Now that we’re on the brink of a Great Depression, we must look to Reagan for answers.
The extended stagnation of the American economy is starting to look more and more like a depression. Obama is on track to put the Great in that Depression with what he has already enacted into law for 2013, unless the American people reverse course next year.
At no point in the last 70 years, going back to the Great Depression, has the American economy suffered unemployment this high for this long, or such extended stagnation without a rebound or recovery. The American economy simply does not lie flat on its back for years and years like this, except during a time of depression. Even in the 1970s, the economy persistently rebounded after four worsening recession cycles.
According to the historical record in America, deeper downturns yield stronger recoveries. Based on this precedent, America should be in the second year of a booming recovery by now. So what’s the holdup?
The Failure of Keynesian Economics
President Obama had the chance to guide America to at least a typical recovery. But his retrograde Keynesian, neo-socialist policies have prevented any real recovery at all.
Last Friday’s unemployment report showed that 3 ½ years after the last recession started, still virtually no new jobs were being created, and unemployment was persistently rising again. Since the Great Depression, recessions in America have lasted an average of 10 months, with the longest previously being 16 months. But in June, 42 months after the last recession began, unemployment rose again to 9.2%.
The Depression has already arrived for African-Americans, with unemployment at 16.2% persisting for two years now. The same is true for Hispanics, with long-term double-digit unemployment persisting at 11.6%.
A pitiful 18,000 jobs were supposedly created in June, in a nation of 300 million people. But it’s worse than that. 54,000 jobs supposedly created in May, but then that figure was revised downward to 25,000. Without that revision for May, Friday’s labor report would have shown a decline of 26,000 jobs last month, as reported by John Crudele in the New York Post on July 9. Crudele adds that the June labor report includes an estimated 131,000 jobs that were supposedly created by companies that can’t be identified, which will probably be removed as well in subsequent labor reports.
The total army of the unemployed in June comprised 14.1 million Americans, including 6.3 million who have been unemployed for 27 weeks or more — more than half a year. Not counted as unemployed were another 8.6 million working part time “because their hours had been cut back or because they were unable to find a full time job,” as the Bureau of Labor Statistics (BLS) reports. Also not counted were another 2.7 million deemed “marginally attached to the labor force.” The BLS explains that these individuals “wanted and were available for work, and had looked for a job sometime in the prior 12 months.” But, “They were not counted as unemployed because they had not searched for work in the 4 weeks preceding the survey.”
That makes a total of 25.4 million Americans unemployed or underemployed. Counting them, the real unemployment rate climbed to 16.2% in June, as reported by the BLS. Moreover, the June labor report showed even nominal wages starting to decline, and with the reappearance of even the underreported inflation, that means that the real wages of American workers are decisively falling.
President Obama and the Democrats persist in their wildly confused and erroneous theory that economic growth is created by increased government spending and deficits. If that were true, the American economy would be enjoying its greatest boom in history right now, with a 28% increase in federal spending and more than $4 trillion in deficits since 2008.
Yet, on July 1, the White House released a report that tried to tell us that the nearly $1 trillion “stimulus” bill passed in February 2009 “saved or created” up to 3.8 million jobs. But with more than 25 million Americans unemployed or underemployed, and real wages for the rest of us declining, the undocumented fabrication of supposedly “saved” jobs is dishonorable political propaganda. Jobs remain over 7 million below their peak 3 ½ years ago with almost 2 million lost since the “stimulus” corruption was passed.
Indeed, economist John Lott demonstrated that this White House claim is a fairy tale in the New York Post on July 8. He notes how the economies of both the United States and Canada moved in lockstep during the financial crisis, with unemployment at 6.1% in both countries in August 2008, and rising to around 8 percent in February 2009, when President Obama’s Keynesian trillion dollar stimulus bill was passed. U.S. unemployment then continued to shoot up to over 10%, and stayed above 9.5% for almost another year and a half, lately resuming its upward rise. But in Canada, unemployment peaked at 8.7% in September 2009, and has fallen since to 7.4% today, behaving more like the American economy used to, before Obama’s neo-socialist hope and change.
That is because instead of relying on Keynesian government spending, deficits and debt, Canada adopted instead the Reaganite supply-side economics of cutting tax rates and reducing regulatory cost burdens. While President Obama has maintained America’s corporate tax rate at nearly 40% counting state corporate rates, and gleefully proposes still more tax increases on American business, Canada cut their corporate rate to 16.5% this year, scheduled to fall to 15% next year. Lott reports, “By last year, Canada had the lowest overall tax rate on business investment of any major industrialized country.”
Under Obama’s outdated Keynesian economics, federal debt as a percent of GDP is projected to almost double from 2008 to 2012, from 48% to 81%. Canada’s debt by contrast will rise only from 22.4% to 35.8% due to the downturn, less than half Obama’s. Lott concludes, “Blaming President Bush, as Obama has, just doesn’t explain why our economy got worse relative to other countries — after the current president’s policies were adopted.”
A man of faith in a godless age is hitting Americans where it hurts.
Mr. and Mrs. American Spectator Reader, let P.J. O’Rourke talk sense to your kids.
In Britain, defending your property can get you life.
The debacle of this president’s administration is both a cause and a symptom of the decline of American values. Unless Congress impeaches him, that decline will go on unchecked. An eminent jurist surveys the damage and assesses the chances for the recovery of our culture.
It won’t take long for conservatives to scratch this presidential wannabe off their 2008 scorecard.
The American Christmas, like the songs that celebrate it, makes room for everybody under the rainbow. Is that why so many people seem to be hostile to it?
Was the President done in by the economy, or by the politics of the economy?