Federal Reserve Announced Actions To Increase Growth And Employment

Federal Reserve Announced That It Will Take Action To “Support A Stronger Economic Recovery.” On September 13, the Federal Reserve's Open Market Committee issued a press release announcing several policies it would undertake in order to produce more economic growth. Those policies included purchasing mortgage-backed securities:

To support a stronger economic recovery and to help ensure that inflation, over time, is at the rate most consistent with its dual mandate, the Committee agreed today to increase policy accommodation by purchasing additional agency mortgage-backed securities at a pace of $40 billion per month. The Committee also will continue through the end of the year its program to extend the average maturity of its holdings of securities as announced in June, and it is maintaining its existing policy of reinvesting principal payments from its holdings of agency debt and agency mortgage-backed securities in agency mortgage-backed securities. These actions, which together will increase the Committee's holdings of longer-term securities by about $85 billion each month through the end of the year, should put downward pressure on longer-term interest rates, support mortgage markets, and help to make broader financial conditions more accommodative. [Federal Reserve, 9/13/12]

The Wall Street Journal Claimed Fed Action Is A Tacit Admission That Obama Policies “Haven't Helped The Middle Class”

WSJ: Fed Action Is “Mr. Bernanke...Tacitly Admitting How Lousy The Obama-Bernanke Economy Really Is.” A September 13 Wall Street Journal editorial attacked Obama by claiming that the Fed acted because of Obama's failed policies. From the editorial:

The irony is that, with this historic and open-ended easing, Mr. Bernanke is also tacitly admitting how lousy the Obama-Bernanke economy really is. For all the back-slapping by the Fed and the White House about how they've saved us from a Great Depression, four years later the Fed is acknowledging that the recovery is rotten, that job creation stinks, and that their policies haven't helped the middle class. But, hey, it's great for Wall Street. [The Wall Street Journal, 9/13/12]

WSJ Echoed Mitt Romney's Attack. In an interview with ABC's George Stephanopoulos, Mitt Romney said: “Well, what Bernanke's doing is saying that what the president's saying is wrong. The president's saying the economy's making progress, coming back. Bernanke's saying, 'No, it's not.  I gotta print more money.' ” [ABC News, 9/13/12]

In Fact, The Fed Said The Economy Is Growing

Fed: “Economic Activity Has Continued To Expand At A Moderate Pace In Recent Months.” In the September 13 press release announcing its new policies, the Fed specifically stated that the economy has been growing in recent months:

Information received since the Federal Open Market Committee met in August suggests that economic activity has continued to expand at a moderate pace in recent months. Growth in employment has been slow, and the unemployment rate remains elevated. Household spending has continued to advance, but growth in business fixed investment appears to have slowed. The housing sector has shown some further signs of improvement, albeit from a depressed level. [Federal Reserve, 9/13/12]

Fed Said That Further Action Will Help Support Economic Growth. In the same release the Fed explained that, while the economy was growing, further actions were necessary to ensure even stronger growth:

Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. The Committee is concerned that, without further policy accommodation, economic growth might not be strong enough to generate sustained improvement in labor market conditions. Furthermore, strains in global financial markets continue to pose significant downside risks to the economic outlook. [Federal Reserve, 9/13/12]

Experts Have Said Obama Policies Are Responsible For Growth In The Economy

CBPP: Because Of Stimulus, “The Unemployment Rate Has Been Lower Each Year Since 2009 Than It Otherwise Would Have Been.” The Center on Budget and Policy Priorities (CBPP) produced a chart showing the real unemployment rate alongside Congressional Budget Office (CBO) estimates of what the unemployment rate would have been without the stimulus bill from mid-2007 through 2012. This chart shows that the unemployment rate would have been consistently higher throughout Obama's term in office had the stimulus never become law:

[Center on Budget and Policy Priorities, updated 8/30/12]

