Rep. Pence Ignores Recent History In State Of The Union Prebuttal

January 25, 2011 4:19 pm ET

In a one-minute speech at the outset of today's House session, Rep. Mike Pence (R-IN) predicted President Obama will portray the past two years of economic policy as "pulling the economy back from the brink," and disagreed with that view of the recent past. "Far from pulling our economy back, the weight of debt and taxes and regulation have stifled our economic recovery," Pence said. "Mr. President, we will not win the future with the failed economic policies of the past." Yet the private sector has added jobs each month for the past year, for a total of 1.3 million new private jobs in 2010. This steady job growth stands in stark contrast with the 800,000 job losses per month — a product of President Bush's "failed economic policies of the past" — that greeted President Obama at the start of his term.

Rep. Pence Misrepresents Recent Economic History

PENCE: Tonight the President of the United States will appear in this chamber, as nearly every president has for 150 years, and report on the state of the union, and we will receive him with the respect that is due his office. We are told in press reports that the president will focus on the future, on "winning the future." But as the president said last Friday, and I quote, "The past two years were about pulling our economy back from the brink," close-quote. And we expect to hear the same theme today. But frankly as most Americans know, during the last two years this administration and the former majority in Congress met our current crisis with an avalanche of borrowing and spending and bailouts and taxes and takeovers and mandates. Far from pulling our economy back, the weight of debt and taxes and regulation have stifled our economic recovery. Mr. President, we will not win the future with the failed economic policies of the past. As you come into this hallowed chamber tonight, we urge you, Mr. President, not just a new speech. Give the American people a new direction.

FLASHBACK: When President Obama Was Sworn In, The Economy Was Hemorrhaging Hundreds Of Thousands Of Jobs Each Month

The Economy Shed Almost 8 Million Jobs Under Republican Policies Before The Recovery Act Could Affect The Economy. According to economist Robert J. Shapiro:

From December 2007 to July 2009 - the last year of the Bush second term and the first six months of the Obama presidency, before his policies could affect the economy - private sector employment crashed from 115,574,000 jobs to 107,778,000 jobs. Employment continued to fall, however, for the next six months, reaching a low of 107,107,000 jobs in December of 2009. So, out of 8,467,000 private sector jobs lost in this dismal cycle, 7,796,000 of those jobs or 92 percent were lost on the Republicans' watch or under the sway of their policies. Some 671,000 additional jobs were lost as the stimulus and other moves by the administration kicked in, but 630,000 jobs then came back in the following six months. The tally, to date: Mr. Obama can be held accountable for the net loss of 41,000 jobs (671,000 - 630,000), while the Republicans should be held responsible for the net losses of 7,796,000 jobs. [, 8/10/10, emphasis added]

Based on Shapiro's research, the Washington Post's Ezra Klein created the following chart showing net job losses before and after the Recovery Act was enacted:

[Washington Post8/12/10]

  • From December 2007 Through July 2009, Economy Lost Nearly 400,000 Private Sector Jobs Per Month On Average. According to Bureau of Labor Statistics data on monthly gains and losses in private sector jobs, the private sector added 23,000 jobs in December 2007. In June 2009, the sixth month of the Obama presidency, the private sector shed 452,000 jobs. Over that 19-month span, the private sector shed 393,000 jobs per month on average, the data show.

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[, accessed 1/25/11]

PolitiFact: "True" That "Most Job Losses" Happened Before Obama Policies Took Effect. According to's analysis of President Obama's statement that "most of the jobs that we lost were lost before the economic policies we put in place had any effect": "Looking at BLS data on seasonally adjusted non-farm employment from December 2007, when the recession officially began, to January 2009, the month before the stimulus was enacted (a 25-month period), the jobs number declined by 4.4 million. ... When [Obama] refers to his economic policies, we presume he is referring to his main economic stimulus, the American Recovery and Reinvestment Act. It passed in February 2009, but it took several months before the impact of its spending was felt in the economy. Job loss didn't stop, but Obama is right that it slowed down. In the 19 months from February 2009 through September 2010, the month of the most recent preliminary data, the overall job decline in the private and public sectors was 2.6 million. And the number of jobs lost per month has declined from around 700,000 a month at the beginning of the administration to months in which there were small net gains. ... 'I watched the president on Stewart's show last night, and I thought his basic point about the timing of the employment losses was correct and ought to be noncontroversial,' Gary Burtless, a labor markets expert at the centrist-to-liberal Brookings Institution said in an e-mail." [, 10/27/10, emphasis added]

Despite Pence's Fact-Free Claims, Economic Facts Suggest We Are "Back From The Brink"

The Private Sector Has Added Jobs Every Month Since December 2009. According to Bureau of Labor Statistics data, the private sector shed 83,000 jobs in December 2009. Since then, the lowest monthly job gain was 16,000 in January 2010, and the highest was 241,000 in April 2010; private industries have added jobs for 12 straight months, the data show. [, accessed 1/23/11]

Job Statistics Trend Shows Private Sector Grew By 1.3 MILLION Jobs In 2010. Below is a graph prepared by Minority Leader Pelosi's office showing net private sector job gains or losses per month since December 2007.


