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Republican Strategy for Victory: Stall Economic Recovery

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I suppose it should come as no surprise. The Republicans are rooting against the American economy and American workers. They believe that they will do better politically in the 2010 midterm elections -- and the 2012 presidential -- if the economy does worse. And for the last twenty months they have done everything they can to assure that outcome.

Of course some will say that no, the Republicans just have a different view of what will create jobs than Democrats. And that is partly true. Generally their view is that whatever is in the short-term interest of the big Wall Street banks, insurance companies, big oil and their wealthy donors is what is "good for the economy." They implemented their program of tax cuts for the rich and allowing the reckless Wall Street banks to do whatever they pleased for eight long years. The result was a $2,000 decrease in real income for most Americans, a massive increase in incomes for the top two percent of the population, zero net private sector job creation, and the collapse of our economy.

But it's not just their commitment to "trickle down" economics that has caused them to do everything in their power to block economic recovery. They believe that their political fortunes will rise if the fortunes of the rest of us decline. We can't let them be right.

The most striking case in point is the small business jobs bill that will hit the Senate immediately after the recess. The bill provides financial incentives to small business to create new jobs. You'd think that any bill that infuses money into a key Republican constituency like small business would be met with open arms by the Republican minority. No such luck. They plan to filibuster the bill even though many of its provisions were lifted directly from measures authored by Republicans.

The Republican anti-recovery crusade began with the stimulus. When President Obama took office, the economy and job market were in free fall. The month he took the oath of office, the economy lost 650,000 jobs. Virtually every mainstream economist agreed that an emergency stimulus package was necessary to avoid spiraling into another Great Depression.

In a recession, the problem is not a sudden decline of the ability of the economy to produce goods and services. The problem is that the web of economic relationships is disrupted and creates an artificial decline of demand for products and services -- a demand deficit. Without adequate demand to buy their products, businesses lay off workers who have even less money to buy products, and the economy spirals into recession.

Recessions result in incredible waste. All of the products and services that idle workers, plants and equipment could have created are simply not produced -- meaning that the society as a whole is poorer with fewer goods and services to go around.

The solution to this problem is to create the economic demand to put people back to work and jump start the economy. But the only source of that demand is the government.

The White House economic team -- and many progressive economists -- believed that a large stimulus was necessary to push the economy out of the economic ditch and get it going again. But the Republicans said no. Many opposed any stimulus at all. In the end, the price for the three Republicans who ultimately voted yes was a scaled-back stimulus that turned out to be enormously effective -- just not big enough to do the job.

Even today, Republicans are campaigning against the stimulus, claiming it didn't work, even though the non-partisan Congressional Budget Office analysis finds that it created or saved 2.8 million jobs by the end of July and will probably have created or saved 3.5 million by the end of September. Without it, instead of the eight million jobs lost as a result of the Republican recession, we would have lost 11.5 million jobs.

But of course politically, that would have been just fine with the Republicans.

The effective size of the stimulus bill was about $717 billion, not counting the so-called Alternative Minimum Tax fix that Republicans forced into the bill that had no stimulative effect. Had the stimulus been $1.4 trillion, the odds are good it would have created another 3.5 million jobs.

Think just how different both the economic and political situation would be today if the economy had generated another 3.5 million jobs in the last 20 months.

But what about the deficit you say? First a good portion of the newly-generated, short-term deficit would have been offset by increased tax revenues generated from new wages and the new spending they created as they flowed through the economy. And over the long run, most economists agree that this kind of expenditure would have actually improved the deficit picture by jumpstarting overall economic growth.

In fact, most of the budget surplus generated by the Clinton economic program came from just that -- the big-time economic growth of the late 1990's.

But opposing and limiting the size of the stimulus was just the beginning of Republican attempts to throw sand in the gears of the recovery.

They opposed the government rescue of GM that has proven to be one of our biggest economic bright spots. Instead of going into bankruptcy, or liquidating and costing thousands of additional jobs, GM actually turned a $2.2 billion profit in the first half of this year and is preparing a stock offering that will allow the government to sell off its stake at a potential profit. GM is now hiring new workers once again.

Then there was the marathon Republican attempt to stop the extension of unemployment benefits that was finally defeated by Democrats earlier this summer. That delayed payment of benefits to millions of workers and cost the economy dearly.

And there was the Republican filibuster of federal money for teachers, police, firefighters and other public servants. They caused hundreds of thousands of state employees to be laid off or furloughed. It finally passed the Senate with two Republican votes, but only after it was cut in half. It will prevent 300,000 layoffs. Every time a teacher is fired, it not only damages the economy in the short run, it also permanently damages our economic prospects -- and ability to compete in the world -- over the long run, by shortchanging the education of our next generation.

All the while they have been opposing these jobs initiatives, Republicans have proposed -- with a straight face -- that we spend almost three quarters of a trillion dollars over the next 10 years on tax breaks for the top two percent of the population.

And they have opposed Democratic attempts to end tax breaks to companies that ship jobs overseas -- one of the most profound causes of the decline of American manufacturing.

Finally, there was virtually unanimous Republican opposition to the measure that began to rein in the recklessness of the big Wall Street banks that caused the collapse of the economy in the first place.

For the last twenty months, Democrats have been pushing hard to get the economy out of the ditch. Not only have the Republicans refused to lend a hand, they have been actively throwing rocks under the wheels.

The fact is they want to keep the economy in that ditch so they can divert attention from the fact that they were behind the wheel when it careened off the road.

They hope that if they prevent it from getting back onto the pavement, the voters will forget about who put it in the ditch in the first place and blame the guys who are trying to get it out. They're counting on the frustration caused by the delay in getting the economy out of that ditch to be enough that the voters will turn once again to the culprits who put it there, throw them the keys and say "why don't you try it again." That, of course, will require a gigantic case of national amnesia. It would also be a political and economic disaster.

We can't let them be successful.

In particular, the Republicans hope that the frustration and the fatigue of struggling with the economic situation is just enough to make a large number of Democratic voters give up in disgust and simply stay home on Election Day. That's how the "1994 Republican Revolution" that gave us Newt Gingrich, and culminated in the election of George Bush, the Iraq War and the collapse of the economy began. In 1994, Democrats simply stayed home.

We've seen that movie, and it ends badly.

So unless you're up for more tales of economic collapse -- more stories of chaos and destruction, wasted lives and frustrated dreams -- don't let the Republicans succeed.

We have to show them that those who sacrifice the economic well-being of their fellow Americans for partisan political gain will not ultimately be rewarded with political success.

Robert Creamer is a long-time political organizer and strategist, and author of the recent book: "Stand Up Straight: How Progressives Can Win," available on amazon.com.

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