Thanks for the Boom!

Republicans take credit for good economic news. Can they?

Eric Cantor

At 9:37 a.m. Monday, the office of House Majority Leader Eric Cantor e-mailed reporters its daily news update, the “Leader’s Ledger.” The third item in the e-mail was a Dow Jones story on new private-sector hiring. Cantor’s office gave it this headline: “THERE ARE THE JOBS: Republicans Prevent Massive Tax Increase, Economy Begins to Improve.”

It took 19 minutes for Politico to post that item, an effort to “claim credit” for good economic news. It took another hour for the Democratic National Committee to follow up and make sure reporters had seen this stuff. (The Republicans-did-it spin appeared only in e-mail, not in a public online version of the ledger.) At 2 p.m., Cantor began his weekly press conference to explain what the message meant: “When you look at the tax deal that did occur, and I do think that has begun to at least allay some fears in the minds of small businesses and investors that perhaps things won’t get any worse, and maybe we ought to begin to focus again on how we work through some of these problems and create jobs,” said Cantor. “I say that because I also think that the tax deal itself is a great example of how the two sides can work together and I’m hoping that we could do so yet again, especially as it deals with the No. 1 priority, which is jobs and the economy.”

Was Cantor overselling the GOP’s role in the good news? Yes and no. The deal that the White House and Republicans hammered out in the lame-duck Congress is, indeed, partly to thank for new, rosy projections for the economy. That’s why, as Republicans pointed out on Monday, the White House has spent weeks taking credit for the thinnest, greenest shoots it could find.

“The tax cut deal is an important reason why economists, including me, have raised their outlook for 2011 growth,” said Mark Zandi, the chief economist for Moody’s Analytics, in an e-mail. “The deal was a significant surprise, including the temporary payroll tax cut, the extension of emergency UI benefits through the end of the year, and perhaps most underappreciated … the expensing of all business investment in 2011.”

But the sticking point wasn’t whether the deal had helped. It was whether Republicans had willed a recovery into existence by preventing tax hikes, and whether the boom couldn’t have happened had the midterms gone another way. That’s what seemed to be implied in the Leader’s Ledger, and it’s literally what Sen. Jon Kyl, R-Ariz., had said earlier this month. * If Republicans think that, said former Bush and Reagan administration economist Bruce Bartlett, they are “full of shit” about the economy.

“The ‘tax cut’ enacted in December was not a tax cut at all,” said Bartlett. It was “merely the extension of tax cuts enacted in the early 2000s that were in effect all during the time the economy was shedding jobs by the millions. And even if there were some miracle properties in just extending tax cuts already in effect, it is grossly implausible to claim that this would have any impact on jobs so quickly.”

But politics is the art of the grossly implausible. Ideally, the economy is going to grow this year. If the projections are right, this is the year that unemployment will fall below 9 percent as GDP grows at better than 3 percent. Republicans are going to want to take credit for that. So are Democrats. The rule that governs this is: Take as much credit as you can without getting laughed out of the room.

Here’s how that worked during last week’s debate on the repeal of the Affordable Care Act: Republicans referred to it as a “job-killing” law, basing that on the sacrifices employers were saying they’d make when the law went into effect. Democrats were armed with a chart—a calculation that 1.1 million jobs had been added to the economy since the passage of “Obamacare.” How, asked Democrats (led by Rep. Frank Pallone, D-N.J.), could Republicans say the bill was job-killing when jobs were being not-killed all over the country?

Republicans didn’t even attack the connection. They invented one of their own. Rep. Phil Gingrey, R-Ga., rebutting Pallone and others, said that nearly 7 million people had lost jobs since the Democrats took over Congress. It wasn’t the first time that data had been used. In October, then-RNC Chairman Michael Steele calculated that “since Democrats took over Congress in 2006, America has lost 6,851,000 jobs.” When Newt Gingrich and Dennis Hastert’s Republicans ran the place, there were 22,404,000 new jobs. Thus, Republicans create jobs and Democrats destroy them. (A few months after this, Steele lost his job. But that was largely coincidental.)

There is a grand tradition of this stuff. In early 2009, for example, when the Dow was plummeting to an eight-year low, Sean Hannity started giving Obama the blame for market moves from “May 6, when it was apparent he was probably going to be the Democratic nominee.” After stocks recovered in 2010, the focus was back on jobless numbers. To prove that Democrats were responsible for them, Hannity and others would start the clock when Nancy Pelosi became speaker, or when Obama became the Democratic nominee, or when Obama was sworn in, or when the stimulus passed.

But is this actually how economic policy works? Do markets and businesses respond immediately, in days or even months, to new policies or new majorities? When the question was put to William Gale, the co-director of the Tax Policy Center, he sighed.

“The economy is in a recovery,” said Gale. “You’re seeing a slow but otherwise not exceptional recovery. For years, everything that was good that happened was attributed to Reagan tax cuts, and then it was attributed to the Bush tax cuts. That’s just politics. The interpreting of every up blip is more evidence that this tax cut works, or that works, while ignoring every down blip in the economy, is kind of silly.”

Yes, there are some policies that are targeted to have specific effects—tax rebates, for example, or unemployment insurance extensions. Their impact can be visible in a few weeks or months. But the effects of the bigger stuff are guesswork, and dating their effects from political events is basically useless. The only upside to all this posturing is that at least there is some good news for the politicians to fight over.

Like Slate on Facebook. Follow us on Twitter.Correction, Jan. 25, 2011: This article originally misspelled Jon Kyl’s first name. (Return to the corrected sentence.)