June 14, 2012
WAHINGTON, D.C. – As President Obama travels to Ohio today in an attempt to distract voters away from his dismal record on job creation, Politico featured an op-ed from Senator Rob Portman (R-OH) providing a better way forward to grow the economy and create jobs.
While facing the weakest economic recovery since the Great Depression with more than 20 million Americans out of work, President Obama continues to push for more government spending that has failed to turn our economy around. Portman’s plan promotes pro-growth policies, such as regulatory relief and corporate tax reform, aimed at providing businesses with the climate needed to expand and create jobs.
Article included below. Actual article can be found here.
We can do better on economy
By Sen. Rob Portman
June 13, 2012
We are living through the weakest economic recovery since the Great Depression. More than 20 million Americans cannot find work, have given up searching or have been forced to accept part-time jobs. We must do better.
The unemployment rate has remained above 8 percent for more than three years — the longest stretch since the Great Depression. The average unemployed worker spends nearly 40 weeks looking for a job. That’s nine months of stress, uncertainty and wondering how to make ends meet.
President Barack Obama correctly points out that he inherited this recession. But the question is: What did he do with it? His policies, unfortunately, have failed to turn things around.
Typically, the steeper a recession, the stronger the recovery. In recoveries, millions of unemployed Americans return to work and idled factories, and resources are put in use again, giving the economy lots of room to grow.
This is what occurred after the 1981-82 recession. In terms of unemployment, that recession was as deep as the most recent one was. The unemployment rate peaked at 10.8 percent, which is higher than the 10 percent peak in the recent recession.
But the 1980s recession was followed by five consecutive quarters of strong economic growth rates of between 7 percent and 9 percent. The economy gained more than 1.1 million net jobs in a single month. By this point after the beginning of that recession, the economy had recovered all jobs lost in the downturn and gained 7 million new jobs.
Obama promised his policies would bring a similarly steep recovery. However, in contrast to Ronald Reagan — who encouraged the recovery by reducing tax rates, cutting red tape and limiting government, Obama spent more than $800 billion on a stimulus bill, has supported far higher tax rates, jammed through Congress a government health care takeover and expanded regulation.
Obama and his team promised the unemployment rate would fall below 6 percent by now with his stimulus bill. He also pledged to cut the budget deficit in half in his first term and reduce annual family health costs by up to $2,500.
Instead, the unemployment rate remains above 8 percent, $4 trillion has been added to the debt, this year’s budget deficit remains at well over $1 trillion and health care costs continue to rise.
Rather than follow a steep recession with a steep recovery, the economy grew only 1.7 percent last year. Perhaps worst of all, we’re still 5 million net jobs down since the recession began.
By this point after the 1981-82 recession, the economy was 92 percent of the way back to what economists call its potential performance. After the recent recession, it’s only 27 percent of the way back. It won’t return to its potential level until 2018, according to Congressional Budget Office projections. By then, the recession and weak recovery will have cost $6.7 trillion in lost output. That’s $55,000 per household.
Remarkably, Reagan’s recovery took place even as the Federal Reserve was strongly contracting the money supply. Obama’s policies have failed despite the Federal Reserve loosening the money supply.
Part of the lesson is that government policies matter. Between 1969 and 1982 — a period dominated by high tax rates, expanded government and excessive red tape — the economy was in recession 32 percent of the time. Since then, with lower tax rates and restrained government, the economy has been in recession less than 10 percent of the time — including this past recession.
Rather than follow Obama’s 1970s-era vision of ever-rising taxes to chase ever-rising spending, we need a pro-growth, pro-jobs agenda. We should pursue pro-growth tax reform by lowering marginal tax rates and pay for it by closing loopholes that only complicate the Tax Code and slow growth.
We should also provide regulatory relief to small businesses, open up more export markets to better reach the 95 percent of the world’s consumers who live abroad and encourage domestic energy production to create jobs and lower prices. We should replace the president’s health care law with a policy that lowers costs by putting consumers in control of their health care and forcing insurance companies to compete for our business. We must also rein in runaway spending to close this staggering budget deficit before we have a fiscal crisis. We can do better.
These pro-growth policies would unshackle the economy and encourage hiring. They would bring long-term sustainability to the budget and new revenues through growth.
There is no reason the economy cannot return to the higher growth that occurred in past recoveries. We have the blueprint; we just need the will.