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

Recession Officially Ran From December 2007 To June 2009, Making It The Longest Since World War II. From the National Bureau of Economic Research: “The Business Cycle Dating Committee of the National Bureau of Economic Research met yesterday by conference call. At its meeting, the committee determined that a trough in business activity occurred in the U.S. economy in June 2009. The trough marks the end of the recession that began in December 2007 and the beginning of an expansion. The recession lasted 18 months, which makes it the longest of any recession since World War II. Previously the longest postwar recessions were those of 1973-75 and 1981-82, both of which lasted 16 months. In determining that a trough occurred in June 2009, the committee did not conclude that economic conditions since that month have been favorable or that the economy has returned to operating at normal capacity. Rather, the committee determined only that the recession ended and a recovery began in that month.” [NBER.org, 9/20/10]

• Recession Resulted In 8.3 Million Job Losses. According to the Associated Press, “the Great Recession killed 8.3 million jobs, compared with 1.6 million lost in the 2001 recession.” [Associated Press via Yahoo! News, 5/4/12]

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 Over 3.4 Million Jobs While Public-Sector Employment Has Fallen By 670,000. According to the Bureau of Labor Statistics, there were 107,933,000 private-sector jobs in June 2009, and 111,400,000 private-sector jobs in August 2012, an increase of 3,467,000 jobs. The BLS also reports that there were 22,570,000 Americans working in the public sector in June 2009, and 21,900,000 working in the public sector in August 2012, a decrease of 670,000 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 9/7/12; BLS.gov, accessed 9/7/12; NBER.org, 9/20/10]

• Conservative AEI: The Public Sector Is Shrinking, 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]
• GOP-Favored “Government Downsizing” Has Been “A Drag” On Job Growth. From the Associated Press: “Conservative Republicans have long clamored for government downsizing. They’re starting to get it — by default. Crippled by plunging tax revenues, state and local governments have shed over a half million jobs since the recession began in December 2007. And, after adding jobs early in the downturn, the federal government is now cutting them as well. States cut 49,000 jobs over the past year and localities 210,000, according to an analysis of Labor Department statistics. There are 30,000 fewer federal workers now than a year ago — including 5,300 Postal Service jobs canceled last month. By contrast, private-sector jobs have increased by 1.6 million over the past 12 months. But the state, local and federal job losses have become a drag on efforts to nudge the nation’s unemployment rate down from its painfully high 9.1 percent.” [Associated Press, 10/25/11]

The Private Sector Has Added 4.6 Million Jobs Over 30 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 9/7/12; MSNBC.com, 9/7/12]

Bush Policies And Recession 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]

If “We’re Facing A New Recession,” It’s Because Of Automatic Austerity Measures Triggered By Intransigence Of Conservative Lawmakers

Economy Expected To Continue Growing Through 2012. From the Congressional Budget Office: “After growing at an annual rate of 1.7 percent in the first half of 2012, real (inflation-adjusted) gross domestic product (GDP) will increase by 2.2 percent in the second half of the year, CBO projects. That forecast reflects CBO’s expectation that businesses’ and consumers’ concern about the scheduled fiscal tightening will lead them to spend more cautiously than they would otherwise.” [CBO, August 2012]

Fears Of Economic Contraction In 2013 Are Based Upon Presumed Austerity Measures Written Into 2011 Debt Deal. From the Congressional Budget Office: “But the sharp increases in federal taxes and reductions in federal spending that are scheduled under current law to begin in calendar year 2013 are likely to interrupt the recent economic progress. By CBO’s estimate, that fiscal tightening will probably lead to a recession in 2013 and to an unemployment rate that remains above 8 percent through 2014.” From Forbes: “There’s a 20% to 25% chance that the U.S. economy will suffer a double-dip recession, according to a report by Standard & Poor’s.  The credit rating agency which downgraded the U.S.’ sovereign credit rating last year noted unemployment could peak above 9%, real GDP would contract 0.9%, and housing markets would once again collapse under their adverse scenario.  The catalyst: Congress failing to reach an agreement to avoid the fiscal cliff.” [CBO, August 2012; Forbes, 9/21/12]

Deficit-Reduction Committee Failed After Republican Members Refused To Budge On Tax Cuts For The Wealthiest Americans. According to the Los Angeles Times: “The committee faced a Wednesday deadline to vote on a proposal to slash the nation’s deficits by $1.5 trillion over the decade. The panel that was brought into existence as a result of the summer debt ceiling fight spent three months in mostly secret negotiations. A deal needed to be posted by Monday evening to provide a 48-hour review. But Republicans and Democrats were unable to compromise on the tax and spending issues that have divided Congress all year, punting the debate to next year’s presidential and congressional campaigns. Republicans refused to substantially raise taxes and wanted to cut federal deficits largely by reducing spending on Medicare and other domestic programs. Democrats wanted a more equal balance of new taxes and spending cuts — a level of taxation the GOP could not accept. A focal point in final days became the George W. Bush-era tax cuts, which are scheduled to expire in December 2012. Republicans wanted to extend those tax breaks for the wealthy and other Americans, rather than carve into that source of new revenue. Most Republican members of Congress have signed an anti-tax pledge with conservative activist Grover Norquist, and were hesitant to agree to new taxes. [Los Angeles Times, 11/21/11]

If “Fiscal Cliff” Avoided, CBO Anticipates Continued Economic Growth In 2013 And Beyond. From the Congressional Budget Office: “Of course, the tax and spending policies that are scheduled to take effect under current law may be delayed or modified. To illustrate how some changes to current law would affect the economy over the next decade, CBO analyzed an alternative fiscal scenario that would maintain many policies that have been in place for several years. Specifically, that scenario incorporates the assumptions that all expiring tax provisions (other than the payroll tax reduction) are extended indefinitely; the alternative minimum tax is indexed for inflation after 2011; Medicare’s payment rates for physicians’ services are held constant at their current level; and the automatic spending reductions required by the Budget Control Act of 2011 (Public Law 112-25) do not occur (although the original caps on discretionary appropriations remain in place). Under that scenario, real GDP would be higher in the first few years of the projection period than in CBO’s baseline economic forecast; the economy would continue to grow in 2013 and the unemployment rate would fall (although it probably would remain near 8 percent in 2013 and above 7 percent through most of 2014). By 2022, however, the larger federal deficits and the resulting larger amount of federal debt created by the continuation of those policies would reduce output and income relative to the figures in CBO’s baseline forecast.” [CBO, August 2012]

Liberal Nobel Prizewinning Economist Stiglitz: Romney Economic Plan Would Make New Recession More Likely. From Bloomberg: “Nobel Prize-winning economist Joseph Stiglitz said the election of Mitt Romney as president in November would ‘significantly’ raise the odds of a recession because it would herald a shift to a much tighter budget. History shows that the adoption of fiscal austerity when an economy is weak can have disastrous consequences, as happened in the U.S. in 1929 on the eve of the Great Depression, Stiglitz told Bloomberg editors and reporters in New York yesterday. Republican candidate Romney risks making that same sort of mistake by backing a plan to slash the budget deficit, he said.” [Bloomberg, 6/5/12]