August 9, 2011
The world’s largest economy remains mired in the deepest recession since the Great Depression. The Bureau of Economic Analysis reported the US economy grew at an anemic 1.3% in the second-quarter growth and revised first-quarter growth downward to a paltry .4%. The American economic malaise is a drag on and danger to Europe and indeed the rest of the world.
Stubbornly high headline unemployment of 9.1% in July grossly understates the depth of the malaise. The 58.1% employment-to-population ratio is a truer gauge. It hasn’t been this low since 1983. Near the end of President Clinton’s second term it was 64.7%. Translation: America is missing 16 million jobs. That’s 16 million people who aren’t creating wealth and paying taxes, many of whom have become discouraged, left the labor force and are losing the habits of work.
While President Obama did not cause the Great Recession his policies have prolonged and deepened it.
Obama has his boot on the throat of the naturally resilient American economy. If one or two of his policies were anti-growth one might write it off. Even President Reagan wasn’t 100%. But Obama’s entire policy suite is anti-private sector and anti-growth.
The administration sold its mammoth $821 billion stimulus package as a silver bullet to end the recession. Council of Economic Advisors Chairman Christina Romer warned without it unemployment would hit 8.8% in the 4th quarter, 2010 but assured the country with their Keynesian binge it would be 7%. Lo in December, 2010 unemployment was 9.4%. The much ballyhooed stimulus package bled the wealth-producing private sector to spend on a smorgasbord of political “investments,” but didn’t resuscitate the moribund economy.
The cash-for-clunkers program vividly illustrates Obama’s imperviousness to economic reality. It was based on the preposterous notion subsidizing destroying cars and new-auto purchases creates wealth. By perverse Obamanomics burning down and rebuilding houses would enrich America.
The president’s signature Obamacare batters the economy with 18 new taxes, including a 40% excise tax on “Cadillac” insurance plans with exemptions for his union allies, a .9% payroll tax increase, a 3.8% tax on capital gains, dividends, rents and royalties, and a 2.3% excise tax on medical devices. It’s a job killer and ultimately will and is intended to crowd out private insurance.
Only 24% of teens have jobs this summer. In 2007 Senator Obama voted for the Fair Minimum Wage Act increasing the minimum wage in 3 steps to $7.25 per hour in 2009, pricing millions of teenagers out of the labor market. Did the man who vowed to make jobs his number one priority gave them a moment’s thought?
In another bout of false compassion, Obama extended unemployment insurance to 99 weeks, with his advisors Christina Romer and Larry Summers and most recently press secretary Jay Carney spuriously contending paying people not to work creates jobs. The WSJ’s Steve Moore rightly brands this economic bimboism. Europe’s generous unemployment safety net and large pool of chronically unemployed testify when you pay people not to work fewer people work. It’s not rocket science.
Pro-growth policies would boost labor and capital mobility.
The partisan National Labor Relations Board (NLRB) is pulling out the stops to facilitate unionization. Unions reduce labor market flexibility and consequently inhibit job creation. The president has also sought thus far unsuccessfully to end secret-union-organizing ballots enabling intimidating workers to vote to unionize.
And NLRB commissars are preventing export powerhouse Boeing from building a new plant in South Carolina rather than Washington because it’s a right to work state.
Barriers to investing and selling goods and services across international and domestic boundaries hurt job and wealth creation.
Opening foreign markets to U.S. exports creates jobs. However, to appease his union allies Obama is stonewalling free-trade agreements with Colombia, Panama and Korea. Domestically Obama opposes free trade of healthcare insurance across state lines, which would increase consumer access and choice.
Energy is vital to economic growth. It is an input of everything produced and consumed. Americans are painfully aware of energy costs every time they fill up at the pump. Energy abundance makes producers more competitive, enriches consumers, and spurs wealth and job creation.
Gas prices are double the day Obama took office. Obama’s Green Jacobins have systematically increased rather than decreased energy costs, stifled production of oil, gas, coal and nuclear, blocked the Alberta pipeline, supported tariffs on Brazilian ethanol, and subsidized uneconomic photovoltaic and wind-mill power. The EPA is conducting a jihad on fossil fuels.
Doing a 180, vigorously supporting off and onshore oil drilling, shale oil and gas, eliminate ethanol tariffs, a nuclear-power-plant construction blitz and ending Jimmy Carter’s ban on nuclear fuel reprocessing would be pro-growth. While Energy Secretary Steven Chu doesn’t want or understand the stimulus one dollar a gallon gasoline and 5 cents per kilowatt hour electricity instead of 9.7 cents would bring, millions of businesses and consumers would.
Money matters enormously. A strong dollar, market interest rates and a healthy and competitive financial services sector are critical for sustainable economic growth. Obama, Treasury Secretary Geithner and Fed Chairman Bernanke have continued President Bush’s destructive weak-dollar and easy-money policies, and put the financial services industry in a regulatory straight jacket.
Obama reappointed dove Ben Bernanke Fed Chairman. Bernanke’s debasing the dollar and easy credit fuel inflation, punish saving and distort economic decision making.
The Fed’s negative real interest rate policy under maestro Alan Greenspan with consigliore Ben Bernanke at his side, along with government systematically weakening mortgage credit standards, to increase home ownership caused the housing bubble, mortgage implosion, financial crisis and consequent Great Recession.
Obama sold the most extensive financial regulatory overhaul in history the Dodd-Frank Act as preventing the next financial crisis. While it imposes a huge regulatory burden on the financial services industry, it doesn’t address the crisis’ fundamental causes. It sets up a corporatist regime under which all aspects of business are politicized, where Washington mandarins rather than markets pick winners and losers and too-big-to-fail is enshrined.
Obama put Bush’s “compassionate” government expansion on steroids. The Federal Leviathan now consumes more than 25% of GDP, versus the 19.6% post-WW2 norm. In a second term unchecked by any need to appeal to voters to the right of MoveOn.org and MSNBC for reelection, Obama would continue on all cylinders on the path to freedom-suffocating Euro-statist levels of government.
The President demonizes the productive and in the name of “social justice” demands higher capital gains and personal income taxes – red meat for his base but decidedly anti-growth. Eliminating capital gains and corporate taxes and cutting marginal personal rates would be a powerful testosterone booster shot for the economy, firing investors’, businesses’ and workers’ animal spirits.
In recession voters normally fire incumbent presidents. When Reagan won reelection in 1984 unemployment was 7.2% – down from its 10.8% peak in December, 1982. His supporters could point to a roaring recovery and revived optimism and say the Gipper’s policies worked. In 2012 brass-ring Obamaists will be left with an increasingly lame blaming Bush.
The president is betting fear and the ever increasing percent of Americans dependent on government will carry him to a second term. A whopping 50.5 million Americans receive Medicaid, 46.5 million Medicare, 52 million Social Security, 5 million SSI, 7.5 million unemployment insurance, 44.6 million food stamps and 24 million “earned income tax credits” (constructively welfare). Obama may be right. While his numbers are deteriorating, a July Washington Post/ABC poll showed an astonishing 29% of Americans believe he’s making the economy better and 32% believe he’s having no effect.
Obama’s economic nuclear winter has destroyed millions of jobs and brought misery to and smothered the dreams of millions of his countrymen. His supporters profess compassion for the un and underemployed. Robust economic recovery is impossible with Obama occupying the White House. Real compassion would be firing him.Author : Eric Grover