If you’ve read my work over the past few months, you’ve probably heard me argue that Republicans don’t have a jobs plan. I’ve said it a few times. Never has that point been clearer than in the New York Times Thursday morning, where economists on both sides of the aisle—and even House Speaker John Boehner’s spokesman—admit that the Republican “jobs” plan wouldn’t actually help the economy very much.
“Some of those things will help,” Matthew J. Slaughter, who served on President George W. Bush’s Council of Economic Advisers, told the Times about Republican economic ideas, “but, it just struck me as sort of a compendium of modest expectations. If you ask me, ‘What’s your ballpark guess for how many jobs are going to be created?,’ it’s just not many.” Douglas Holtz-Eakin, a conservative economist and former director of the Congressional Budget Office said, “I don’t think any of these are particular game changers.”
The traditional Republican ideas to boost the economy—cutting spending, reducing regulations, and reforming the tax code—represent a misunderstanding of the underlying problems with the economy. Those are all supply-side policies, intended to boost investment and improve productivity. Those aren’t bad goals, of course, but they don’t solve the demand-side issues that are actually holding back growth.
When the Great Recession struck, households cut back on their spending, forcing businesses to fire workers, who then cut back their own spending—thus, a lack of demand. This creates a nasty cycle of reduced spending and job losses. The government’s role in these situations is to fill the hole in demand by using fiscal or monetary policy. We did both and they were moderately successful. But they weren’t sufficient to fill the entire hole in demand and we’ve had a lackluster recovery as a result, made even worse by a premature turn to austerity.
The most revealing quotation in the Times article came from Kevin Smith, a spokesman for Boehner. When asked about the 46 bills that Boehner has outlined as the Republican jobs package—most of which would cut regulations and taxes—Smith said that the bills were not “a cure-all, but they would be a good start for our economy; we need to do more.” In other words, after six years of critiquing Obama’s economic policies, House Republicans still don’t have an economic agenda to fix the economy’s ills.
In some sense, that’s OK right now. The recovery has taken a step forward this year and we no longer need a big jobs package to save the economy (although more infrastructure spending would help). But during the beginning of the Obama presidency that wasn’t the case. Then, we did need a big jobs plan, but Republicans offered the same supply-side ideas they're proposing now. Based on Smith’s comments, it seems the GOP was aware of this too.