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November 16, 2011 10:35 AM CBO tells Congress what works

By Steve Benen

The Congressional Budget Office warned lawmakers yesterday that the economy, on its current course, will see the unemployment rate remain largely unchanged over the next year, with sluggish GDP growth “well below its potential.”

Congressional Republicans, still confused by the basics, saw this as proof of how right they are — if President Obama’s policies were better, the projections would be stronger. This, of course, assumes that the president’s agenda is being implemented, but it’s not. In case GOP policymakers missed it, they’ve killed the White House’s jobs agenda, and we’re doing things the Republicans’ way: the private sector is being left to its own devices; the public sector is shedding jobs quickly; and lawmakers are focused on debt-reduction. The right has nothing to complain about.

As it turns out, though, that’s not the only thing the CBO had to say yesterday. In the same economic-outlook report, the non-partisan office also considered policy options for “increasing economic growth and employment in 2012 and 2013.” This wasn’t at all what Republicans wanted to see.

The chart may be a little tough to read here (click on it for a larger view), but what it shows is which investments have the greatest impact when it comes to improving the economy. The CBO made no references to parties or ideological agendas, it simply highlighted the facts — and in this case, Democratic proposals would boost the economy and Republican proposals wouldn’t. It’s not an opinion, so much as it’s the result of an objective, independent analysis.

What’s more, this is consistent with the analyses of other independent economists, who’ve consistently reached the same conclusions (though GOP leaders found an “anarcho-libertarian philosopher” who believes differently).

Now, if our political process made any sense, this would be about the time that policymakers said, “We all want to improve the economy, so let’s do more of what works, and less of what doesn’t.” Then, they’d look to independent analyses like this one from the Congressional Budget Office to shape the best agenda.

But our political process doesn’t make sense, and analyses like the new CBO report won’t sway Republicans at all. Confronted with evidence that their agenda won’t work, Republicans reflexively respond, “We don’t care what the evidence says; our ideology trumps all.”

And that’s why we can’t have nice things.

Steve Benen is a contributing writer to the Washington Monthly, joining the publication in August, 2008 as chief blogger for the Washington Monthly blog, Political Animal.

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  • stormskies on November 16, 2011 10:54 AM:

    Confronted with evidence that their agenda won’t work, Republicans reflexively respond, “We don’t care what the evidence says; our ideology trumps all.”

    *************

    And then rely upon the corporate media to megaphone it so that then becomes what most Americans 'believe'. I am sure we will see this CBO report being held up on next Sunday's propaganda shows, especially by the corporate cum slut called David Gregory.

  • c u n d gulag on November 16, 2011 11:01 AM:

    "...the economy, on its current course, will see the unemployment rate remain largely unchanged over the next year, with sluggish GDP growth “well below its potential.”

    And the thunderous, overwhelming cheering, waving, screaming, high five-ing, and inadulterated joy, amongst Republicans, made the people who were out there flooding the streets on V-E and V-J Days seem like mimes at a funeral.

    And we can't have nice things, because too many of us want to hog all of the nice things.

    And too many people get more joy out of denying things to someone else, than they'd ever get out of having it themselves.
    But their joy comes in that denial.

    If I remember right, I think it's about 1 to 99 ratio.

  • square1 on November 16, 2011 11:08 AM:

    This, of course, assumes that the president’s agenda is being implemented, but it’s not.

    What is the President's economic agenda anyway? Leaving aside the past 2 months, when the President proposed a new jobs bill that the GOP has largely refused to implement, what job-creation policies has the President called for that have not been implemented?

    The original stimulus bill was essentially the size that the President asked for. And between the passage of the original stimulus bill and the most recent jobs proposal, there wasn't a single significant jobs-creation proposal by the White House that was blocked by the GOP.

    I have little patience for liberals and other Democrats projecting their personal views upon the President and insisting that, but for the GOP, Obama would have had us back at full employment. There simply isn't any evidence of any of that.

    One can make an argument that, going forward, "we can’t have nice things" because of GOP obstruction. But it is damn hard to make an argument that, as we sit right now, the Obama administration would have done anything different that would have significantly affected the unemployment rate over the past 2 1/2 years.

