There’s no question that 4 percent second-quarter growth is better than the 2.1 percent contraction in the first quarter. Some of this is the post-cold weather phenomenon. (Economic activity postponed in the first quarter was made up and inventories got replenished.) But putting this in perspective, we are still experiencing the worst recovery in modern times. The Wall Street Journal editorial board summarizes: “As part of its Wednesday growth report, the federal Bureau of Economic Analysis also revised its previous GDP figures, with the biggest adjustments coming in the last few years. BEA revised downward its GDP increases for both 2011 (to 1.6%) and 2012 (2.3%), while revising it up a bit for 2013 (2.2%). This confirms that the current expansion is the weakest by far in the post-World War II era. . . . Not a single year of the current recovery has reached the 2.7% or higher annual growth figures that prevailed from 2003-2006, much less the booms of the 1980s and 1990s.” With the Fed dutifully keeping interest rates near zero, there is “good news for stocks and other asset prices, if not necessarily for growth and real middle-class incomes.”
That doesn’t do much for middle-class Americans caught in a squeeze of rising college, energy and health-care costs as well as stagnant wages. It does even less for lower-class Americans, who have the most to gain from a high-octane recovery creating jobs at the entry level (and higher). The aim, if the Senate turns Republican, should be to make the case for conservative governance and spell out what a pro-growth economy would look like. Pass an energy development bill. Pass an Obamacare alternative, regulatory reform (requiring congressional passage for any regulation with an economic impact of more than $5 million, to pick a number), tax repatriation (which can block grant infrastructure spending and send it to the states), anti-poverty and pro-jobs bills based on reforms suggested by Sen. Mike Lee (R-Utah), Rep. Paul Ryan (R-Wis.) and others. Go after crony capitalism spending and tax breaks and restore defense spending (which will give a boost to high-skilled manufacturing). Spend wisely on border security and expand H-1B visas for those who are highly skilled and potentially can generate jobs for others. The president is unlikely to sign any of this, but Republicans might corner him on a few measures. And if he and Democrats in the Senate reject reasonable, pro-job-growth bills, the stage is set for 2016.
Hillary Clinton has said she’s all about creating growth and working toward compromise. Swell. She can then be asked whether she supports actual bills that fit this description. It can be a revealing contrast — her cap-and-trade and domestic spending spree vs. the Republicans’ agenda. At the very leas, it will sniff out who is serious on growth promotion and who is not.