A milestone year! A breakthrough year for the US economy! The strongest growth since 1990s! Even average wages are inching up, reversing a decades-old trend!
You would think that these would have been the headlines leading up to the midterm elections, a mere eight weeks ago. After all, the turnaround didn’t happen overnight, but has been a long, uphill slog – steady, like the proverbial tortoise who similarly got no respect, compared to the fast-track rabbit who wound up losing the race (hear that, Putin?) – made all the harder for all the unnecessary obstacles and self-inflicted crises put in the way.
Even skeptics are saying that 2014 is the year the US finally turned the corner on the 2008 financial collapse, when ordinary Americans are beginning to see the benefits.
The economy grew at a combined 4.2% pace in the second and third quarters of this year, the strongest six-month period of growth in more than a decade. American businesses have added new jobs for 57 consecutive months, the longest streak of private-sector job creation on record, for a total of 10.9 million new jobs – more than all the jobs created by the rest of the industrialized nations. The pickup in the pace of job growth this year has come in industries with higher wages. And wages across the economy are rising – a very welcome sign for millions of American families.
The U.S. economic recovery took a major step forward in 2014, achieving a number of important milestones:
Jobs: By November, 2014 was already the best year of job growth since 1999. Businesses added 10.9 million jobs over last 57 months – 57 straight growth, longest on record – 2.6 million jobs added this calendar year through November, more than any full calendar year since the 1990s, said Jeff Zients, National Economic Council Director.
Manufacturing: The manufacturing sector added 15,000 jobs per month, and the average workweek for those workers is the highest since World War II.
Education: The high school graduation rate is the highest on record, and more Americans are earning post-secondary degrees than ever before – “the surest pathway to the middle class,” the White House said.
Energy: America is now the number one oil and gas producer in the world. For the first time in nearly two decades, the US produces more oil than it buys from abroad. Tens of thousands of Americans are now have jobs harnessing energy from the wind and the sun. Just last month, President Obama and President Xi jointly announced the two countries’ respective post-2020 climate targets in Beijing – a move that will spark investment and innovation in clean energy technology and represent a substantial opportunity for U.S. companies.
Housing: The continued rise in home prices has cut the number of underwater mortgages from a peak of 14 million to less than 4 million, and the share of mortgages in delinquency or foreclosure has been cut in half.
Health Care: Through the Affordable Care Act, 10 million Americans obtained health insurance in the past year alone (5 million more would have except for Republican governors which refused Medicaid expansion). Meanwhile, due largely to reforms in the law (including a requirement that 80% of a premium go toward patient care, as well as the mandate that everyone have insurance), the price of health care has been rising at the slowest rate in nearly 50 years.
The Deficit has been cut by nearly two-thirds as a share of the economy. (Remember the obsession during the 2012 campaign with the Debt Clock? And how the Republicans nearly pushed the economy over a fiscal cliff?)
The stock market topped 18,000 for the first time EVER, the 51st record in just 2014, let alone the six years of the Obama Administration. The Dow has now tripled since the low mark in March 2009, when Obama went to work with a fiscal stimulus, as meager as the Republicans would let him have.
And gas prices are the lowest they have been in years (remember when Republicans blamed Obama for rising prices? Where is the credit for lower prices?). And this has a lot to do with Obama’s gas mileage standards, investments in renewables (that steams Big Oil), the fracking revolution (that inflames progressives), and in general, Obama’s “all-of-the-above” energy policy. Every penny drop at the pump saves consumers $1 billion (and deprives the Kochs of $1 billion to spend on political campaigns and climate-denying ads).
Consumer confidence is up, and as is spending, because of an overall better feeling (less talk about fiscal cliffs and government shutdowns certainly helps, combined with greater job and housing security and health care).
Even wages, kept artificially low by tightfisted employers (because they can), are now beginning to bump up.
Mitt Romney, had he become president, would have killed for these results and would have taken full credit, even though Republicans blocked each and every policy. Think of how much better the economy would have been – at least sooner- had the Republicans authorized the American Jobs Act and the Infrastructure Bank, if Republican Governors like New Jersey’s Chris Christie and Florida’s Rick Scott, had not turned back federal funding for rail projects, if they had passed an increase in the minimum wage and resolved the immigration problem which keeps 11 million people living in shadows in a hidden economy.
