The Facts Show (and Businessweek Agrees) Obama Plan is Working

A lot has happened this week, both locally (a great Democrats Abroad health care celebration!) and back home (Justice Stevens is retiring!) but I wanted to take a moment now to write about the economy. Specifically, the improvement in the economy.

Businessweek magazine, hardly a bastion of economic populism, has just published an interesting article about how not only are the markets recovering, but they are doing so because there appears to be a solid grounding of underlying economic improvement. And they attribute this to directly to Obama's efforts:

Little more than a year ago, financial markets were in turmoil, major auto companies were on the verge of collapse and economists such as Paul Krugman were worried about the U.S. slumbering through a Japan-like Lost Decade. While no one would claim that all the pain is past or the danger gone, the economy is growing again, jumping to a 5.6% annualized growth rate in the fourth quarter of 2009 as businesses finally restocked their inventories. The consensus view now calls for 3% growth this year, significantly higher than the 2.1 % estimate for 2010 that economists surveyed by Bloomberg News saw coming when Obama first moved into the Oval Office. The U.S. manufacturing sector has expanded for eight straight months, the Business Roundtable's measure of CEO optimism reached its highest level since early 2006, and in March the economy added 162,000 jobs—more than it had during any month in the past three years. "There is more business confidence out there," says Boeing (BA) CEO Jim McNerney. "This Administration deserves significant credit."

It is worth stepping back to consider, in cool-headed policy terms, how all of this came to be—and whether the Obama team's approach amounts to a set of successful emergency measures or a new economic philosophy: Obamanomics.

But this doesn't need to be a question of  interpretation. The facts on the ground are very clear - on almost every measure, bar unembployment - which is only just starting to recover, with our first month of positive jobs news just reported - the economic situation has grown better under Obama's presidency.

I'm going to just flagrantly steal some charts from Ezra Klein's blog, but as usual you really should read it yourself.

Here's a chart showing job growth:

And yes, the blue bits are the Obama Presidency and the Red bits are Bushville. Spotted a pattern? Hmmm....


Here's a chart showing house prices. (Hint, remember Obama was inaugurated in Jan 2009...)

Here's a chart showing the Dow Jones Industrial average under the Obama Presidency:

This is fun. I could do this all day.

Here's one showing GDP growth under Obama - remember, the first quarter of his Presidency would have been reported in April 2009, so that's the first point of measure the chart uses:

 Now, the news is not all unmixed joy. It's true that in order to achieve these results, Obama has allowed the deficit to continue to rise (worth noting that the biggest chunk of the deficit still came under Bush - but also worth noting that Obama CHOSE to let it continue going up).

Ezra, and most professional economists, argue convincingly that it was this counter-cyclical spending and the increased deficits that they caused which made it possible for the other measures to go up. They further argue

that the deficit would also have continued to go up if the economy (e.g., GDP growth) had failed to grow, since tax revenues would have continued to plummet. I find all that convincing.

There's another point as well - it's possible Obama was just plain lucky. Maybe he just happened to be inaugurated at the peak moment of the recession and it would have naturally turned around even if he had done nothing. I don't think that's the case, and there's plenty of evidence to suggest that the direct job creation and protection (a lot of firefighters and teachers were due to be laid off without the stimulus) led to real growth. But it's theoretically possible.

What I DON'T think you can now argue, even as a hypothetical, is that anything Obama and his team did in any way slowed down of prevented a recovery. So the source of the anger and economic populism that springs from much of the right appears tome (how shall I put this delicately) to spring from factors other than a purely fact-based analysis.

Republicans Don't Care About Policy

Rachel Maddow has a good point here.



Republicans in the House and Senate voted unanimously against supporting the stimulus package that economists now agree has had a major positive impact on jobs and the economy. Then they have travelled around the country, with tedious frequency, touting the benefits of the stimulus funds in their own districts. Why?

Isn't it obvious? If they really thought those funds would be bad for their constituents, they wouldn't insist on taking credit for them.

Democrats have a majority, and it's time we started using it, because Republicans have no interest in doing the right thing.

5.7% growth woo hoo!

Everyone keeps saying how the thing US voters care about most right now, is the economy. And rightly so - after all, we're in a jobs crisis and people are hurting.

But today we learned that the US GDP grew by 5.7% in the fourth quarter of 2009 - that's a good start even if it we still have a long way to go in translating the recovery into jobs.

