Watching politicians give speeches, such as Obama’s State of the Union address, is an occupational hazard when you work at a think tank.
Which is why, in the past, I’ve heartily recommended the State-of-the-Union Bingo game developed
by Americans for Tax Reform.
But I was in New York City for a television program about the President’s address, so I had to pretend I was an adult and pay attention to the speech.
That being said, the silver lining to that dark cloud is that the folks at U.S. News and World Report gave me an opportunity to add my two cents to an online debate on whether the President was correct to assert that the state of the union is strong.
In my contribution, I combined some dismal economic indicators and bad policy developments to argue that America could – and should – be doing much better.
Here are the bullet points from my article.
- Economic growth has been anemic. Normally there are several years of above-average growth after a recession. These post-recession booms are very important since they help people recover lost income. But there’s been no boom during the supposed Obama recovery. We haven’t even climbed back up to the long-run average of 3 percent growth.
- When the economy suffers from slow growth, it hurts the living standards of ordinary people. Probably the most damning statistic is that median household income has declined every year that Obama has been in the White House.
- Another very grim piece of data is that America’s labor force participation rate has dropped to the lowest level in decades. Yes, it’s good news that the official unemployment rate has fallen, but it would be much better if it fell because of strong job creation instead of people giving up on finding work.
- Since we’re talking about the unemployment rate, it’s worth noting that the jobless rate only started falling after the so-called stimulus ended and the burden of government spending began to decline. In other words, the good news was in spite of the president’s policies.
- And since we mentioned government spending, let’s debunk one of the president’s big claims. He bragged about a falling deficit
(not that a $400 billion-plus deficit is anything to brag about), but red ink has only declined because of policies that the president opposed, such as sequestration.
- In his speech, Obama talked about the importance of making American more competitive, yet he wants to extract more money from the U.S. business sector even though we already have the world’s highest corporate tax rate. He also wants to boost the capital gains tax rate, which will be bad news for job-creating investment.
- One reason for all these dismal numbers is that there’s been a dramatic increase in rules, regulations and red tape from Washington. That’s not good for economic dynamism, particularly since a growing regulatory burden imposes a disproportionate burden on small businesses.
By the way, I need to make one correction. I didn’t realize the 2013 data on median household income had been released, and it turns out that there was a slight increase that year. So while the average household is more than $2000 poorer than when Obama took office, it’s not true that there’s been a decline every single year.
But that goof notwithstanding, I think my concluding remarks are spot on.
The bottom line is that the State of the Union is not strong. We’re suffering from anemic growth and income stagnation because of an ever-rising burden of taxes, spending and regulation. Yes, the president was right when he noted that we’ve created more jobs than Europe and Japan, but that’s hardly a big achievement since those nations have traveled even further in the wrong direction with statist policies.
In other words, what matters most, in terms of prosperity, is our long-run growth rate. And this is where Obama’s policies (like Bush’s policies) have hurt the country.
P.S. If you agree with my analysis, feel free to vote in the online debate and give me an “up arrow.” If you disagree with what I wrote, by contrast, I’m sure you have more important things to do than casting a vote.
P.P.S. I realize I’m being pedantic, but the two cartoons included in this post may be amusing, but they should have focused on the underlying disease of too much spending (particularly the problem of entitlement programs) rather than highlighting the symptom of red ink.
[…] I goofed last week when I wrote that median household income fell every year under Obama, and I repeated that mistake […]
[…] I goofed last week when I wrote that median household income fell every year under Obama, and I repeated that mistake […]
sure it’s propaganda…. what isn’t?
“It’s Barack Obama’s Cloud Cuckoo-Land and We Just Live In It”
by Michael Walsh
http://pjmedia.com/michaelwalsh/2015/01/23/obamas-cloud-cuckoo-land/
[…] Reposted from International Liberty […]
And this: http://www.gallup.com/businessjournal/180431/american-entrepreneurship-dead-alive.aspx
Not only is the state of the Union not strong, but there’s little potential in the pipeline.