CBPP: “GDP Has Been Higher Each Year Since 2009 Than It Would Have Been Without The Recovery Act.” The CBPP post also featured a chart showing real Gross Domestic Product (GDP) alongside the CBO estimates of what GDP would have been without the stimulus. The chart shows that without the stimulus, GDP would have been consistently lower:

[“Chart Book: The Legacy of the Great Recession,” Center on Budget and Policy Priorities, updated 8/30/12]

Congressional Budget Office: Stimulus Boosted Economy By Up To 4.1 Percent In 2010, 2.3 Percent In 2011. In its August 2012 report, the CBO estimated that the Recovery Act increased real GDP by between .7 percent and 4.1 percent in 2010, and by between .4 percent and 2.3 percent in 2011. [Congressional Budget Office, August 2012]

CBO: Stimulus Created Equivalent Of Up To 4.7 Million Jobs In 2010, Up To 3.6 Million In 2011. The  August 2012 CBO report also found that the stimulus created the equivalent of between 900,000 and 4.7 million jobs in 2010 and the equivalent of between 600,000 and 3.6 million jobs in 2011. [Congressional Budget Office, August 2012]

And The GOP Has Blocked Additional Obama Policies That Would Lead To More Economic Growth And Job Creation

Obama Proposed American Jobs Act. In September 2011, Obama proposed the American Jobs Act, which contained tax cuts for small business and working Americans, help for states to hire or retain teachers, spending on infrastructure and other projects to create jobs, and other provision. [White House, 9/8/11]

Moody's Analytics Chief Economist Mark Zandi: American Jobs Act Would Add Nearly 2 Million Jobs. A September 9, 2011, UPI article reported that economist Mark Zandi said that the Jobs Act, if passed, would create nearly 2 million new jobs and grow the economy by two percent:

President Barack Obama's $447 billion job-creation plan would likely add 1.9 million payroll jobs and grow the U.S. economy 2 percent, a leading economist said.

The plan, which Obama outlined before a joint session of Congress Thursday, would likely cut the unemployment rate by a percentage point, Moody's Analytics Chief Economist Mark Zandi said as Obama prepared to tout the plan at Virginia's University of Richmond. [United Press International, 9/9/11]

Macroeconomic Advisers: American Jobs Act Would Be “A Significant Boost To GDP And Employment.” A September 2011 Macroeconomic Advisers LLC blog post analyzed the Jobs Act, and found that it would boost GDP and employment, if passed. From the post:

We estimate that the American Jobs Act (AJA), if enacted, would give a significant boost to GDP and employment over the near-term.

· The various tax cuts aimed at raising workers' after-tax income and encouraging hiring and investing, combined with the spending increases aimed at maintaining state & local employment and funding infrastructure modernization, would:

• Boost the level of GDP by 1.3% by the end of 2012, and by 0.2% by the end of 2013.
• 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.

· The program works directly to raise employment through tax incentives and support to state & local governments for increasing hiring; it works indirectly through the positive boost to aggregate demand (and hence hiring) stimulated by the direct spending and the increase in household income resulting from lower employee payroll taxes and increased employment. [Macroeconomic Advisers LLC, 9/8/11]

EPI: American Jobs Act Would “Increase Employment By About 4.3 Million Jobs.” On the Economic Policy Institute (EPI) blog, EPI research and policy director John Irons stated that, according to a preliminary analysis, the various provisions of the Jobs Act would add over 4 million jobs over the next two years:

Overall the package would increase employment by about 4.3 million jobs over the next couple of years. The new initiatives would boost employment by about 2.6 million jobs, while the continuation of the two temporary provisions (EUI and the payroll tax holiday) would prevent a backslide of over 1.6 million jobs.

There's still a big hole left to fill, but every step matters. [Economic Policy Institute, 9/8/11]

But Republicans Voted Against Obama's Jobs Act. According to the U.S. Senate roll call vote record, every single Republican senator voted against the Jobs Act. [U.S. Senate vote number 160, 10/11/11]