The above chart tells quite a story of Obama's 1st year of economic management. (Hint, the stimus package passed near the end of Q1 2009.)

Jobs Jobs Jobs Jobs Jobs Jobs Jobs

And did I mention jobs?

Do make sure to watch this video - trust me, two minutes nineteen seconds well spent.



This is good stuff. As I reported before, it's not quite enough or as much as we'd like. But it's a damn sight better than nothing, or the less than nothing that the Republicans' "let's freeze federal spending" economic plan would have led to.

Experts Agree: "Without the Stimulus It Would Have Been Worse"

One of the really hard things about governing during a time of economic downturn is that people are understandably uninterested in being told taht things are bad, but they could have been so much worse.

Heck, it's an argument I hate making. People that I love are hurting, badly, in this economy - people that I love are worse off financially than they have ever been in their lives. So it's not very comforting to know that, while bad, things were very nearly much, much worse.

Uncomforting though this truth may be, however... it is true.

Mark Zandi, chief economist of Moody's Economy.com and an occasional adviser to lawmakers from both parties, said, "[T]he stimulus is doing what it was supposed to do -- it is contributing to ending the recession." Zandi added that without the recovery bill, the "G.D.P. would still be negative and unemployment would be firmly over 11 percent. And there are a little over 1.1 million more jobs out there as of October than would have been out there without the stimulus."

For example, remember that a great deal of the stimulus money went directly to states to fund programs that they would have otherwise had to cut because of the downturn in their tax revenues.

"Programs" sound clinical, though - the types of things states were need to cut back on were teachers, firefighters and police. Let's say your small town loses one firefighter, one teacher, and one police officer. OK, now you've got three peopele out of work - that's three people who won't be buying much stuff in your town now. Direct effect = bad.

But the loss of that teacher means slightly larger class sizes for all the other kids. There's a proven correlation between class sizes and student performance - that means an entire school's worth of kids are slightly worse off in ways that will harm their future.

One fewer police officer on the street means the PD needs to reorganise their shifts - slightly more of each officer's time is now focussed on emergency callouts, for instance, and slightly less on patroling. Areas that aren't patrolled can become more welcoming for a small number of criminal elements.

Let's not even talk about what happens if the fire department is down one many (possible consequences = detroyed property and lost lives).

Long term indirect effects = even worse.

A LOT of money was spent by the government trying to forestall the worst effects of the recession. But in the long run, in my view, this was all DEFICIT busting expenditure. It costs a lot more to fix a community once it's broken than it does to keep it from breaking in the first place. The President wasn't free to spend as much money as he would have liked in the stimulus package. But there simply is NOT ARGUMENT whatsoever based on fact that says the stimulus didn't save jobs - it paid salaries of people who would otherwise have been fired.

Unfortunately, an awful lot of people who deserve a hell of a lot better got badly burned anyway. It's heartbreaking.

100 Days, 100 Successes

Here's a very detailed, informative and informed round up of Obama's achievements in the firs 100 days. Here's a snippet...

Policy Change Successes

For those who say that the two parties are the same, here are a number of policy breaks between the new Obama administration and the old Bush administration. You can see that there are a lot of differences between these two presidents and their parties. I hope you’re reading this, Ralph Nader.

42 Freedom of Information Act - Barack Obama made America a more open society by changing government procedures under the Freedom of Information Act during his first days in office.

43 Signed the Ledbetter Law - The Lilly Ledbetter Fair Play Act allows women to better challenge pay discrimination in court. This is for cases when women are institutionally paid less for the same work than their male colleagues. A basic matter of fairness like equal pay for genders is a basic American concept.

44 Department of Transportation Energy Memoranda - President Obama signed a pair of memoranda which ordered the Department of Transportation to set higher fuel standards for the 2011 and future year car models. Not only does this make good scientific and environmental sense, but higher fuel standards allow Detroit cars to make it into more markets worldwide - like China for example - so higher fuel standards make economic sense, too.

45 Reversing the Stem Cell Ban - It’s quite simple: Barack Obama’s reversal of Bush’s stem cell ban is a victory for science. Instead of stem cells being thrown out with the trash, they now can be used to research cures for Alzeihers, Parkinsons and other horrible diseases. That’s a good thing, despite reactionary comments from the Right about stem cell farms and other tactics used to scare good people into immoral positions on the stem cell debate.
46 Funds For College Education - President Obama has offset rising college prices for up to 7,000,000 university students by increasing the funds for Pell Grants and other student aid programs. One overlooked issue is how underfunded the Pell Grants have been the last few years. The next generation needs to be educated to pay off all the debts we’re creating for them.

