of $3.5 trillion actually spent in FY09, only $165 billion, less than 5 percent, was the result of policy changes signed into law by President Obama.

In other words, probably the best baseline against which to judge spending under Obama is $3.5 trillion (the amount actually spent in 2009) minus $165 billion (the added amount Obama himself actually approved): $3.35 trillion. This year, the CBO expects that the federal government will spend $3.6 trillion. After accounting for inflation, that’s a growth rate of just 1.7 percent. By comparison, and using the exact same methodology, spending in President Bush’s first term was up nearly 15 percent. [ThinkProgress.org, 5/25/12]

PolitiFact: Spending Growth Under Obama Is “Second-Slowest” In Recent History. According to PolitiFact: “Obama has indeed presided over the slowest growth in spending of any president [in recent history] using raw dollars, and the growth on his watch was the second-slowest if you adjust for inflation.” [PolitiFact.com, 5/23/12]