Obama was for deficits before he was against them and for them yesterday.
President Barack Obama exulted that the November unemployment report “was the best since 2007.” The report showed double-digit unemployment and still further job losses. Apparently, President Obama considers that a major achievement. Rest assured the American people will not.
The army of the unemployed now totals 15.4 million Americans. Another 9.2 million were working part-time “because their hours had been cut back or because they were unable to find a full-time job,” according to the Bureau of Labor Statistics. Another 2.3 million “wanted and were available for work.” That totals almost 27 million unemployed or underemployed, which would amount to a total effective unemployment rate of 17.5%.
Unemployment among African-Americans is at Depression-era levels at 15.6%. Unemployment among teenagers is at 26.7% because of reckless increases in the minimum wage. The number of long-term unemployed (out of work for more than half a year) smashed records, rising by almost 300,000 to nearly 6 million.
President Obama’s Chairman of the Council of Economic Advisors, Christina Romer, displayed just how out of touch the Administration is with this real world in the Wall Street Journal on December 2. She claimed credit for the President’s economic policies in stopping “the economic free fall and stabilizing financial markets” and for “restoring confidence and begin[ning] the process of financial market repair.” “Restoring confidence” is not what comes to mind when evaluating the impact of the President’s policies of record-shattering deficits, explosive government spending, and unprecedented federal debt.
Yet, the President continued high in orbit completely out of touch in his redundant jobs speech yesterday, where he said to reduce the deficit we need to spend more money. Go look it up. But don’t be surprised. That is his Keynesian economic policy, where the more the government spends the richer we get.
But the President was both for and against deficits yesterday, blaming Republicans for the federal deficit. His wasted and failed $787 billion stimulus supposedly had little to do with the record shattering $1.4 trillion 2009 federal deficit. Apparently neither did the additional $400 billion in the Omnibus spending bill passed right after the stimulus, and the one-third increase in federal welfare spending, from $522 billion to nearly $700 billion, that he and Congressional Democrats have already adopted.
Back on earth, the numbers show that the deficit for Bush’s last year in office was $458.6 billion, only a third of Obama’s 2009 deficit. And the deficit for the last budget adopted by the Republicans when they held Congressional majorities was $160.7 billion, only about 10% of this year’s Obama/Congressional Democrat deficit. President Obama is now trying to claim success in generating recovery with his $1.4 trillion Keynesian deficit, at the same time he is blaming George Bush and the Republicans for that same deficit. If President Obama did not want a $1.4 trillion deficit, he should have adopted policies to change it when he came into office. Instead, he embraced it as part of his Keynesian economic policy, and as a result it is his deficit, not George Bush’s.
Romer, in fact, tries to claim success for the Keynesian deficit and stimulus in her Wall Street Journal article, saying the stimulus “increased employment between 600,000 and 1.6 million.” But the ugly reality is that since January the number employed has declined by 3.6 million, while the unemployed have increased by 3.76 million. The claim that the stimulus increased employment is a complete fairy tale produced by a model that assumed the result. The model used by CBO started by assuming that government spending increases GDP by a multiplier of 1.5 times each dollar spent, as claimed by the Administration. With that assumption, it is a pure mathematical calculation to conclude that the stimulus increased employment as claimed.
But economic growth, jobs, and prosperity are not produced by runaway government spending, record shattering deficits, higher welfare benefits, and exploding federal debt, as assumed in the outdated, retro, Keynesian thinking of the untutored extremists now running Washington. That is why the true number for jobs created and saved by the stimulus is exactly zero.
The Failure of Obamanomics
The economy will move into recovery now into next year, and the recession will be declared to have officially ended some time this fall. Expect a symphony of loud celebrations and congratulations for the Anointed One from what Rush Limbaugh is aptly calling these days “the state-controlled media,” as President Obama claims personal credit for any positive wiggle in the economy. But that recovery will have nothing to do with the utterly failed Obamanomics for the two reasons explained below.
First, the recovery is long overdue. The recession is officially scored by the National Bureau of Economic Research as starting in December, 2007. From the beginning, Washington tried to counter the recession with old-fashioned Keynesian economics, rather than the more modern, wildly successful, supply-side economics. In February 2008, President Bush joined with Speaker Pelosi to push an entirely Keynesian stimulus package through Congress, based on tax rebates, which are economically equivalent to welfare checks, rather than tax rate cuts, which provide supply-side incentives for growth. Senator Barack Obama at the time strongly supported that “stimulus,” which we can see now in retrospect had no positive impact on the economy.
So President Obama, who experience proves does not learn from experience, pushed through another Keynesian “stimulus” bill in February 2009, only wasting 5 times as much money. Still the recession continued, immune to the Keynesian stimulus, and unemployment soared into double digits, even though President Obama promised his stimulus would keep unemployment below 8%. President Obama yesterday claimed again that one-third of his stimulus was “tax cuts.” But those tax cuts were again all tax credits, rather than rate cuts, and so were just more Keynesian spending.
The average recession since World War II, which is 65 years ago by now, has been 10 months. The longest previously was 16 months. We have now suffered through almost 24 months since this recession started. The recession may ultimately be officially scored as ending a couple of months ago. But it will still be the longest recession since World War II by far. Keynesian Obamanomics has already failed to end the recession in a timely manner.
Indeed, the recovery is both too little and too late. Historically, the deeper the recession the stronger the recovery. Based on the severity of this recession, real growth over the next year should be 6% to 8%. Indeed, the major tax increases slated to go into effect in 2011 should cause even more rapid growth over the next year, as income is moved forward as much as possible to avoid the later tax increases. That is the yardstick by which to measure this recovery. So far, it appears to be running well below that.
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It won’t take long for conservatives to scratch this presidential wannabe off their 2008 scorecard.
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