47 Increased Funding for Public Education - Amid all the posturing about evil federal funds going to states is the fact that many states will have to cut funding and layoff a lot of school personnel without federal funds. Obama provided over $53,000,000,000 to state education agencies and local school districts to help them avoid these layoffs. That’s a good plan for our childrens’ education.

48 Focus on At-Risk Students - The Obama Administration set aside 25 billion dollars to help at-risk students and special needs students. “At risk” means students who have a higher risk of dropping out of school and starting a life of crime. The benefits of keeping these kids in schools, off the streets and out of jail is incalculable, creating a safer community and increasing the talent pool of educated Americans. It also happens to be the moral thing to do.

49 Endangered Species Get a Break - Just this week, Interior Secretary Ken Salazar rolled back a Bush Administration decision that put endangered species in great danger of dying out. Plus one for our role as stewards of this Earth.

50 Early Head Start Funding for Children - The president’s education package offered over a billion dollars to help fund the “Early Head Start” program, to start children on their way to a better education and a better future.

51 Head Start Funding - Besides funding the Early Head Start, the administration offered a billion dollars to fund the head start programs across the country. These two measures increased head start and early head start services for nearly 120-thousand children and infants.

52 Credit Card Reform - President Obama recently met with executives of the credit card industry in anticipation of a future credit card reform bill. Critics of the current credit card laws have argued that credit card companies are unclear and predatory in their practices, and that laws pushed through by the previous Republican Congresses allow the companies to set up credit traps. The new proposed laws will create regulations that will require transparency and clear stipulations, instead of the “lawyer speak” that is the current practice. Once again, I would say that Obama’s attention to credit card laws indicates he cares about the normal American and this is a worthwhile cause.

53 Funding for Local Health Care Facilities - The Obama Administration also increased funds for community health centers, which means that health centers across the country will be modernized. These funds will also go towards health care research, to make certain the next generation has better health care provided to them than this
generation.

54 Medicaid Money Release - Obama announced in early February that he would release $15 billion to pay medicaid expenses, which gives pharmacies and hospitals relief after waiting months for Medicaid bills to be paid. It also helps businesses of all sizes, who have been required to pay Medicaid expenses, but waiting weeks and months to be reimbursed.

55 American Recovery & Reinvestment Act and Medicaid - Let’s get back to the stimulus package. This legislation potentially protects up to 20 million Americans who are at risk of losing their Medicaid or State Children’s Health Insurance Program eligibility. We’ll talk about the economic stimulus package in greater detail in a minute.

Department of Good Ideas

Want to stimulate the economy by spending government money? Also concerned that the automobile industry is moribund, and trying to ward off bankrupcy for some of the country's major employers? Meanwhile, are you hoping to find ways of encouraging people to invest in more environmentally friendly items, including cars?

Why not Cash for Clunkers? I like it. Turns out this policy has increased new car sales in Germany by 21% (!) this year - with the simple mechanism of giving people government cash for trading in their old, inefficient cars with newer more energy-efficient models.

Let's hope the UK and the US will latch onto this clever plan.

Yesterday's Presentation

Yesterday I had the chance to talk to a group of business folks about Obama and the US Economy. Since I am, essentially, totally unqualified to discuss economic issues, I concentrated my talk on the recently passed stimulus package, and a few thoughts about the political dimension in which Obama (and therefore all companies seeking to offer services to the government) are currently operating.

Since a couple people have expressed an interest in the presentation, I've posted the slides below as JPEGs. The presentation would be, of course, far better with the benefit of my witty reparte, learned commentary and devastating joke - but I guess we'll just have to make do with these.

Rejoice: Birth Control Funding is Back

Turns out, when I speculated that the funding for state provided birth control that was cut from the stimulus package over Republican objections wouldn't be dropped for good, I was right.

Three cheers for rational policy making!

Absolutely Necessary

Obama speaks about the stimulus during his weekly youtube address, saying:

"Legislation of such magnitude deserves the scrutiny that it's received over the last month, and it will receive more in the days to come. But we can't afford to make perfect the enemy of the absolutely necessary. The scale and scope of this plan is right. And the time for action is now."



Call your senator and make sure they are supporting this vital legislation to cope with what looks to be the worst economic crisis since the Depression.