    The fact is that the Obama administration largely implemented the policies that they wanted, misjudged the severity of the economic crisis, and simply thought that the economy would have rebounded without further intervention by now. And it really isn't hard to come up with quotes by Obama's economic team admitting as much.

  • dalloway on November 16, 2011 11:16 AM:

    It isn't the ideology. It's the M-O-N-E-Y.

  • DisgustedWithItAll on November 16, 2011 11:18 AM:

    "If policymakers wanted to boost the economy in the near term while seeking to achieve long-term fiscal sustainability, a combination of policies would be required: changes in taxes and spending that would widen the deficit now but reduce it later in the decade."

    This is what the CBO says at the bottom of the graph. Wonder why Republicans are ignoring that?

  • SYSPROG on November 16, 2011 11:31 AM:

    Really Square1, REALLY? Just because YOU didn't see something with JOBS in the title they weren't WORKING on it? They were busy putting policies in place (and dismantling others) to help the business community to hire more. You don't LIKE that? If you don't see it it's not HAPPENING? How naive ARE you?

  • DisgustedWithItAll on November 16, 2011 11:36 AM:

    @square1: "The fact is that the Obama administration largely implemented the policies that they wanted, misjudged the severity of the economic crisis, and ..."

    The severity of the crisis wasn't known until May, 2011. They were going on badly overconfident information from all the data producers. And they did what was politically possible.

  • square1 on November 16, 2011 11:48 AM:

    @sysprog: Instead of name calling, try making an argument. If you dispute my claim, by all means point to the policy proposals that the White House made between the spring of 2009 and the Summer of 2011 that would have made a significant dent in the unemployment rate.

  • johnny canuck on November 16, 2011 11:50 AM:

    Square1: you have a wonderfully selective memory. I also realize from past comments that you believe in a magical Presidency that can overcome threatened filibusters with a shake of a competent President's fist.

    Claim:The original stimulus bill was essentially the size that the President asked for.

    My memory: While it is true that the original stimulus was not as large as Krugman would have liked, and in retrospect much smaller than would have been desirable if the extent of the recession had been known at the time, the price of getting the necessary Republican votes was reduction of 100Billion, because the ladies from Maine thought the number looked better. There is, I gather, both a mathematical and a confidence component to a stimulus. Making it 1/8th bigger might have more than a 12 1/2% improvement on demand.

    Your Claim: And between the passage of the original stimulus bill and the most recent jobs proposal, there wasn't a single significant jobs-creation proposal by the White House that was blocked by the GOP.

    My memory re Lameduck session: The President had expected that if his first stimulus had not worked sufficiently there would be a second. The republicans were blocking such a plan. Obama negotiated a compromise that (besides allowing for the passage of START, DADT, etc,) provided an extension of some tax cuts, which were the only acceptable stimulus options republicans would agree to.

    Claim:The fact is that the Obama administration largely implemented the policies that they wanted, misjudged the severity of the economic crisis

    My Reality: what you say is of course not "the fact" but your opinion: they implemented those policies they could get through the blocking powers of Republicans and conservative Democrats in the Senate . There was no misjudgment- unless reliance on official US govt reports demonstrates misjudgment. I don't know why the US govt did not accurately estimate the depth of the recession at the end of 2008. I have heard no one suggest it was manipulation by the Bush team. I assume it was honest bureaucratic error.

  • June on November 16, 2011 12:12 PM:

    @Square1 says: "I have little patience for liberals and other Democrats projecting their personal views upon the President and insisting that, but for the GOP, Obama would have had us back at full employment. There simply isn't any evidence of any of that."

    A random selection of 2010 headlines:

    Final Call: Republicans block jobs amendment: GOP senators prevent change that could have created 600,000 jobs
    MSNBC: GOP to block all bills until tax cuts are addressed
    CNN: GOP blocks Democrats' jobs outsourcing bill
    LAT: Republicans block extra $250 for those on Social Security
    Congressman Garamendi: Senate Republicans Block Jobs Bill, Putting at Risk the Nation’s Economy with a Double Dip Recession

    Add to it the concerted GOP effort to keep economic uncertaintly a constant factor since they took over the House, and there's plenty more evidence:

    --> At least two GOP attempts to shut down the government
    --> The GOP hostage demand that the deficit be increased by extending Bush's unfunded tax cuts
    --> The GOP attempt to make the nation default on its bills
    --> GOP governors' deliberate increasing of their states' deficits/laying off state workers/union-busting/refusal of Recovery Act funds

    There is indeed, plenty of evidence.

