Applying Romney’s rules to Obama’s economy

July 9, 2012

In response to Mitt Romney's inevitable criticism of Barack Obama's economic record following yesterday's bleak jobs report, the pro-Obama PAC American Bridge is circulating the following video, taken from a Romney press conference on June 24, 2006 (via Andrew Sullivan)

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The takeaway, as Alexander Burns puts it, is that "rhetorically, there's not much space between Obama ca. 2012 and Romney ca. 2006." But how much space was there economically? Let's look at a couple of Romney's key claims, and compare them against Massachusetts' economy when he was governor and the US economy during Obama's tenure as president to find out.

Romney: "I came in and the jobs had been just falling right off a cliff, I came in and they kept falling for 11 months...If you're going to suggest to me that somehow, the day I got elected, jobs should have turned around, that would be silly. It takes awhile to get things turned around."

Romney is right that it doesn't make much sense to blame governors and presidents for the economies they inherit. It takes time to write and implement new policy. It takes time for that policy to have an effect on the economy. But that's not a standard Romney has kept in mind when criticizing Obama's record. If you apply Romney's rules to Obama's economy, the picture looks very different.

Here's how payrolls changed for Obama and Romney, from four months before they took office (September 2002 and September 2008, respectively) to eleven months after (December 2003 and December 2008):

Romney is actually a little too hard on himself. Employment was rising by eleven months into his tenure, and the unemployment rate was 5.6 percent, down from a peak of 6 percent. Obama had to deal with a much more severe economic downturn - unemployment maxed out at 10 percent, not six - and the situation was still deteriorating eleven months into his tenure.

Romney: "We've turned around and since the turnaround we've added 50,000 jobs."

Employment bottomed out seven months into Romney's tenure, and thirteen months into Obama's. Let's index payrolls to their worst months and see how things changed since then:

Romney's right that employment was increasing later in his term. What's more, when he made the above remarks in June 2006, employment was up by 52,025 from its trough in August 2003, so his claim of 50,000 jobs gained is accurate. But job growth has been swifter in the US under Obama than it was in Massachusetts under Romney, so by 2006 Romney's standards, Obama's doing a bang-up job. Here's their full records, up to June 2006 and 2012, for a fuller comparison:

As you can see, job growth under Obama has been perhaps not swift enough, given the huge output gap left by the economic downturn, and Romney was governing during a period of full employment in which dramatic job gains aren't going to be forthcoming.

But again, if Romney thinks the pace of job growth during his tenure suggests his policies were working, then it follows that the pace of job growth under Obama suggests the president is really doing something right. Unemployment is down to 8.2 percent from a peak of 10 percent, a 1.8 point drop to Romney's 0.4 point drop. And payrolls are up over 3.8 million since their trough in February 2010, meaning Obama oversaw job growth 380 times as big as the growth Romney oversaw, even though the US is only about 47 times as big as Massachusetts.

Or, to take Massachusetts out of the equation, if you start the clock 11 months after Obama took office, the economy has added 3.2 million jobs and the unemployment rate has fallen 1.2 percent under Obama.

Romney: "We're the, you know, we're one part of that equation, but not the whole equation. A lot of it is outside of our control, it's federal, it's international, it's private sector."

Here Romney is totally right. The federal government has a lot more power over the national economy than state governments do over state economies. A lot is outside of governors' control.

Perhaps the most important thing they can't affect is the value of money. Just like the Eurozone countries, US states have ceded monetary policy control to a central actor, to wit the Federal Reserve, that deserves much of the credit and/or blame for those states' economic performance. So when evaluating both Romney's and Obama's economic records, bear in mind that Ben Bernanke and, during Romney's tenure, Alan Greenspan bear at least as much if not more responsibility for the employment numbers as do the guys leading the federal, and especially the state, executive branches.

Then there's the broader economic context: Romney was governing amidst a healthy national and world economy. Obama took office during the worst financial crisis since the 1930s, and as that began to ease, the euro zone fell into a state of permanent crisis. There's been rather a lot going on that he can't control. Romney knows this, of course, but it's against his political self-interest to admit it.

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Ezra Klein · July 9, 2012