Obama faced an uphill battle, robbed of the tools that each and every president has used to get out of recession in the past – government spending and infrastructure investment.
And the results have little to do with “normal business cycles” – that is, if government did nothing, we would still be in this rosy place. It’s not merely the passage of time that has produced these milestones – which is apparent from the comparative weakness in other industrialized economies, including Japan.
Several of Obama’s top advisers discussed the policies at the heart of 2014’s economic results with reporters:
“It’s been a milestone year for the economy, 4.2% average growth in last 2 quarters, strongest in more than decade, home prices up, businesses added 10.9 million jobs over last 57 months – 57 straight growth, longest on record – 2.6 million jobs added this calendar year through November, more than any full calendar year since 1990s,” said Jeff Zients, National Economic Council Director.
Job growth is even stronger in business services, technology, manufacturing sectors – important because these sectors have higher than average wages.
“Manufacturing, in particular, has made significant strides – growing faster than broader economy, contributing to record exports for the fifth straight year – 764,000 manufacturing jobs have been added since February 2010 – in 2014, a pace of 15,000 new manufacturing jobs per month, double the pace of 2013. And we have every reason to believe these positive trends will continue,” Zients said. (Compare this with a pace of losing 50,000 factories, and 4,560,000 manufacturing jobs during the George W. Bush years).
This did not happen on its own. The Administration has helped support these efforts through some innovative initiatives (which are hardly known). For example:
Launching New Hubs as Part of a National Network for Manufacturing Innovation: This year, four more “manufacturing innovation institute” competitions were launched, for a total of eight institutes (or “regional hubs”) representing $1 billion of public-private investment. Obama set a goal of 15 institutes by 2017. The regional hubs bridge the gap between applied research and product development by bringing together companies, universities and community colleges, training institutions, and Federal agencies to co-invest in technology areas that lead to new, advanced manufacturing capabilities—and the high-paying jobs that come with them—in the United States.
The hubs have resulted in new patents, new products developed, new investments. Last month, in Youngstown, Ohio, where the first hub was created, they are doing cutting edge research on 3-D printing and GE just announced $32 million in new investment in the region.
“What the president did in 2012 by executive action, Congress just passed into law, Revitalize American Manufacturing and Innovation Act of 2013 (RAMI), authorizing a national network of manufacturing hubs.
Supporting Efforts to Foster Manufacturing Entrepreneurship and Investment in the United States: The Administration brought together 90 mayors who are offering manufacturing entrepreneurs more opportunities to start and grow their businesses, and helped entrepreneurs secure access to $5 billion dollars-worth of cutting edge equipment from the private sector to help start businesses. In addition, the President hosted the first-ever White House Maker Faire to promote home-grown manufacturing entrepreneurship and new tools that lower the cost of prototyping.
Growing Investments in Advanced Manufacturing Research: The Administration has increased Federal investments in advanced manufacturing research and development to nearly $2 billion, up 34 percent from $1.4 billion in 2011.
Another Year of Record-Breaking Exports: U.S. exports of goods and services through the third quarter of 2014 have increased by 3 percent from 2013, putting us on pace for a fifth consecutive year of record exports.
Exports were helped by such initiatives as “Made in Rural America,” which is designed to boost small rural manufacturing exports. Also, efforts to promote US products abroad has helped US agricultural exports reach a record $152.5 billion in fiscal year 2014 (easing the embargo with Cuba would dramatically bolster US agricultural exports).
“The US is now the #1 place in the world to invest, when you survey global CEOs,” Zients said. “The US had lost that position, now we are #1 for two straight years. When you talk to CEOs, 54% say they are looking to add capacity in US.”
“The more we can do to grow manufacturing, exports, good jobs -and work with Congress on trade deals, business tax reforms, and using business tax reform to pay for infrastructure, are critical to job growth and future competitiveness.”
The Obama Administration has also taken steps to transform labor, through innovative programs that link training and apprenticeships with the needs of private enterprise.
“We are not just tweaking but transforming the workforce,” said Labor Secretary Thomas Perez. “It’s akin to Eisenhower when he built Interstate highway system. [Today’s] system of on ramps, off ramps is the educational superhighway; construction apprenticeships are on the ramp now, the destination is middle class. Under this administration, the level of employer engagement in building a skilled ecosystem is unprecedented.
