Private Sector Job Growth In 2008, 2009, 2010

By Justin Gardner | Related entries in Deficit, Democrats, Economic recovery, Economy, Jobs, Money, Republicans, Texas

Here ya go…

Pretty straightforward. Dems aren’t going to win any economic ingenuity awards, but we’re out of the recession, private sector job growth is still holding on and we’ve got the shopping season coming up, which should drive even more.

But what if the Republicans had their way?

Well, let’s refer back to the Congressional Budget Office’s recent projections, as brought to you by Newsweek. Basically, the Republicans wanted to extend the tax cuts and that’s about it. What effect would that have on the economy?

Extending all of them, according to the CBO, would lower unemployment by 0.3 to 0.8 percent over the next year or so; extending them solely for people making less than $250,000 would produce a somewhat smaller effect, for a difference of roughly 200,000 to 500,000 people.

The problem, as economist William G. Gale of the Brookings Institution has noted, is that “of 11 potential stimulus policies the CBO recently examined, an extension of all of the Bush tax cuts ties for lowest bang for the buck.” In fact, he continues, “letting the high-income tax cuts expire and using the money for aid to the states, extensions of unemployment insurance benefits, [or] tax credits favoring job creation … would have about three times the impact … as continuing the Bush tax cuts.”

In addition, it’s unlikely that extending the cuts for the richest Americans would have much of an effect on small-business hiring, which is a claim that Republicans make with some regularity. Why? Because of the taxpayers that report running small businesses on their taxes, only 2 percent fall into the top two income brackets.* The other 98 percent of small-business owners make less than $250,000 a year and wouldn’t pay higher taxes under Obama’s plan.

Now, let’s look at their supposed deficit reduction measures, which they’ve been talking about constantly. Again, we’ll refer to the CBO and Newsweek’s analysis of it, which I’m repurposing here to make a couple additional points.

Obama spent $814 billion on the stimulus plan and Republicans didn’t offer an alternative, so it’s…

D: $814B
R: $0

On health care reform, Republicans want to repeal the law and substitute it with, well…nothing. Some think they’d take the Wyden/Bennett approach, but there’s no evidence that would actually happen. So what’s the problem with repealing it? The CBO says that the current health care law will cut $30B from the budget deficit in the next 10 years. What’s the cost of doing things in the same way (repealing it) ? $455B. That’s right…the health care bill is actually saving us $475B over 10 years. Still, you can’t subtract $455B from the Dem’s total, so Dems are still leading the deficit game in 10 years time…

R: $455B
D: $784B

Now, on to the Bush tax cuts. As mentioned above, only 2% of small businesses owners make more than $250,000 in income every year and their hit would be VERY minimal. For a refresher, let’s go back to the chart we posted a few weeks ago…

That’s right, people making up to $500,000 will have to pay roughly $400 more a year if the tax cuts aren’t extending. Folks who make $250,000 would pay even less than that. Most likely around $200 extra.

Yes…that’s it.

So, don’t believe the Republicans when they say not extending those benefits would kill jobs killer because $400 of salary can’t create a job.

The Dems’ extension of the tax cuts for everybody else will add roughly $3 trillion to the deficit in the next 10 years. What would the Republicans add? Another $700B.

What’s the total budget deficit over the next ten years for either party?

D: $3.784T
R: $4.155T

If you vote for the GOP this fall because you think they’re going to create more jobs and reduce the deficit, you’re a sucker. Plain and simple. They have no new ideas to turn things around and they’re simply referring back to the same play book that got us into this mess in the first place: deregulation and tax cuts.

Also, remember that if the GOP had their way they would reduce the federal government down so much it would cripple an already crumbling infrastructure. We need to innovate and continue to make sure the basic building blocks of our society are the best in the world or else we will not be competitive in the years to come. And, as the evidence shows, the Dems still offer the best plan for that. I’m not saying it’s the best, most innovative plan, but it’s demonstrably better both in terms of jobs and deficit reduction than the GOP’s.

(h/t: Washington Monthly)


This entry was posted on Friday, September 3rd, 2010 and is filed under Deficit, Democrats, Economic recovery, Economy, Jobs, Money, Republicans, Texas. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

11 Responses to “Private Sector Job Growth In 2008, 2009, 2010”

  1. Alistair Says:

    Justin:

    He’s a bit of some news, the GOP plans to shut down the Government if they take over the House & the Senate.

    http://tpmdc.talkingpointsmemo.com/2010/09/choke-it-starve-it-shrink-it-what-government-shutdown-hints-are-really-about.php?ref=fpa

  2. Calmoderate Says:

    The choices are unappealing. Neither the Democrats nor the Republicans can see past their own power struggles or the power of special interest money. Either way, we are, technically speaking, hosed. At the moment, Democrats do seem to be the lesser of the evils, but it is hard to quantify. Anyone up for a new political party?

  3. kranky kritter Says:

    What if you vote for Republicans on the premise that a divided congress will find it much harder to agree on how to overspend, leading to less overspending?

    MW’s hypothesis applies pretty well here, that idiocy and counteridiocy will cancel each other out. Lots of sound, lots of countervailing fury, signifying less overspending. I’d settle for that.