[, 1/7/11]

Princeton, Moody's Economists Say "Highly Effective" Government Response To Crisis Saved 8.5 Million Jobs. According to the New York Times: "Like a mantra, officials from both the Bush and Obama administrations have trumpeted how the government's sweeping interventions to prop up the economy since 2008 helped avert a second Depression. Now, two leading economists wielding complex quantitative models say that assertion can be empirically proved. In a new paper, the economists argue that without the Wall Street bailout, the bank stress tests, the emergency lending and asset purchases by the Federal Reserve, and the Obama administration's fiscal stimulus program, the nation's gross domestic product would be about 6.5 percent lower this year. In addition, there would be about 8.5 million fewer jobs, on top of the more than 8 million already lost; and the economy would be experiencing deflation, instead of low inflation. The paper, by Alan S. Blinder, a Princeton professor and former vice chairman of the Fed, and Mark Zandi, chief economist at Moody's Analytics, represents a first stab at comprehensively estimating the effects of the economic policy responses of the last few years. 'While the effectiveness of any individual element certainly can be debated, there is little doubt that in total, the policy response was highly effective,' they write." [New York Times7/27/10, emphasis added]

The private sector jobs-per-month chart below, based on Bureau of Labor Statistics data, is shaded red for months before economists say President Obama's policies began to impact the economy, and blue for subsequent months.

CBO: The Recovery Act Created Jobs, Lowered Unemployment, And Boosted GDP. According to the nonpartisan Congressional Budget Office:

CBO estimates that ARRA's policies had the following effects in the third quarter of calendar year 2010:

  • They raised real (inflation-adjusted) gross domestic product by between 1.4 percent and 4.1 percent,
  • Lowered the unemployment rate by between 0.8 percentage points and 2.0 percentage points,
  • Increased the number of people employed by between 1.4 million and 3.6 million, and
  • Increased the number of full-time-equivalent (FTE) jobs by 2.0 million to 5.2 million compared with what would have occurred otherwise. (Increases in FTE jobs include shifts from part-time to full-time work or overtime and are thus generally larger than increases in the number of employed workers). [CBO, November 2010]

Despite Pence's Claims About An "Avalanche Of...Taxes," Tax Rates Are Historically Low...

Top Tax Brackets Over Time:

  • 35% in 2010: Currently, The Highest Tax Rate is 35%. According to The Tax Foundation, the 2010 tax rate for couples making over $373,650 annually is 35%. [Tax Foundation, accessed 9/20/10]
  • 39.1% in 2001: The Highest Tax Rate was 39.1% in 2001. According to The Tax Foundation, the 2001 tax rate for couples making over $297,350 annually was 39.1%. [Tax Foundation, accessed 4/14/09]
  • 50% in 1986: Highest Tax Rate was 50% in 1986. According to The Tax Foundation, the 1986 tax rate for couples making over $175,250 annually was 50%. [Tax Foundation, accessed 4/14/09]
  • 70% in 1981: The Highest Tax Rate was 70% in 1981. According to The Tax Foundation, the 1981 tax rate for couples making over $215,400 annually was 70%. [Tax Foundation, accessed 4/14/09]
  • 77% in 1964: The Highest Tax Rate was 77% in 1964. According to The Tax Foundation, the 1964 tax rate for couples making over $400,000 annually was 77%. [Tax Foundation, accessed 4/14/09]
  • 91% in 1963: The Highest Tax Rate was 91% in 1963. According to The Tax Foundation, the 1961 tax rate for couples making over $400,000 annually was 91%. [Tax Foundation, accessed 4/14/09]

...And The Recovery Act Included $288 BILLION In Tax Relief

PolitiFact: "Nearly A Third" Of Recovery Act Is "Tax Breaks To Individuals And Businesses." According to "Nearly a third of the cost of the stimulus, $288 billion, comes via tax breaks to individuals and businesses. The tax cuts include a refundable credit of up to $400 per individual and $800 for married couples; a temporary increase of the earned income tax credit for disadvantaged families; and an extension of a program that allows businesses to recover the costs of capital expenditures faster than usual. The tax cuts aren't so much spending as money the government won't get -- so it can stay in the economy. Of that $288 billion, the stimulus has resulted in $119 billion worth of tax breaks so far." [, 2/17/10]

Bush Policies Are The Real "Failed Economic Policies Of The Past"

Failed Tax Cuts & Economic Stagnation

Bush Tax Cuts Followed By "The Slowest Average Annual Growth Since World War II." As the New York Times' David Leonhardt explains:

Those tax cuts passed in 2001 amid big promises about what they would do for the economy. What followed? The decade with the slowest average annual growth since World War II. Amazingly, that statement is true even if you forget about the Great Recession and simply look at 2001-7.

The competition for slowest growth is not even close, either. Growth from 2001 to 2007 averaged 2.39 percent a year (and growth from 2001 through the third quarter of 2010 averaged 1.66 percent). The decade with the second-worst showing for growth was 1971 to 1980 - the dreaded 1970s - but it still had 3.21 percent average growth.


Is there good evidence the tax cuts persuaded more people to join the work force (because they would be able to keep more of their income)? Not really. The labor-force participation rate fell in the years after 2001 and has never again approached its record in the year 2000.

Is there evidence that the tax cuts led to a lot of entrepreneurship and innovation? Again, no. The rate at which start-up businesses created jobs fell during the past decade.

[New York Times, 11/18/10]

Massive Debt

The Bush Tax Cuts Are The Primary Driver Of Federal Budget Deficits Over The Next Decade. Below is a chart from CBPP showing the deficit impacts of war spending, financial recovery spending, the recession itself, and the Bush tax cuts:

Description: 12-16-09bud-rev6-28-10-f1

[, 6/28/10]

Debt Skyrocketed While Bush Was In Office. Below is a graph prepared by Minority Leader Pelosi's office showing the increase of public debt during the years Bush was in office:

[U.S. Treasury via, accessed 1/25/11]