In Ohio, Obama says his policies have created jobs. Is that true?

Visiting a manufacturing plant in Youngstown, Ohio, President Obama said the $787 billion Recovery Act helped avert a possible depression. Critics – especially Republicans – aren't so sure.

Susan Walsh/AP
President Barack Obama tours the facilities of a manufacturer of steel tubular goods in Youngstown, Ohio, Tuesday before speaking on the economy. He said his economic policies helped put thousands of people back to work.

President Obama had a simple message Tuesday for residents of Ohio and the nation: White House economic policies are working.

Is the message true?

The question is very much on the minds of voters and political strategists this week.

Democrats still have a slight edge over Republicans as the party that's trusted more on economic policy, but the advantage has narrowed this year, according to an Associated Press/GfK Roper poll released Sunday. Unemployment remains high, near 10 percent, at a time when job creation is Americans' top priority. And primary elections Tuesday are revealing the restive state of the voting public – a pattern that puts congressional incumbents at risk in November.

On a visit to Youngstown, Ohio, the president fought back against those worries, and against Republican naysayers in Washington.

Nearly 300,000 jobs added in April

"The fact is, our economy is growing again," Mr. Obama told a manufacturing-plant audience. He pointed to 290,000 workers added to US payrolls last month, a big turnaround from the massive monthly job losses seen a year ago.

"Any fair-minded person would say that if we hadn’t acted ... more people across America would be out of work today," he said. He defended the $787 billion Recovery Act and the massive prop-up efforts for the banking and auto industries as programs that, although not winning popularity contests, helped to avert a possible depression.

Many economists agree that those efforts, along with equally large economic support from the Federal Reserve, have helped the economy turn a corner. But that doesn't mean that Republicans wanted to "do nothing," as Obama implied, or that those economists who disagree with his policies are automatically failing to be fair-minded.

One thing that Obama can justly claim is that he inherited a very difficult situation when he took office early in 2009. The economy had come to the brink of collapse. It wasn't just Democrats, but also economists at places like the International Monetary Fund, who were calling for large government stimulus spending.

A year later, this January, the prevailing view among 50 economists surveyed by USA Today was that the Obama stimulus succeeded in saving many jobs. Unemployment would have hit 10.8 percent without the Recovery Act, according to their median estimate. The difference would translate into another 1.2 million lost jobs, USA Today said.

But the Obama policies are controversial. The reason is partly election-year politics. Minutes before Obama spoke, House minority leader John Boehner (R) of Ohio released a critique of the stimulus-is-working message. A genuine policy debate also underlies the politics.

Many economists support key elements of the stimulus program, such as extended unemployment insurance, tax breaks for consumers, spending on infrastructure jobs, and aid to states to prevent massive layoffs or Medicaid cuts. Even with the stimulus, state and local governments have reduced employment over the past year. Some economists say more stimulus is needed to help launch a stronger jobs recovery.

Recovery Act critics

The Recovery Act also has critics on the other side as well, who say it is adding heavily to government debt without doing much for job creation. The number of jobs attributable to the stimulus is a matter of hot debate. At the very least, many economists believe that stimulus efforts lose traction as a nation's government debt rises.

"Further fiscal 'stimulus' can darken consumer and business confidence by creating fears about future debt burdens," policy experts Jeffrey Sachs and George Osborne warned in a Financial Times commentary in March.

Mr. Boehner echoed that concern in his news release.

"President Obama is pledging to make 'tough choices' about the deficit when Democrats aren’t even proposing a budget, missing a valuable opportunity to provide the fiscal discipline economists say is needed to create jobs and grow our economy," he said.

The good news is that, whether people credit the stimulus or not, hard-hit industrial cities including Youngstown are seeing some revival of some factory jobs. "Last month ... brought the largest increase in manufacturing employment since 1998," Obama told the crowd at V&M Star, a steel-goods maker.

Obama said a Recovery Act investment in railroad infrastructure has paved the way for V&M's parent company to commit to a $650 investment in a new Youngstown mill, which will create 350 jobs.

Auto-industry bailouts, while costly, have preserved jobs at a plant in nearby Lordstown, the president added. Instead of being liquidated, GM "turned a profit for the first time in three years" this week, he said.


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