“There are 4.8 million jobs open now – our focus not just on those, but growing the jobs of the future – business owners across America are bullish about our future. What we want to make sure is prepare tomorrow’s manufacturing, which is different from yesterday’s so workers can have the skills to compete today and tomorrow. That’s what the Skills Superhighway means.”
The recently passed Workforce Innovation and Opportunity Act was the most substantial reform of the workforce system in 15 years – to facilitate acquiring in-demand skills and help business find the talent they need to grow, Labor Secretary Thomas Perez said.
“We need a workforce system that can work for everybody more than ever. The Act is part of a fundamental transformation in the way we prepare people for careers of today and tomorrow.
“More than ever, we taking a job-driven approach – making sure we understand what employers need – an unprecedented partnership to make sure training programs connect ready-to-work Americans with jobs.
“Our businesses are growing and bullish. We put more than $1 billion into grants to help people up-skill, and succeed in jobs.”
This includes $450 million for community colleges to build industry partnerships, to expand and deliver career training; millions for high schools to offer work-based learning opportunities; $170 million to help long term unemployed to get back on their feet, and last week, $100 million American apprenticeship grant opportunity – the largest investment by the federal government in apprenticeship programs- “the other college” but without the debt.
At the same time, building the stairway to shared prosperity also means making sure people get a fair day’s pay for a day’s labor.
“Two million home health care workers will for first time have the benefit of minimum wage and overtime protections as a result of a new regulation issued by the Labor Department,” Perez said.
During the President’s Year of Action, the Labor Department finalized a rule, effective January 1, increasing the minimum wage to $10.10 for workers on federal construction and service contracts; this will affect 200,000 workers.
“Congress continues to stand in the way of a national minimum wage – as result of Boehner’s refusal to take up the legislation in the House, and to get over a filibuster in the Senate, but businesses nationwide – Gap, Ace Hardware, Disney and IKEA – continue to raise worker’s wages on their own.” (Gap Inc.’s increase in its starting wage to $10 an hour by next year will benefit 65,000 workers – and has already helped increase applicants for new positions by 10 percent.)
Also 14 states and local governments including San Francisco, Chicago, Philadelphia, Louisville and St. Louis, increased the minimum wage. As a result, 7 million Americans will get a raise because of states answering president’s call.
“I’m proud of what we accomplished,” Perez said. “We have more work to do in 2015. We intend to continue to build on this progress.”
Cecilia Muñoz, Director of the Domestic Policy Council, in this year-end review, focused on progress made in the nation’s educational system:
Throughout his presidency, she said, Obama has focused on education as the centerpiece for economic and social progress, “preparing young people for the jobs of future, and putting them on the road to middle class security. The impact the President’s agenda has had this year covers the whole spectrum, from early childhood to higher education, particularly the quality and cost.”
Last summer, the president made a commitment to making college more affordable, and toward that end, expanded the “pay as you earn” system. “Thanks to regulations adopted a couple of years ago, most students can cap their loan repayments at 10% of their income. This has only extended to a portion of people, not to people with older loans. This year, President Obama took action so that all borrowers could take advantage.” This means an additional 5 million student loan borrowers became eligible for ‘pay as you earn’ – “a great step forward in making college affordable.”
Consistent with a pattern Obama has followed to solve large problems of fostering public-private partnerships, in January 2014, the President and First Lady hosted the first College Access Summit which resulted in commitments across higher education to expand access, and make millions of dollars of investment “to make us first in world by 2020” in college graduates (again).
The President hosted second summit December 4. “It grew so much, we had to hold it in a different building. This second summit generated over 600 actions to improve access to college, and tens of millions of dollars in commitments- significant expansion in number of students – especially first in family to enroll – to get into college and complete college on time.”
To improve K-12, Obama launched the ConnectEd initiative, which calls for 99% of American students (not schools), to have high-speed connectivity by 2017. The FCC has taken steps to modernize the E-rate program to support high-speed connectivity for America’s schools and libraries, providing a $2 billion down payment. Additionally, private-sector companies have committed more than $2 billion in resources to schools.