  • square1 on November 16, 2011 12:13 PM:

    @DisgustedWithItAll: "The severity of the crisis wasn't known until May, 2011"

    You mean that it wasn't known by the White House until (arguably) May of 2011 and possibly later.

    In reality, there were numerous voices who were repeatedly and loudly saying that (a) the initial stimulus was insufficient to lead to an alleviation of the employment crisis that began in late 2008; (b) the failure of the administration to properly address the insolvency of the largest financial institutions in early 2009 was going to create a "zombie bank" phenomenon that would stifle economic growth for years (like in Japan in to 90's); and (c) the failure of the administration to properly deal with the dual, but related, problems of underwater mortgages and mortgage fraud similarly was going to stifle economic growth and prevent the unemployment rate to fall.

    These observations were made by prominent economic voices in early 2009 and continue to be made up to the present. The fact that the administration ignored these voices and concerns does not mean that they should have been ignored.

    The administration chose to believe overly optimistic forecasts for recovery. The administration chose to cherry-pick economic data to confirm their initial but incorrect forecasts. And the administration chose to wait until September 2009 to propose a significant follow up to the first stimulus package.

    In the meantime, the administration repeatedly called for spending freezes, which are obviously contrary to fiscal stimulus.

    It would be one thing if the administration and its supporters would admit to being wrong. But instead, when their errors are pointed out, we see responses like sysprog's which suggest that the administration has been proposing numerous phantom job-creation policies and that critics are just too stupid to see them. Apparently these phantom policies are so obvious that the administration's defenders cannot be burdened with actually specifying what they are.

  • June on November 16, 2011 12:30 PM:

    I give it to you, @square1, you are a master of mis-direction. You also provide no backup for your assertions, but castigate everyone else for not doing so.

    "....we see responses like sysprog's which suggest that the administration has been proposing numerous phantom job-creation policies and that critics are just too stupid to see them."

    This link provides a comprehensive overview of the programs and initiatives the President has proposed/initiated on the economy:
    http://www.whitehouse.gov/economy

  • Anonymous on November 16, 2011 12:33 PM:

    Government can only help economy, not define economy.
    Republicans are right to say that new jobs are created from private sectors.

    Republicans believe that short-term benefits of stimulus is not worth the long term deficit it creates, which will slow future economic growth. it's that simple.
    They are also right to say that tax increase DURING the recession will hurt recovery.

    Democrats counter argument is that while deficits are a problem, this "short-term" unemployment can prolong enough that some members of society will lose lifelong opportunities without job training or education or temp jobs from government.
    so even when economy is recovered, those who lost jobs during the recession will never recover. that is the huge human capital loss.

    COB explains both points o view clearly.
    Without government assistant spending and tax cut, 2012 will still be jobless sluggish recovery.

    But spending and tax cut during the recession will add to a long-term deficits.
    so when the economy is back and healthy hopefully around 2014 or 2015, we have to increase taxes and cut spending over next 10 years. ideally 4 trillions.

  • Anonymous on November 16, 2011 12:54 PM:

    to square1, your critique on the white house's miscalculation is absolutely right.
    but that's why they are arguing for more stimulus.

    first stimulus was 800 billions. it was still too small.
    they also did nothing to reform mortgage refinance, other than limited tax credits.

    and yes, it's because they underestimated the depth of this recession and mortgage crisis. (though to be fair, those measures would have been pretty impossible to pass politically in 2009)

    now in 2011 when economy was supported to be better (it's better than 2010, but only slightly), they learned economy recovery is even slower than they forecast, partially because they didn't predict Arab spring, Japanese earthquake and domino affect from euro zone.

    the white house is right to try to get second stimulus because of their half-assed measure in 2009. better late than never. better than nothing.
    alas, they don't write the laws, they only approve them. it's up to congress.