    You, Justin, have an enduring faith that the government is what is going to lead us out of current circumstances. I lack that faith, as do many others.

    Lacking that faith, it’s appealing to think that the only viable alternative as a voter may be to shackle both republicans AND democrats. The voters can effect a hippocratic oath on congress, ensuring that first they do no harm.

    I don’t buy the strong version of MW’s hypothesis that a divided congress is inherently desirable. But in these circumstances, it may quite possibly be the best alternative for voters convinced that neither side really has any bright ideas about what to do, only self-serving schemes that privilege their particular constituencies.

  4. Mike A. Says:

    Why don’t we vote for the best candidate, regardless of party? And then, as ridiculous as this may sound, assess their performance and relect/or not at the next election. In other words, stop treating politics like a football game and start treating our elected officials as public servants.

  5. Jim Satterfield Says:

    Unfortunately, Mike, in our current system you can’t vote for an individual. If you vote for a Republican, you empower every other Republican and vice versa. The leadership of the Senate and House has consequences. I dislike the politics of McConnell and Boehner much more than I dislike Reid and Pelosi. This has to enter into the thinking of any informed voter.

  6. Mike A. Says:

    I apologize for my previous post…24 hours and I sobered up a bit.

  7. Tillyosu Says:

    Actually, I happen to like Ryan’s Roadmap for America’s future:

    http://www.roadmap.republicans.budget.house.gov/

    Ryan may not have lined up the rest of the party behind it yet, but I suspect many will come on board after they retake the House and Senate. But to say that the Republicans don’t have ideas is simply dishonest. But I’ve come to expect this kind of cherry picking and number fudging from a partisan rag like Newsweek.

  8. Alistair Says:

    Looks like the GOP is going have get on board and support President Obama on this one.

    http://politicalticker.blogs.cnn.com/2010/09/05/nsba-president-endorses-obamas-jobs-bill/

    If they say no to President Obama’s then they should never take any position of leadership in the three branches of Government.

  9. Chris Says:

    Kranky, the problem is that they may do no harm ( i doubt that) but they also won’t be able to functionally do any good either. I don’t think the status quo is going to work for very much longer. We’ll find out though.

  10. JimS Says:

    Ryan’s Roadmap is a rigged joke. In order to make it looks like it would work, his staff specified the assumptions the CBO should evaluate it under and they are not particularly realistic.

  11. kranky kritter Says:

    I don’t want to defend the status quo per se. Instead, it’s worth noticing that a congress that doesn’t do much could at least result in a number of unstable situations becoming more stable by default. Granted, that’s for better OR for worse, especially in the short term..

    So, for example, businesses who may have ben holding off on hiring in anticipation of some sort of tax break or subsidy might go ahead and hire. Underwater borrowers holding on for a big bailout might go ahead and default, getting more property on the market at realistic prices. Banks hoping for the government to subsidize cramdowns might go ahead and book the losses so that they can get on with business. People running out of unemployment extensions might apply for that less than ideal job.

    Briefly, I think that we need to get to a point of stability and sustainability before the economy can grow and create jobs, even if those jobs aren’t all that great, which is, let’s face it, a real prospect.

    I’m not saying that we’ll like what we find on the next page, but I am saying that it’s becoming more and more important that we go ahead and turn that page, and face what the future has to offer. Even if it’s lowered expectations that represent the new reality after the 2007 economic collapse.

    Don’t forget how many folks point to balancing the budget as a signature achievement of Bill Clinton. It didn’t happen until Republicans took congress. If a 2010 Republican resurgence brings federal spending under control in 2011, that could be a good thing.

    Anyone who gets the math knows that the giant budget deficits that we’ve run since the last Bush budget are VERY unsustainable. The scope of overspending needs to be very quickly brought back down at least to recent historic levels, before US bonds become iffy investments and American solvency crumbles. My sense is that democrats as a group either think we can get away with several more budgets where we collect 3 and spend 5, or they lack the will to face the likelihood that we can’t get away with that.

    Some folks seem caught up in the notion that the government really has no choice but to continue to overspend in huge chunks until the economy shows signs of genuine rebound. This kind of thinking reminds me of Republicans “failure is not an option” view of the Iraq war.

    Both of those viewpoints function by denying the possibility that America operates under unpleasant but real constraints. The Iraq war has now come to a point we’re we’ve tacitly acknowledged that Iraq’s success or failure is ultimately not our outcome to determine. It’s up to Iraqis, more every day.

    Restoring a sane, stable economy is sooner or later up to us, not the government. And the government’s ability to borrow/overspend faces serious and growing real-world constraints which exist regardless of our feeling that we MUST keep overspending for just another year or two. We’re running out of time to voluntarily face real-world constraints. And every fiber of my being says that if we don’t face those constraints before we our forced to, it’ll go badly. All it will take is a couple of bond offerings that don’t go well, leading to the necessity of offering higher rates of return, and the swing will be on.

    If the reckoning is not here right now, today, then surely it is neigh. There is only one way to face that reckoning. Namely, by spending within our means, whether that means Joe Bag-a-donuts or Uncle Sam.

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