Lindsey Graham Gets It Wrong On The Stimulus: Blames Legislation For U.S. Job Losses
A top issue on the Sunday morning talk shows was the Obama administration's record on jobs, with Republicans hitting the stimulus and calling for an extension of the Bush tax cuts. To make, his case, however, Sen. Lindsey Graham (R-S.C.) completely distorted the effects of the stimulus, calling it a "disaster" and trying to tie it to millions of U.S. jobs lost.
On NBC's "Meet the Press," Graham called for extending the Bush tax cuts, saying the U.S. taxes and spends too much. To make his claim, he said that the country has lost 2.5 million jobs since the stimulus passed.
GREGORY: Republicans are so concerned about the deficit and overall spending picture in Washington, as Republican leaders say they are. When you talk about extending the Bush tax cuts, yes, it's existing tax policy, but is there a responsibility for Republicans to say if you want to extend all of the cuts that somehow you have to pay for what the impact will be going forward beyond the expiration date on the Treasury?
GRAHAM: Only if you believe that America taxes too little; I think America taxes too much, and we certainly spend too much. I would extend the tax cuts to create private sector jobs. If you increase taxes now at any level, it is going to make it harder to create jobs, and we've lost 2.5 million jobs since the stimulus package passed. We're at 9.6 [percent] unemployment. So I don't think we don't tax too little; I think we spend too much.
While it's true that there have still been jobs lost since the stimulus passed, it's not because of the legislation and it's lower than between December 2007(when the recession began) and February 2009 (when the stimulus passed). According to an Aug. 24 report by the nonpartisan Congressional Budget Office, there would have been significantly higher job loss without the Recovery Act:
On that basis, CBO estimates that ARRA's policies had the following effects in the second quarter of calendar year 2010:
- They raised real (inflation-adjusted) gross domestic product (GDP) by between 1.7 percent and 4.5 percent,
- Lowered the unemployment rate by between 0.7 percentage points and 1.8 percentage points,
- Increased the number of people employed by between 1.4 million and 3.3 million, and
- Increased the number of full-time-equivalent jobs by 2.0 million to 4.8 million compared with what would have occurred otherwise (see Table 1).
In other words, the stimulus put 3.3 million Americans to work. Similarly, on July 27, economists Alan Binder and Mark Zandi released a study showing that without a strong federal response -- "Wall Street bailout, the bank stress tests, the emergency lending and asset purchases by the Federal Reserve, and the Obama administration's fiscal stimulus program" -- the U.S. would probably have lost 16.6 million jobs -- about "twice as many as were actually lost." Additionally, the unemployment rate would have peaked at 16.5 percent. As David Lynch of USA Today recent wrote, "Eighteen months later, the consensus among economists is that the stimulus worked in staving off a rerun of the 1930s."
Obama's presidential campaign manager, David Plouffe, also sharply defended the stimulus on NBC's "Meet the Press" today, saying, "By the way, the Recovery Act that Republicans are attacking -- if they had their way, we wouldn't have done anything like that. We probably would have unemployment rate if Republican ideas and policies had been in place that drove us into this economic climate in the first place, we'd be sit here with unemployment almost double what it is with no positive growth, no glimmers that were coming out of this."
Zandi, who served as an economic adviser to McCain's 2008 presidential campaign, said on CBS's "Face the Nation" that the effects of Bush's tax cuts on small businesses was being overblown. "On the margin some small business people won't hire as aggressively, but that is an overdone argument," said Zandi, adding that the main reason they're not hiring is a "lack of confidence." Economist Laura Tyson, who is a member of the president's Economic Recovery Advisory Board, agreed, saying the tax cuts are "not the major reason they're not hiring." Zandi also advised against raising taxes on high-income households, saying they are "very, very fragile."
On CNN's "State of the Union," National Small Business Association President Todd McCracken argued against letting the Bush tax cuts expire for businesses making more than $250,000, saying that although it's a "minority of small companies," they are "the more successful ones who are most likely to be growing jobs and the ones that we want to continue to be successful and we don't want to put disincentives in place for them to do it." AFL-CIO President Richard Trumka took issue with McCracken's characterization, saying, "They're not created by the 3 percent. They're created -- the vast majority are created by the other 97 percent. So it's not fair to say most jobs are created by that top 3 percent, because they are not."
From December 2007 to July 2009 - the last year of the Bush second term and the first six months of the Obama presidency, before his policies could affect the economy - private sector employment crashed from 115,574,000 jobs to 107,778,000 jobs. Employment continued to fall, however, for the next six months, reaching a low of 107,107,000 jobs in December of 2009. So, out of 8,467,000 private sector jobs lost in this dismal cycle, 7,796,000 of those jobs or 92 percent were lost on the Republicans' watch or under the sway of their policies. Some 671,000 additional jobs were lost as the stimulus and other moves by the administration kicked in, but 630,000 jobs then came back in the following six months. The tally, to date: Mr. Obama can be held accountable for the net loss of 41,000 jobs (671,000 - 630,000), while the Republicans should be held responsible for the net losses of 7,796,000 jobs.
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