ConnectED “will revolutionize the way teaching and learning happens,” Munoz said. “It means we can duplicate the kinds of personalized learning that happens in Singapore and South Korea which have done away with textbooks, so that materials can be updated more effectively, and be more responsive to where students are. It’s a transformational moment in our educational system.”
The President has also prioritized Early Childhood Education. Throughout 2013 and 2014, the President challenged states, business leaders, and Congress to help more children gain access to the early education they need to succeed in school and in life. On December 10, the President convened philanthropists, educators, community leaders and others to announce a collective investment of over $1 billion for early childhood education. Federal commitments of $750 million will support early learning for over 63,000 children while corporate and philanthropic leaders’ independent commitments of $330 million will expand the reach and enhance the quality for thousands more.
None of these initiatives – which explain the economic progress this year and are building blocks to sustain progress – are simple. They defy bumper sticker slogans.
What is more, these initiatives are not the top-down variety (ie. Trickle Down), but are at the level of individuals – health care, education, job training, wages.
“This has been a milestone year for the economy, with strong growth and job progress,” Zients said. “We hope to continue that momentum into 2015 and beyond.”
The results validate Obama’s policies, especially when you compare the results here in the US with the abysmal record in Europe and even Japan (even China’s economy is weakening). And especially in Russia, which is on the brink of a major recession – the result of an economy 60% dependent upon oil as global oil prices have dropped by 40%, and economic sanctions led by the US as a consequence of Russia’s takeover of Crimea and incursion into Ukraine.
My question is: Why did the Democrats keep these successes such a secret leading up to the midterms?
Or rather, why didn’t the Democrats crow about the economy or, if Americans say the economy is their Number One concern, the media report such milestones instead of obsessing about Ebola, ISIS and brown children invading America?
Funny how little we hear about these “existential threats” now (or even how the “lone wolf” tragedies have all been enabled by lax gun policies).
One of the reasons for the unleashing of robust economic growth during 2014 was that it lacked the drama of Republican brinksmanship – no debt ceiling crisis hanging over businesses and investors with the threat of destroying “the full faith and credit” of the United States; no government shut down (not even the threat of one until December) – all of which not only undermined investor confidence, but consumer confidence and created a sense of insecurity which affected people’s decisions to take a new job, start a new business, hire more workers. And with all but Homeland Security being fully funded through the end of fiscal 2015, that also bodes well for enterprise.
“We can look back at business contracts or consumer confidence – which have generally been up but when you look at when there were noticeable dips, each one was associated with a fiscal crisis in Washington. Whether the debt ceiling debate or shutdown debate or fiscal cliff, these self-inflicted wounds have real impact on the economy,” said Zients. “In the last year or so, CEOs of all size businesses, entrepreneurs, all say the lack of fiscal drama has improved their confidence to make investments and hire more workers. So it is really important that Congress not have these dramas, and we are hopeful that Congress has learned the lesson and we won’t face these self-inflicted wounds going forward.”
And what will the Republicans do with their control over Congress? Will they continue the Obama policies that so clearly have worked, or revert back to the “Trickle Down” policies that have been proved to be utter failures everywhere? Certainly not raise the minimum wage or protect pay equity or even legalize 11 million people who are forced to live and work in shadows where employers regularly pay below-legal wages, if they pay at all.
My guess is that the Republicans will exert their power to win (more) tax cuts for businesses, retain the tax loopholes for Big Oil and Big Business while eliminating any tax incentives for energy innovation; they will pay for corporate tax cuts by cutting out the tax policies that enable Americans to enter or stay in the middle class – like the home mortgage tax credit – while raising taxes for those who can least afford it (under the guise of “flattening” tax rates) and cut benefits for Medicare and Social Security (as opposed to raising the cap upon which Medicare and Social Security taxes are collected).
Instead of investing in early childhood education, K-12, or giving college students the same interest rates and refinancing opportunities that businesses have and expanding “pay as you earn” programs, apprenticeship programs or ConnectED, or making whatever fixes are necessary that will realize truly universal health care, they will push to repeal or defund Obamacare, further restrict women’s reproductive rights, and roll back Dodd-Frank protections intended to prevent another fiscal calamity.
Their economic stimulus? Shutting down the Environmental Protection Administration, pushing through the Keystone XL pipeline, and returning to laissez-faire deregulation.
And when things go south by 2016, the Republicans will blame a Democratic president and claim to have a better plan.
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