If Not For Republicans, Unemployment Would Be Less Than 6%

Blue Mark  on Sun Jul 08, 2012      

The GOP has been on an economic wrecking mission ever since the election of Barack Obama - indeed we now know that leading Republican strategists and legislators met and planned a course of economic sabotage and complete obstruction on Obama's very first day in office.

This obstruction has had a huge price - a deliberate price that the GOP is betting the American people will blame on President Obama. GOP obstruction did not prevent the passage of ARRA - the American Recovery and Reinvestment Act - popularly know as "The Stimulus" bill of 2009 during the height of the economic disaster as the economy was falling off a cliff - the non-partisan Congressional Budget Office estimates that ARRA has saved up to 3 million jobs. But nearly every economic measure since then has been blocked by GOP obstruction, filibusters and brinksmanship.

What has been the result of GOP obstruction?

It is hard to quantify what constant obstruction has cost - you could tally up estimates of every measure that came along, but not all would have passed - nor even been introduced if previous measures had been adopted that obviated their need. But we can look at just two big examples and get a minimal measure of the human cost to American citizens of a deliberate policy to destroy the economy in order to bring down the president; 1) austerity, and 2) obstruction of the 2011 American Jobs Act. Taking just those into account, the unemployment rate would be under 6% were it not for deliberate GOP wrecking.

Austerity is madness - many in the GOP actually believe that austerity during an economic downturn is the right thing to do - even 'socialist' Europe was convinced of this - although most realize it is not true, and has no history of success - even Mitt Romney unwittingly admitted as much in an unguarded moment. But that hasn't stopped savage austerity on the state and local level - which has cost over 600,000 public sector jobs so far.

Normally in a recession and recovery government at all levels increase public employment - this has happened in every GOP administration - and much of that increase is funded by federal government grants to the state and local governments. But since the Stimulus, the GOP has blocked any substantial help for the states, and in GOP led states severe austerity cuts have been the rule - even including GOP governors rejecting projects fully funded by the federal government. The economic cost of this is far more than just those 600 thousand jobs - the spillover effect on private business and local economies has been devastating - when you factor in all these effects the total job cost of austerity has been estimated at 2.3 million jobs.

President Obama proposed the American Jobs Act in his 2011 State of the Union address, and spent the next year promoting it at every opportunity. Although expensive - it contained a combination of targeted tax cuts and some tax increases, along with direct spending designed to increase consumer spending and lower the cost to business of hiring new workers, all while paying for the bill. The CBO said the bill would not only have paid for itself within 10 years, but would have reduced the deficit by at least 6 billion dollars. According to an analysis by Moody's it would have created about 1.9 million jobs.

The result of GOP obstruction with those two things cost us 2.3 million jobs and 1.9 million jobs respectively. US employment as of May 2011 is about 155 million jobs, which means those 4.2 million jobs that the GOP has prevented account for 2.7% of the unemployment rate. But let's be fair, there is a small amount of overlap in those jobs - a small portion (about 8%) of the American Jobs Act would have gone to State and Local governments to pay for teachers, first responders and the like - although for the most part it would have just prevented further layoffs rather than resulted in new hires. It is also very likely that without the economic wrecking of GOP obstructionism the labor participation rate would be higher - so instead of a reduction of unemployment to 5.5% it would be slightly higher, but still well under 6%.

Now just for fun, consider if we had done during this recovery what every GOP administration has done, and substantially increased public sector employment.

Without knowing how much we would have increased public sector employment we can't make a firm estimate of how much better employment levels would be, but if we make the assumption that we increased the public sector by just half of the amount we actually reduced it - the total effect on the economy in both public and private sector jobs would be around 1.15 million - which would push the unemployment  rate below 5%.

That is the human cost of GOP economic obstruction.                                     Original

Technorati Tags: The Republican Party,Unemployment,Barack Obama,Mitch McConnell,2012 Elections,The Economy,Congress,Austerity,Politics,Current Events

Romney Economics….Cheat Main Street

By Leo W Gerard  on Wed May 30, 2012

Mitt Romney contends his money making as CEO of Bain Capital qualifies him to be President of the United States. That’s true if Americans believe money should flow out of their pockets, out of the cash registers of Main Street shops and into the Swiss bank accounts of Romney and his 1 percenter cronies.

Mitt Romney made a boatload of money for himself and his fellow fat cats. No doubt about it. Billions. But he made it the way Americans hate most – Wall Street style wheeling and dealing.

Americans hate it because when all that scheming went bad, when the market collapsed, it was the 99 percent who footed the bill to bailout Wall Street. The same is true of Romney and Bain. When Bain bankrupted the companies it bought – and Bain did that shockingly often – workers and Main Street businesses paid the price.

