Just possibly, the 12 million jobs will materialize no matter who wins, as Glenn Kessler, The Post’s able fact-checker, suggests. Some mainstream economic forecasters are in this camp. For example, Moody’s Analytics has payroll employment growing from an average of 133.2 million in 2012 to 145 million in 2016. The forecast assumes no recession and a stronger recovery. By 2014 and 2015, annual economic growth improves to about 4 percent, up from 2 percent now.
Presidents, Kessler notes, are often “the beneficiary . . . of broad economic trends. . . . Romney’s pledge appears to be an effort to take advantage of that.”
But the 12 million jobs could also be a stretch.
Other forecasters are less optimistic. IHS Global Insight predicts 9.7 million new jobs by 2016. Although not foreseeing an imminent recession, it expects economic growth to average only 3.25 percent in 2014 and 2015.
Let’s do some arithmetic.
To fulfill the target of 12 million jobs, the economy would need to generate 3 million jobs a year, or 250,000 a month. Romney’s economic advisers argue that this is an achievable, even modest, goal.
“If we had a recovery that was just the average of past recoveries from deep recessions, like those of 1974-1975 or 1981-1982, the economy would be creating about 200,000 to 300,000 jobs per month,” wrote four Romney advisers in a recent paper. (The four are: Glenn Hubbard of Columbia University, Gregory Mankiw of Harvard University, John Taylor of Stanford University and Kevin Hassett of the American Enterprise Institute.)
That’s true — and possibly irrelevant. Many recoveries from deep recessions have featured rapid economic growth; the economy snapped back quickly from the downturns of the 1970s and early 1980s. (In 1982, the monthly unemployment rate reached a post-World War II high of 10.8 percent.) The trouble is that we’re not in the 1970s and 1980s. Companies now seem more reluctant to hire than in earlier decades.
It’s not entirely clear why. It may be that firms, focused on maintaining profits, won’t assume added costs until they’re convinced the recovery is well-established. It’s also true that for many reasons — including an aging society, the hangover from the Great Recession and uncertainty over government policies — the economy’s underlying growth rate has slowed. So, there’s less need for more workers.
Whatever the cause, cautious hiring practices suggest that reaching 3 million jobs a year isn’t a cinch. Since 1990, annual job growth has equaled or exceeded the 3 million target in only five years — all during the 1990s boom (1994, 1995 and 1997 through 1999).
Romney is arguing that his economic policies, by restoring confidence, will prompt consumers and companies to spend more. A stronger economy would then require more hiring.
Though this makes for good campaign rhetoric, the reality may be messier. Romney’s proposed policies include: reducing personal income tax rates by 20 percent; cutting the top corporate rate to 25 percent; replacing lost revenue by broadening the tax base (eliminating or reducing tax breaks); and decreasing federal spending from 23 percent of the economy (gross domestic product) in 2012 to 20 percent.
But details on all these proposals are sketchy — which tax breaks and spending programs will be curbed? — and Democratic critics dispute Romney’s claim that they will automatically raise economic growth. Legislating changes could be time-consuming as well as controversial.
At best, the 12 million job promise seems a shaky proposition. Wouldn’t it be refreshing if, for once, America’s political leaders understated their case. Perhaps Romney should have promised 8 million jobs or 10 million — or maybe he shouldn’t have promised at all. Now, there’s a fantasy!