Economy Improving Thanks to Whom?
WASHINGTON (AP) – Increased hiring, lower unemployment, stock market on the rise. Who gets the credit?
It’s a hotly debated point in Washington, where political scorekeeping amounts to who gets blame and who gets praise.
Following Friday’s strong jobs report – 236,000 new jobs and unemployment dropping to a four-year low of 7.7 percent – partisans hurriedly staked out turf.
“Woot woot!” tweeted former White House economic adviser Austan Goolsbee. “With 12 million still unemployed?” countered Senate Republican leader Mitch McConnell’s spokesman, Don Stewart.
Presidents usually get the rap for economic downturns and reap benefits when things improve. But the main factors affecting the current recovery and the record activity in the stock market may have less to do with high-profile fiscal policy fights in Washington than they do in the decisions of the Federal Reserve Bank, which has pumped trillions of dollars into the economy, kept interests rates at near zero and pushed investors away from low-yield bonds to stocks.
“From a policy standpoint, this is being driven primarily by the Fed,” said Mark Vitner, an economist at Wells Fargo.
Yet to some, Washington deserves little recognition.
“Economies recover,” said Douglas Holtz-Eakin, a former director of the nonpartisan Congressional Budget Office and now head of the American Action Forum, a conservative public policy institute. He acknowledged the Fed’s monetary policies halted the initial free fall by the financial industry, but he said the economy has had to catch up to the Fed’s low interest rates.
“It took a long time for the housing market for them to matter and for the auto market for them to matter,” Holtz-Eakin said. “So I don’t think that’s a policy victory.”
If Democrats are eager to give President Barack Obama acclaim for spurring the recovery with an infusion of spending in 2009, there are just as many Republicans who will claim his health care law and his regulatory regimes slowed it.
If there is common ground among economists, it is that the next step in fiscal policy should be focused on reining in long-term spending on entitlements programs.