As President Obama delivers his State of the Union address to Congress, we can look back at a hard year for America’s economy — but a year in which collapse was averted.
President Obama took office facing an economic crisis on a scale unseen since the Great Depression. Wall Street greed, fiscal irresponsibility during the Bush administration, and Republican regulatory neglect all combined to crash our economy; but since then, Democrats have been determined to repair the damage. Our efforts have made real progress, but damage of the kind we saw last fall can’t be undone in a year; an unemployment rate of 10 percent means that millions families continue to struggle. For their sake, our work must be even more focused and vigorous.
The most important economic step of the past year was the Recovery Act, which cut taxes for 95 percent of Americans, launched job-creating projects across the nation, and strengthened aid to the hardest-hit families. Republicans voted unanimously against the recovery effort and spent the rest of the year characterizing it as a failure.
But while Republicans made an enormous bet on economic failure, that bet is demonstrably not paying off. The Recovery Act has created or saved more than 2 million jobs; teachers, firefighters, and police officers have been saved from layoffs in states across the country; and 6 million Americans have been protected from falling into poverty. Even economist John H. Malkin of the conservative American Enterprise Institute recently found that the Recovery Act helped add “about 4 percentage points to U.S. growth” during the second half of 2009. In fact, in the last fiscal quarter, our economy grew by 2.2 percent, its fastest rate in two years. In the first quarter of 2009, by contrast, our economy shrunk by 6.4 percent.
Democrats have also helped businesses and students take out loans to hire new workers and pursue higher education. We’ve worked to help small businesses cope with backbreaking healthcare costs. We’ve stopped credit card companies from taking advantage of responsible consumers, and we’ve helped families across the country keep their homes. Most of these protections for ordinary Americans were opposed with near unanimity — and with no constructive alternatives — by congressional Republicans.
But as long as millions of Americans remain out of work, none of that is enough. In recession after recession, the sad fact has been that the sign of recovery most important to American families — job creation — is often the last to appear. That is why job creation will be a central message of the president’s address and the central goal of the 2010 agenda.
The House has already passed the Jobs for Main Street Act, which invests in job-creating infrastructure projects and increases unemployment insurance, healthcare assistance, and other emergency programs for the families that are struggling the most — programs that also inject money into local economies. It is essential that the Senate move quickly to pass jobs legislation, as well. But as millions enter another month of unemployment, Senate Republicans are standing against this jobs bill, too.
At the same time, efforts to get through an immediate crisis must not make life more difficult for generations to come. No economic plan is complete without a strong commitment to fiscal discipline, a commitment I expect President Obama to reinforce tonight. Right now, the most important deficit-cutting steps we can take are enacting into law pay-as-you-go, the principle that our government will pay for what it buys, and working with a bipartisan commission to tackle the long-term threats to our fiscal future.
Job creation and deficit reduction go hand-in-hand. Economic collapse and unemployment have been some of the most powerful drivers of our deficit; without Americans getting back to work and an economy that’s growing again, our country will remain in a fiscal mess.
No Democrat claims that the way out is easy. Pretending otherwise — that we can cut taxes without ensuring that they don’t significantly increase deficits, or that we can weaken commonsense regulation without worrying about financial collapse — is exactly the kind of thinking that helped put millions out of work. I wish that Republicans had learned from the manifest failure of their policies, the dramatic collision between ideology and reality.
Republicans continue to promote the same economic policies that they pushed in 2001 and 2003: laxer regulation and tax cuts for the privileged that put all of us in debt. We have already suffered the costs of those policies, in exploding deficits and Wall Street catastrophe. As NBC’s Mark Murray reported, “the challenge for … Republicans is that these solutions … existed during the Bush years, which saw three different economic downturns [in 2001, 2003, and 2008], and which produced the weakest eight-year span for the U.S. economy in decades.”
President Obama promised a constructive response to that failure. That’s what he delivered in 2009, and what’s what we can expect in the year ahead.
Hoyer is the House majority leader.