    Congress raised deficit ceiling without government shutdown or draconian cuts.
    Comparing with Europeans, America is doing okay. not great, but okay.

    America also has the promising future with young populations and immigrations.
    but Europe won't grow their economy for a very long time with aging population and anti-immigrant sentiments.

  • MsJoanne on November 16, 2011 12:56 PM:

    You know, Anonymous, this bullshit about the government not creating jobs is just that, bullshit.

    There are people in government jobs. Those people buy stuff and that stuff is what drives demand. Republican's prefer to have the private sector do public sector jobs which costs the government much more.

    The stimulus provides an opportunity for people to make and spend money. That stimulates demand and demand stimulates jobs - for people have to fulfill that demand. It is a jump-start that only the government is big enough to create. Why do you think there are ebbs and flows in economics?

    You may have bought into the bullshit but to make government work takes people. But therein lies the rub. People like you don't actually want the government to work.

  • Anonymous on November 16, 2011 1:25 PM:

    ok, fair enough. you are right. i shouldn't have dumbed it down to "government doesn't create new jobs" which would make you misunderstand what i mean.
    did you read the rest of my comments, or did you just read the first few paragraphs to call all of my comment bullshit?
    because you and i seem to be agreeing about stimulus.

    what i meant to say is only that government doesn't create "new" jobs, as in new kinds of jobs, directly.

    i meant it in a way that blaming government for Obama for not "controlling" US economy is wrong while we have rights to complain that government is not helping the economy enough.

    government create investments and environments for markets to create jobs, hence yes, government does create private jobs indirectly.
    i should have specify "new jobs" as in new "kinds" of jobs DIRECTLY GENERALLY come from private sectors.

    government create education to someone like Steve jobs. government created internet for someone like Steve Job to create a company like Apple. but it was still Steve Job who grow jobs directly.

    All i was saying that while government has a huge stake in creating new jobs, it's the private sectors' responsibilities that actually do the hiring and paying salaries and paying their taxes back to government.

    government can't and shouldn't order private companies to produce jobs in private sectors. they only create public jobs, invest in private jobs, but not actually manage the private jobs.

    overall economic growth comes from growing private sectors who paid taxes for public jobs that, in return, provide social programs and regulate commerce for private sectors to grow.

    by the way, government-related jobs are about 40% of all the jobs in US. and it's public sectors that are losing the money and jobs the most. so stimulus to keep public jobs make total sense. jobs are jobs. i don't care if it's private or public as long as people have opportunities to work.

    sorry about a long paragraph. but bullshit is too short to explain what i mean.

  • DisgustedWithItAll on November 16, 2011 1:33 PM:

    @square1: "DisgustedWithItAll: "The severity of the crisis wasn't known until May, 2011"

    You mean that it wasn't known by the White House until (arguably) May of 2011 and possibly later."

    It wasn't known by ANYBODY. And yeah, there were those who said it wasn't big enough and that was based on the too-small estimates of the severity of the crisis. The White House had several reasons for its actions:

    - it couldn't possibly have known how severe the crisis was. NOBODY did. NOBODY.
    - it was politically impossible to get anything bigger through Congress.

    Did they come to the optimal solution on the banks? Nope. You get no points for that; too easy.

    But the point you MUST acknowledge: NOBODY knew how severe the crisis was till May 2011. Not Krugman, not OMB, NOBODY.

    (Full disclosure: I haven't been a fan of the political incompetency of the White House or Democrats in general. They're braindead.)

  • Anonymous on November 16, 2011 1:40 PM:

    Disguestedwithitall(like your name) you have a point. it is unfair and untrue to say any economists forecasted everything right, though some were closer than others.

    we should acknowledged the mistake in the fed's forecast, but we shouldn't blame them for making the mistake that much. economics are always unpredictable.

  • DisgustedWithItAll on November 16, 2011 1:48 PM:

    @Anonymous 1:40 pm: I'm not even talking about forecasts. Nobody knew how severe it was even AFTER it occurred and it wasn't known how severe it was till May 2011, years afterward. So even though the White House could have done better - even with the bad data they did have - it is simply just not fair to blast them unmercifully given NOBODY knew what a stinking pile of shit Republican ideas of the last 30+ years have given the country and manifesting itself in the irresponsible Bush-Cheney Administration and lapdog complicit Republican Congresses.

