Republicans seem confused as to whether they should stick to the theme that the economy is still weak — which they've been claiming since President Barack Obama took office, even though the Great Recession was created on their watch — or whether they should acknowledge the obvious sharp improvement in the economy today and somehow take credit for it.
The facts here are clear. When Barack Obama took the oath of office in January 2009, the economy was shrinking at an annualized pace of 8 percent — unheard of since the 1930s — and was losing 800,000 jobs per month. The new president dealt with this crisis through the Economic Recovery Act of 2009, which he initiated and Congress passed with virtually no GOP support. This law authorized approximately $750 billion of federal spending for infrastructure projects, tax relief and aid to state and local governments. By the fall of 2009, the job losses had reversed and turned into a steadily increasing pace of job gains.
Over the last 48 months, over 11 million jobs have been created, and for the first time in over 15 years, the economy is now growing steadily at an annualized rate of well over 3 percent. Most mainstream economists now agree that the president's initiative, coupled with aggressive action by the Federal Reserve, are responsible for this dramatic economic turnaround.
Some in the GOP shamelessly claim the sequester, which mandated across the board spending cuts beginning in 2013, was somehow responsible for the improvement, apparently because of its effect on the deficit. But it is well accepted economic theory and practice that reduced government spending, particularly in a time of economic weakness, can only cause further weakness. The states of Maryland and Virginia, which have long enjoyed higher than average job growth, dropped to 46th and 47th nationally in job formation in 2014, largely as a result of the sequester, according to Stephen Fuller of George Mason University.
The truth is that the GOP policies of dissembling and obstructionism during the Obama presidency have damaged the pace of economic recovery.
It is well established in economic history that when an economic crisis, as we experienced in 2008 and 2009, is accompanied by massive asset losses, such as we saw in stock prices and home values, consumer and business confidence is shattered. Harvard economists Carmen Reinhart and Kenneth Rogoff have well documented that it can take many years, under these circumstances, for confidence to be restored. And it cannot be helpful in that process of healing to have a major political party denying that there has been a recovery, constantly repeating incorrect statements and supported in this effort by Fox News and some talk radio.
There is a broad consensus among business leaders that certain clear, common sense public policy steps must be taken by the Federal Government to strengthen the competitive position of U.S. business in the global marketplace. Strengthening competitiveness is the key to middle class job creation. Among these steps are corporate tax reform, high skill immigration reform and long term infrastructure programs, among others. Corporate tax reform is needed to keep U.S. companies from fleeing the country and instead investing in it. High skill immigration reform is needed to keep the bright students and future innovators the U.S. attracts from around the world and trains at our best universities. Rebuilding the nation's crumbling infrastructure would not only employ large numbers of construction workers now, but it would also enable the economy to function more efficiently in the future, as former Treasury Secretary Larry Summers has written. By refusing to work with the Democrats in these areas, the GOP has immeasurably damaged the pace and duration of the economic recovery and job formation.
So as we continue to hear efforts by the Republicans now to take credit for the economic recovery which they have been uniformly bashing these past 6 years, let's label their efforts for what they are: economic nonsense.
Alexander R.M. Boyle is the retired vice-chairman of the board of the Chevy Chase Bank, a position in which he served for over 30 years. He frequently writes on economic and banking matters. His email is email@example.com.