So, you want to be president. Are you a job creator? Or a job destroyer?
Presidential candidates these days seem compelled to make dubious claims about opponents as “job destroyers,” compared to their own record as “job creators.” This has been Mitt Romney’s theme song about himself and President Obama from the beginning. We can expect no less in the presidential debate this week.
Do presidents create jobs? Yes, indirectly, as a result of policy decisions, but how would we measure that? When Obama took office in January, 2009, jobs were in free-fall (Figure 1), with 4.4 million jobs lost since the start of the recession a year earlier, and with monthly losses stuck at their maximum of 700,000 to 800,000 through March. It wasn’t until July that the monthly drop slowed to somewhere below 300,000, reaching zero only in March, 2010, when losses turned to gains. So where does Obama’s responsibility begin? And, when he leaves office, where will it end?
These are not the only questions we must consider if we’re going to take the measure of presidential job creation since the end of World War II. That’s the goal here.
Posted in Jobs, Presidential campaigns
Tagged Barack Obama, Bill Clinton, civilian labor force, Dwight Eisenhower, George H. W. Bush, George W. Bush, Gerald Ford, Harry S. Truman, Jimmy Carter, job creator, Jobs, John F. Kennedy, Lyndon Johnson, Mitt Romney, president, Richard Nixon, Ronald Reagan
Yglesias and TheMoneyIllusion link to sites explaining “opportunistic disinflation.” It’s a questionable doctrine adopted sometime in the 1980s by the Federal Reserve for fighting inflation “opportunistically.” It contrasts with what former Fed Chairman Paul Volker did in 1981—slamming 15% hyper-inflation with a Fed Funds rate of 19% and throwing the economy into deep recession with 10% unemployment.
A follow-up on the prospect of a long, painful recovery of lost jobs.
Here is the latest projection from the Congressional Budget Office (CBO) of the gap between real GDP and real potential GDP (via Paul Krugman):
Potential GDP is a useful estimate of what the economy would be producing if it were not in a serious recession. The difference between potential and actual GDP is commonly known as the “output gap.”
Earlier this month, New York Senator Kirsten Gillibrand voted “no” on the budget/debt limit deal and said:
The fact is, there is nothing in this deal that will address the significant jobs crisis we are facing…. today we could have gone further in reducing America’s debt with a sensible compromise that both cut discretionary spending and raised revenues.
This was a gutsy decision, and Gillibrand has taken a lot flak from the usual right-wing bloviators. Only 6 Democrats voted against the deal (plus Vermont’s Bernie Sanders, an Independent). The rest of the 26 “no” votes were by Republicans who wanted more budget cuts which, by any credible logic, would cause more unemployment and lost jobs. Gillibrand is right about the jobs crisis outweighing debt concerns. Jobs are the immediate problem, while debt can and should be handled long-term.