I’m not a big fan of Obamanomics. We’re going through the weakest recovery since the Great Depression. Income and wages have been stagnant, particularly when compared to previous expansions. And while the unemployment rate has finally come down, that’s in part a consequence of people dropping out of the labor force.
The net result is that our nation’s output is far lower than it would be if economic performance had simply matched the average for previous business cycles. And that translates into foregone income for American households.
Yet the President seems to think that he deserves applause for his economic legacy. Here are some excerpts from an AP story in the Oregonian.
President Barack Obama is not shy about defining his achievements and casting them in the most positive light…on Monday Obama offered a rare glimpse at how he wants history to judge his presidency, letting the “L” word cross his lips as he touted the U.S. economic recovery… “Obviously there are things that I’ve been proud of,” he said. He first cited the economic crisis he faced upon assuming office in 2009. “It was hard, but we ended up avoiding a terrible depression,” he said.
You won’t be surprised to learn that I have a different perspective. I was on CNN earlier this week and expressed my disappointment with the President’s policies and their impact on the nation.
To be fair, I’m focusing in the interview on the strength (or lack thereof) of the recovery. Obama, by contrast, wants credit for the fact that the 2008 recession didn’t turn into a depression.
Needless to say, there aren’t alternative universes where we can see what would have happened if Obama didn’t get to the White House. And it probably wouldn’t matter even if there were alternative universes since neither McCain nor Romney had a substantially different vision anyhow.
But here’s why I think it’s absurd for Obama to take credit for avoiding a depression. Simply stated, it takes a lot of mistakes, on a sustained basis, to produce a depression.
And that’s precisely what we got from Presidents Hoover and Roosevelt. Thanks to protectionist policies, higher tax rates, a bigger burden of government spending, and massive intervention in markets, a normal downturn was magnified and extended to last an entire decade.
So I suppose we could give Obama credit for not being as bad as Hoover and Roosevelt, but that’s an extreme case of damning with faint praise. And even faint praise is probably unwarranted since Obama wanted more statism and was stopped by the 2010 election.
The bottom line is that Obama wants people – based on zero evidence – to believe a depression would have occurred naturally in the absence of his policies.
The more realistic assessment is that Obama’s policies have been a net negative for the economy. But as I remarked in the interview, I’m not making a partisan argument. Bush’s policies also were a net negative.
By comparison, you can look at Reagan and Clinton for examples of Presidents who increased economic freedom during their reigns.
P.S. Since today’s topic is the economy, here’s a grim reminder of one of the reasons why growth has been relatively anemic.
The folks at Mercatus have put together a pictograph on the regulatory burden.
Something to keep in mind when considering the degree to which red tape is constraining growth and entrepreneurship.
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@Robert Lukitsch – You are correct that spending is the correct measure of the size of government, not current taxes.
Looking back at spending as a % of GDP:
– Spending has come down under Obama from 24.4% in Bush’s last budget year to 20.3% of GDP in FY 2014;
– Spending went up under Bush (43);
– Spending went down under Clinton, from 20.7% in Bush (41’s) last budget year to 17.6% in Clinton’s last budget year.;
– Under Bush (41), he inherited a budget at 20.5% in Reagan’s last budget year, increased it to 21.2% in FY 1990, 21.7% in FY 1991, before decreasing to 21.5% in FY 1992 and 20.7% in FY 1993.
– Under Reagan, we set post WW II records for spending as a % of GDP in his first two budget years ( 22.5% in FY 1982 and 22.8% in FY 1983), not stopping this Keynesian fiscal stimulus until we had fully recovered from the recession of 1981-1982. Spending declined declined a little the next couple of years and finally dipped below 21% in his last two budget years (FY’s 1988 and 1989).
– Under Carter, Spending declined his first three budget years, but increased and set a then post WW II high in FY 1981 (21.1%).
Two takeaways:
1. If you want spending to decrease, elect a Democratic president; and
2. In practice, Reagan was more of a Keynesian than Obama when confronted with a big recession.
Good to see people making the non-partisan argument for economic policy choices. I have been comparing Reagan and Clinton for some time now and linking Bush (43) with Obama as a big government Keynesian. It makes things a lot easier if you don’t have to try and make the case that Bush was a (failed) supply sider – he was no such thing:
Spending = Taxes (current + deferred)
All Bush did was cut current revenues and vastly increase deferred taxation (and increase regulation). There’s nothing “supply side” about that…
If you have been a member of the investor class (a.k.a. top 10% American household) since March 9, 2009, then you and your portfolio have both done remarkably well under Barack Obama and his policies.
Moreover, had you either the courage or the insider information needed to invest in the Obamacare health insurance industry (e.g. Humana, AETNA, United, Cigna, or WellPoint) during this same period, then you would have quadrupled your money. Let that sink in for a bit. A $100K investment in Obamacare back then is now worth over $400K today.
While the rubes, Nimrods, and village idiots were yelleing at one another over their increasing premiums & deductables, their co-pays and what doctors that they would or would not be able to keep; the Obama investor class were raking in some serious profits. Whoo Hoo!
So God bless America, Barack Obama, Obamacare, and of course, crony capitalism too…ehh? Everyone ususally gets what they deserve, only some get it harder than others.
Reblogged this on a political idealist..
” … a consequence of people dropping out of the labor force …”
No one has any idea how pervasive this drop out rate really is. It is much greater than the high estimates published. The understated percentage is equal to or exceeds the purposely deceptive and false percentage reported by the fed.gov; nothing the fed.gov says is believable and is based deception and falsehoods.
The CFR graphic is excellent. However, if an average 100 Americans were polled, I doubt more than two could tell what CFR stands for nor what its purpose is. The bigger it grows the closer to Maoism the US is.
©2015
Reblogged this on rennydiokno.com.
Obama’s economics is envy, force and theft. Only holds back people and the economy.