Obama, the job creator

by pdxblake

It is tiring to hear over and over the idea that Obama has no plan to create jobs and he was distracted by the Affordable Care Act from finding ways to increase employment.  The Affordable Care Act has its own benefits, but most are longer-term (through, for example, lower spending on healthcare by Medicare, which will reduce future deficits, something Republicans *ahem* used to (pretend to) care about).  But it should have been supported widely to deal with the now-minor problem of structural problems in the economy that “serious” people care about (fact check: the unemployment problem is cyclical, not structural).

Universal healthcare will make it cheaper for people to get healthcare, and should increase the willingness of people to leave their jobs to venture out and become entrepreneurs (ahem, job creators).  As someone who took this course (and as anyone else that has to go to the individual healthcare market) it reminds one of the blessing of being young and healthy.  People who do not fall into that category will find an even worse situation for healthcare if they leave a job with healthcare to start a new company where they are thrown into the individual health care market.  Fixing that problem (which the Affordable Care Act will do in many ways) will incentivize people to become ‘

Back to the main issue of Obama’s policies on boosting employment in the near-term.  Before I got distracted by the longer-term job creator narrative of the Affordable Care Act, I was going to mention the Obama Stimulus bill (which was too small).  Even though it was insufficient for the problem that faced the country when Obama took the oath of office, it did do good things to create jobs.  There have been many studies to determine the effectiveness (which Ezra Klein helpfully summarized, both the majority which found it created jobs and the minority which found it had little effect compared to the ‘baseline).

One of the studies Ezra Klein reviewed was from the non-partisan Congressional Budget Office.  I quote from his description of the study because I tend to trust the CBO because it is less influenced by the politics of the situation than other sources like the Office of Management and Budget, which is part of the White House.  The CBO is usually less inclined to put a partisan swing on the numbers (although in budget analyses is does allow for ‘magic asterisks’).  Two economists from the CBO who reviewed the effect of the stimulus found (from Ezra Klein’s summary):

Through the first quarter of 2011, the stimulus created between 1.6 million and 4.6 million jobs, increased real GDP by between 1.1 and 3.1 percent, and reduced unemployment by between 0.6 and 1.8 percentage points.

That’s something and much bigger than nothing (or even subtracting jobs, which the Republicans have implausibly charged).  The big problem with measurement is that the ‘jobs created’ are measured compared to the baseline (of what would have happened in the absence of the policy).  This problem is more apparent looking into the future (which the Republicans like to try and capitalize by saying that Obama said unemployment would never get above 8.8%).  Analysis of historical data is easier, but still will not ever come to a single point estimate, which is why I explained why I think the CBO is a reasonable source for analysis on this.Obama’s focus on job creation did not end with the Stimulus.  In September 2011, he proposed the American Jobs Act (pdf) using similar language as he has used recently on the campaign trail:

The American people understand that the economic crisis and the deep recession were not created overnight and will not be solved overnight. The economic security of the middle class has been under attack for decades. That is why I believe we need to do more than just recover from this economic crisis — we need to rebuild the economy the American way, based on balance, fairness, and the same set of rules for everyone from Wall Street to Main Street. We can work together to create the jobs of the future by helping small business entrepreneurs, by investing in education, and by making things the world buys.

It was of course dead-on-arrival to the Republican-controlled den of iniquity House.  However, it was estimated by Macroeconomic Advisors to “Raise nonfarm establishment employment by 1.3 million by the end of 2012 and 0.8 million by the end of 2013, relative to the baseline.”  Moody’s Analytics’ Chief Economist Mark Zandi estimated “The plan would add 2 percentage points to GDP growth next year, add 1.9 million jobs, and cut the unemployment rate by a percentage point.”

So, the next time you hear someone say, “Obama hasn’t created any jobs, he only focused on his job-killing socializing of healthcare” you can say, “no, he didn’t” and have some facts to back it up.