  • Anonymous on November 16, 2011 1:55 PM:

    DisgustedWithItAll: oh i see. yeah, i agree on that, too.

    MsJoanne: you know, i just read my comment again and it does sound like i'm agreeing more with republicans. my apologies.
    i meant to only explain what republicans say they believe.
    i don't agree with what they believe at all, but i always try to understand them and be objective.

    but i support government stimulus because i agree with liberal economists on saving human capitals now at the cost of deficits.
    i think strength of common men is greater than strength of top earners to a country overall.

  • Jimo on November 16, 2011 3:02 PM:

    Or, to paraphrase the Germans,

    Die Ideologie über alles.

  • square1 on November 16, 2011 3:22 PM:

    @DisgustedWithItAll:

    I have no idea what you are talking about. The unemployment rate has basically hovered between 9 and 10% for a couple of years now. No magic "crisis" emerged in May (or June, July, August, or September) of this year. The crisis is that unemployment has remained high during Obama's entire presidency.

    As for what people predicted back in early 2009, 10 seconds on Google will reveal that, yes, people DID predict that the stimulus was too small and likely to lead to slow GDP and jobs growth. It is a complete bullshit argument to say that NOBODY!!!!11!!1 predicted
    that the sluggish growth would continue for years as a result of insufficiently aggressive economic policies.

  • Anonymous on November 16, 2011 3:41 PM:

    square1

    yes, paul krugman predicted the stimulus was too small among other liberal economists. he didn't work in the white house, though.

    but crisis emerged this year is specifically referring to oil and food price hikes in the world from flooding and droughts, which led to arab spring and euro zone crisis and auto industry and trade backlash from japanese earthquake.

    combined with weak dollars, it's a perfect storm. but hopefully America will be ok.

  • John S. on November 16, 2011 3:45 PM:

    @square1:

    Put up or shut up. You've had ample opportunity to provide evidence of one person prior to May 2011 who knew the severity of the economic impact in Q4 2008, and yet you have no evidence. The issue here is not whether people thought there should be a bigger stimulus or who felt the makeup of that stimulus should be different, but people who KNEW how severe the recession was actually going to be.

    Good luck tracking such a link down.

  • Sparko on November 16, 2011 4:02 PM:

    Sabotage. Republicans are sabotaging the economy because they are rich enough to feel insulated from the damage their treason does.

    There should be occupy capitol hill candidates in every district and Senate race.

  • square1 on November 16, 2011 4:39 PM:

    @Anonymous: Yes, Krugman didn't work in the White House at the time. That was part of the problem.

    @John S.: Your request is poorly phrased and incoherent. But what you appear to be asking is "name someone who knew in Q4 2008 how bad the economy would be in 2011". If that is your question, my response is that it is patently silly to expect anyone to be able to predict specific GDP growth rates or unemployment rates 3 years into the future. But that doesn't mean that it should have taken three years to recognize the changing economic situation.

    You are creating a strawman argument by suggesting that I am somehow blaming the White House for not having a crystal ball into the future. I fully admit that most people in Q4 2008 -- even Krugman! -- did not believe that the economy would continue to suffer for so long.

    Krugman's initial stimulus proposal was for $600B (less than the final amount but not comprised of 1/3 tax cuts) But Krugman quickly recognized that the original stimulus was too small. It took the administration nearly 3 years to make the same assessment.

    My original argument was that, for whatever reason, Obama had not proposed any significant job-creation measures between January 2009 and September of 2011 that the GOP had shot down. If you want to argue that the reason was that the White House didn't understand the severity of the economic crisis until a few months ago, fine. But that just proves my point: They weren't asking for policies that we didn't get.

    My secondary argument is that between Q4 2008 and even May of 2011, there was plenty of economic evidence to indicate that additional stimulus was required.

    BTW, it would be a lot more pleasant if you could discuss these topics without launching into personal attacks.

