Mitt’s Employment Predictions…Or, Why, Oh Why, Does Mitt Do Numbers?
The other day, Mitt Romney pulled a number out of
his ass thin air:
Mr. Romney said the economy should be experiencing growth of around 500,000 jobs a month after such a deep economic downturn. “The president’s policies have simply not worked,” he said. (WSJ)
I would agree that the President’s policies have not been aggressive enough — although I would also argue that Republicans and Blue Dogs in Congress have made things much, much worse — but Romney is making an astounding claim (and by implication, a promise.)
Perhaps we could shrug off this number, were it not for the fact that Romney is running a campaign prefaced on the claim that he understands the economy and can finally turn it around. (You know – because of all his experience buying up struggling companies, firing thousands of people, and raking in millions of dollars for himself…but I digress.)
Here’s the problem for Romney: that rate of growth is incredibly rare. It last happened in May 2010, and was never even close to being achieved during the eight years of the Bush administration. In fact, as Minzie Chinn points out at Econbrowser:
In fact, over the last 21 or so years, one has to go back to the Clinton administrations to find such numbers.
Oh, and by the way, unemployment has been at or below 4% only 11 times in the past 40 years (essentially at the end of the Clinton Administration).
Again, this is not to say that our present rate of job growth is good enough. It clearly is not, and given the depth of the plunge in employment during the recession, there should be a much more robust climb back out.
That last bit of Chinn’s quote (above) refers to Romney’s claim that an unemployment rate of anything over 4.0% is unacceptable. Which is, again, an odd statement from such a financial genius, given that the natural rate of unemployment has been accepted as being roughly 5.6% for the last four decades or so. A belief that unemployment could be pushed below that, without worrying about inflation, would strike one as distinctly Keynesian — and we know Republicans don’t do Keynes.
More concretely, it has to be wondered how a President Romney would achieve growth of this kind? Besides killing regulations and slashing tax rates, I’ve heard no real plan to create jobs from the Romney camp — it’s just a matter of releasing the markets and letting them work their magic. Unfortunately, that’s a recipe which only leads to low wage, reduced benefit jobs. Even were Romney able to generate 500,000 of those – would we want them?
As Robert Reich, Labor Secretary under President Clinton, points out:
Rom says unemp shld be 4%. I was Sec of Lab last time it was 4%. We got there by raising taxes on rich and investing in ed and infrstructre.—
Robert Reich (@RBReich) May 05, 2012
We already know Romney has proposed deep cuts to education and infrastructure spending, including the possible closing of several departments. It strains credulity to believe anything in Mitt Romney’s economic plan could compensate for moves like that.
The evidence is simply not good that a Romney could ever even come close to hitting these numbers. But don’t take my word for it, here’s Paul Krugman:
Incidentally, since Romney is proposing a complete return to Bush economic policies, it might be interesting to note the average rate of job creation during Bush’s first 7 years in the White House — that is, his record even if you ignore the catastrophe at the end. And that average monthly rate, from the BLS, was … drum roll … 66,000.