We are very far from “lazy people dying in the streets” in America.
The American middle class was in the world’s top 10% and has now fallen to the top 12%, or so, and they are trying to claw back the lost 2% through ephemeral redistribution and the ever bigger state and regulation needed to accomplish such redistribution.
The problem is that the reason they fell 2%, in the first place, is all the effort-reward flattening coercive collectivism that they supported in the last decade or so.
Hence the vicious cycle of decline has been entered for American voter-lemmings. The more they decline, the more systemically demotivating redistribution and statism they ask for.
Although life in America (as in virtually every other nation in the world) will be better for the next generation ( yes even in France and Greece, in absolute terms) it is highly unlikely that Americans will maintain their privileged relative prosperity ranking in the world.
Why? Because Americans gave up what made this country exceptional in the first place: a culture of personal independence and self reliance. Or to put it in no uncertain terms: A culture where the intelligent, competent, or simply harder working kept the fruits of their labor while the less productive were not insulated from the consequences of mediocrity. It was that much vilified culture that propelled the American middle class into the world’s top 5 and 10%.
But Americans seem to have changed their mind. There is little hope from this vantage point that Americans will avoid decline. Historical data shows that every single European nation that got to the point America is today, eventually completed its transition into welfare state, with its structural 1-2% annual growth trendline, in a world that is growing by 4% on average. That is the elementary arithmetic definition if decline. This European journey towards the demotivating sub-par growth flatter effort-reward welfare state was travelled by every European country independently, more or less; before the creation of the European Union which enforced more uniformity and more decline.
There is little reason to believe that Americans will be the odd statistical sample to escape this fate. Those who bet that it will not happen may indeed escape. But more likely than not, they will get screwed.
To give you an indication of how definitive American decline is, just think: Silicon Valley votes 76% for statist Democrats, ie. the smartest people in America want to Europeanize. These are the wholesale resellers of ideology to the rest of the nation. It’s over folks. This is the era where the last of the old money is created before the demotivating curtain of welfare, taxes and entrenched cronyism drops and permanently separates the privileged from the common folk. Just as in Europe. It is time to steal the wallets if the middle class with solar panels and other naive boondoggles and jump off the sinking titanic. But don’t wait too long or the exit chutes will likely become jammed. Amongst the typical fractal behavior of the economy, the masses are still unable discern the new norm of slower American growth. A structural growth trendline that is trailing world growth by a full two, perhaps even three percentage points annually. The growth trendline of Euro-style decline.
I find your critique spot on. And while I loathe any policy or process by which a person’s property (money) is taken (stolen) without direct consent and given to a less deserving person, project, agency or government, entitlements (encouragement to not be self-reliant nor productive) are but a small part of that huge deficit and the criminal negligent fiscal policy employed in D.C. Tho’ like you, I still abhor them. Lazy people dying the streets would not bother me.
All the States are right on board with the same abuses of their citizenry. See Illinois, the next Federal bailout ($100B+). And Californicate [sic] right behind ILL, with debt in the trillions. As sub-corporations of the fed.gov, taxpayers will have to pay.
The three Midwestern states in which I have lived most recently all have excessively high property taxes (with expensive, poor results, socialist schools) to the extent that a home owner pays for his home twice in 40 years (not counting mortgage fees which is another three times in full): once to buy the place and once in taxes. And if the owner lives into her 80’s, more than half again. (2+3+.5= 5.5 times) Why work? We can all live in Fema palaces!!!
Taxes paid on a private home should never exceed 10% of its market value in totum. State politicians are just as asinine as those in Washington. ©2015
[…] WAIT, THERE’S MORE… […]
You wrote: “By the way, I need to make one correction. I didn’t realize the 2013 data on median household income had been released, and it turns out that there was a slight increase that year. So while the average household is more than $2000 poorer than when Obama took office, it’s not true that there’s been a decline every single year.”
If the actual increase in median household income was less than what we budgeted for, then the so-called increase is actually still a decrease, if we measure median household income using a baseline budgeting approach.
[…] By Dan Mitchell […]