  • Doug on November 16, 2011 9:12 PM:

    re square1's entire strawman argument -
    President Obama responsible for actions of other people, Democrats, Republicans, whoever. There is no such thing a "free will", only "Presidential will". Whatever happens or doesn't happen is because that's what the President wants. If some facts aren't available to him in making a decision, it's because he doesn't want them to be available. Therefore he's responsible for not knowing what he couldn't have known because if he wanted to know he would have. Known, that is.
    (Don't laugh, it makes as much sense as YOUR posts)

    "BTW, it would be a lot more pleasant if you could discuss these topics without launching into personal attacks."
    This in response to request from John B for FACTS? Perhaps you consider merely questioning your fantasy version of history as a "personal attack"? While YOU present OPINION as FACT and do so in tones guaranteed to have any reader reaching for the closest spitball, or its electronic equivalent?
    Hint: It's not.

    In summary; until the efficacy of the original stimulus was known, there was no chance of a jobs bill getting through Congress. Unfortunately, once the economic signs showed the economy slowing, Republicans had controll of the House and continued with their "All Obstruction, All the Time!" methods in the Senate.
    And THAT'S "why we can't have nice things".

  • Anonymous on November 16, 2011 11:41 PM:

    @square1

    Thank you for clearing up what you are saying.

    I like Paul Krugman, too. i think he wanted 1.5 trillion stimulus, which would have been impossible politically, you have to admit, with filibuster.
    Obama also should get a credit for asking 800 billion because original proposed number was more about 400 to 500 billion.

    "for whatever reason, Obama had not proposed any significant job-creation measures between January 2009 and September of 2011 that the GOP had shot down. "

    "between Q4 2008 and even May of 2011, there was plenty of economic evidence to indicate that additional stimulus was required."

    Actually, Bill Clinton was complaining (politely, you mind) about that, too.
    many analysts (including this web sites) also mentioned about Washington's neglect for job creation for a year and half.

    one reason i've often heard is what you mentioned: the White House didn't understand the severity of the economic crisis.

    But another and (probably true) reason is what Clinton said he learned from his wife (ha ha). Tea party and debt ceiling threat.

    After 2009 stimulus, tea party movement gave Mitch Mc-something guy (republican senate minority leader guy) enough confidence to insist to filibuster deficit ceiling vote without spending cut and clean bush tax cut extension in 2010 and summer 2011.

    If Obama were to veto their filibuster on debt ceiling by claiming its unconstitutionality, then Republicans were going to impeach him for overreaching, which would also prolong the talk while doing nothing, even if they would lose.
    So Obama had no choice but to compromise in 2011.

    that's why Joe Biden called tea party "terrorists" or something like that. Republicans were intensionally gambling America's economy as a chess piece. it's insane.

    But remember the polls showed at the time that majority of Americans were AGAINST raising debt ceiling?

    i'm impressed by the Republicans propaganda machines.

    but Obama should be able to be tougher now that he doesn't have the debt ceiling chain around his neck. He just needs to be cautious not to get impeached. Poor guy.

  • Anonymous on November 17, 2011 12:12 AM:

    oh hey, remember only one job bill between 2009 stimulus and proposed job act of 2011.

    it's the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 during the lame duck session. I think it's the half-assed stimulus they could get.

    Obama didn't bother to push any more job bills until now probably because, simply put it, it would have been waste of time (even symbolically).

    John Carry and other Dem senators proposed infrastructure bank and other job related bills that got introduced.

    Another reason i now remember is that Obama himself didn't propose anything because they had a theory that if his name is attached to a bill, republicans wouldn't even considered it. that's why Obama didn't endorse Bowes-simpson debt reduction bill. that was a probably a bit of political miscalculation there, too.

    but i think Obama would have looked like an ass (not to the fans like us here, but for the masses) if he actually proposed another stimulus and then didn't get it passed.

    it's not so clever to propose and get defeated politically. you risk looking like a loser.
    Americans like winners.

    also, besides the debt ceiling threat, until now there wasn't enough (public display like OWS) cry for it. OSW made Republicans unable to push for austerity now. the same way T party made Obama unable to pass stimulus. he he.

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