Romney contends his money making as CEO of Bain qualifies him to be President of the United States. That’s true if Americans believe money should flow out of their pockets, out of the cash registers of Main Street shops and into the Swiss bank accounts of Romney and his 1 percenter cronies.

Here are some of Romney’s victims, Main Street businesses owed money by just one bankrupted Bain company, American Pad and Paper Co. (Ampad): Technical Coatings Laboratory, owed $125,191.20 and paid in bankruptcy $237.03; Services Plus Inc., owed $12,064.71, paid $22.84; Crown Vantage, owed $32,155.26, paid $60.89.

In the 15 years Romney ran Bain from 1984 to 1999, 22 percent of the companies it invested in went bankrupt or closed within eight years, according to a study by the Wall Street Journal.

In fact, according to the Wall Street Journal, the bulk – 70 percent – of the $2.5 billion Bain made for investors during that time came from just 10 deals. Four of those ended up in bankruptcy as well – killing jobs and jilting Main Street businesses. Despite that, Romney and the Bain investors fattened their Swiss bank accounts.

More Main Street victims: Lakeway Container Inc., owed $47,143.56 by Ampad, paid $89.26 in bankruptcy; Olympic Adhesives, owed $6,566, paid $12.43; American Chain and Gear, owed $505.54, paid 96 cents.

Bain’s handling of Ampad illustrates how the rich extract money from these deals and leave behind wounded workers and Main Street shops. Bain bought Ampad from Mead Corp. in 1992 and added SCM Office Supplies to the holdings two years later. Like many leveraged buyout deals, these were financed with loans secured by the purchased companies’ assets.

Within hours after buying SCM, Bain fired every one of its 350 workers in Marion, Ind. Bain, through Ampad, told the shocked and terrified workers they could apply for their former positions if they wanted them back – at less pay, fewer benefits and worse working conditions.

One way leveraged buyout firms like Bain make money is by taking it from workers – slashing their pay, benefits and pensions. This also makes companies look more productive, enabling buyout firms like Bain to make money on taking them public.

Bain bought SCM early in July, 1994. Within two months, the workers went out on strike, seeking restoration of some of their pay and benefits. Workers sought help from Romney, who rebuffed them as he was running for Ted Kennedy’s U.S. Senate seat. After losing that race, Romney returned to Bain, permanently closed the Marion plant and moved its equipment to other Ampad facilities.

More Main Street victims of Ampad bankruptcy:  Green Bay Packaging Inc., owed $75,551.92, paid $137.37; Springfield Electric, owed $3,919.88, paid $7.23; American Coffee Break Service, owed $1,349.73, paid $2.56.

Through 1999, Bain continued to be the single largest shareholder in Ampad, and three Bain executives sat on its board of directors. Ampad struggled to meet the low price demands of big box retailers – like Staples, in which Bain had also invested and where Romney sat on the board of directors.

Ampad fell into bankruptcy in 2000. Companies besieged with debt -- as Ampad was -- because of leveraged buyouts often fail because they are too weakened to deal with normal business adversity.

More Main Street victims of Ampad bankruptcy: Economy Plumbing Co., owed $1,505.69, paid $2.85; Hohner Stitching Products, owed $2,095.76, paid $3.97; Mount Tom Box Co. Inc., owed $34,351.96, paid $65.04.

When Ampad went under, it owed $182.6 million to its suppliers across America. The bankruptcy left only $328,633 to pay nearly 1,300 unsecured creditors – that worked out to 10 cents for every $10 Ampad owed. That’s how a company liked Hometown Café & Catering, owed $600.60 by Ampad, got all of $1.14. And Hometown Café received that big fat check 11 years after Ampad filed for bankruptcy.

These Main Street shops and businesses are the heart of American communities, supporting the local United Way, Little League teams and Memorial Day parades. Debts never paid mean less money for them to hire their own workers, fewer dollars for them to contribute to their communities and a higher probability they’ll be forced into bankruptcy.

Bain invested $5 million in Ampad and took more than $100 million out, through numerous methods, including fees. That $100 million would have gone a long way toward paying the debts Ampad owed to Main Street businesses across the country.  It wouldn’t be surprising if they felt a little like Romney and Bain robbed them at gunpoint.

But everything Bain did was legal. It’s Romney economics, working for the wealthy while double crossing Main Street.

Technorati Tags: Mitt Romney,Bain Capitol,Ampad,Mead Corp,Wall Street,Vulture Capitolist,Current Events,Politics