‘Hope And Change’ Means Punishingly Slow Growth for Obama’s Biggest Supporters
This column by ACRU General Counsel Peter Ferrara was published September 13, 2013 on Forbes.com.
Steve Moore of the Wall Street Journal explained President Obama’s 2012 reelection in the September 4 edition as follows: “Mr. Obama was reelected with 51% of the vote….He cleaned up with 60% of the youth vote, 67% of single women, 93% of blacks, 71% of Hispanics, and 64% of those without a high school diploma, according to exit polls.”
But it is precisely these groups that President Obama’s economic policies have punished the most. The latest data on incomes shows that since the end of the recession in June, 2009 incomes for black heads of households have plunged by 10.9%. Incomes for those under age 25 have plummeted by 9.6%. Incomes for workers with a high school diploma or less have dived by 8%. Single women have suffered an income decline of 7%. Incomes for Hispanic heads of households have declined by 4.5%.
Incomes are expected to decline during a recession. But the whole point of a recovery is that incomes of workers reverse course and begin to rise with renewed economic growth. As in the Reagan recovery starting late in 1982, which reversed a decline in real median incomes of 10% from 1978 to 1982. Real per capita disposable income boomed by 18% from 1982 to 1989, meaning the American standard of living increased by almost 20%, in just 7 years.
But after more than 4 years of the alleged Obama recovery, incomes for blacks, Hispanics, single women, young workers, and less educated, lower income workers have continued to drop sharply. Incomes for the middle class, which Obama has touted as the “North Star” of his economic policies, have also declined continuously throughout Obama’s misnamed ‘recovery.’
Moore explains, “This is a stunning reversal of the progress for these groups during the expansions of the 1980s and 1990s….Census data reveal that from 1981-2008, the biggest income gains were for black women, 81%; followed by white women, 67%; followed by black men, 31%….” For women overall, real median weekly incomes rose 32.1% in Reagan’s first term, compared to 6.6% in Obama’s first term.
Similarly, for unemployment, last month the unemployment rate for blacks was still 13%, more than four years into the supposed Obama recovery! The Hispanic unemployment rate was still stuck at 9.3%. Those with less than a high school diploma, still in double digits at 11.3%. Employment of women rose by 4,460,000 in Reagan’s first term, while women suffered a net loss of 354,000 jobs during Obama’s first term. Conversely, the number of women not in the work force rose by 4,458,000 in Obama’s first term, compared to 345,000 in Reagan’s first term.
More than 3 times as many jobs were created for African-American women in Reagan’s first term, compared to Obama’s first term, even though the population was much larger in Obama’s first term. Jobs for African American women rose by 15.1% in Reagan’s first term, compared to 2.6% in Obama’s first term.
One of the first things Senator Obama and his Democrats did when they took over Congress in 2007 was raise the minimum wage. Then they did it again as soon as Obama was elected President, completing a 40% increase. As a result, the teenage unemployment rate was still 24.5% in May of this year, almost 4 years into the recovery. Last month, the black teenage unemployment rate was 38.2%! The available Hispanic teenage unemployment rate7mdash;28.4% (not seasonally adjusted).
Teenage female African Americans employed fell by 19.1% in Obama’s first term, compared to a decline of just 1.5% in Reagan’s first term. The unemployment rate for teenage female African-Americans rose by 5.7 percentage points in Obama’s first term, compared to just 1.1 percentage points in Reagan’s first term.
Moreover, despite Obama’s rhetoric, real incomes for the poor have been declining steadily while he has been President as well. That is why the poverty rate has increased every year that he has been President, from 12% in 2008 to 16.1% today, higher than when the War on Poverty started in the 1960s. That represents an increase in the poverty rate under President Obama of more than one third! The Census Bureau reported more Americans in poverty under President Obama, at 50 million, than ever before in the more than 50 years that Census has been tracking poverty.
Reagan’s recovery, again by sharp contrast, reversed an increase in the poverty rate of one-third that began in 1978 under President Carter, with the poverty rate declining every year of Reagan’s recovery while he was President, falling by one-sixth from its peak.
Indeed, under President Obama, only the incomes of the top 20% have been rising, with the recovering stock market and healthy corporate profits. The incomes of the bottom 80% have been falling consistently under Obama’s perverse, consistently anti-growth economic policies. Consequently, what President Obama has done is reestablish precisely the rich getting richer and the poor getting poorer. We need a neo-Marxist President for that?
The Reagan boom starting in 1982 continued to rocket for 25 years, all the way to 2007, which Art Laffer and Steve Moore have rightly called “the greatest period of wealth creation in the history of the planet.” Only two short, shallow recessions troubled the economy during that entire time, and even establishment economists, including the National Bureau of Economic Research, consider it one long boom. As George Washington University Professor Henry R. Nau summarized in the Wall Street Journal on January 26, 2012,
“the U.S. grew by more than 3% per year [in real terms] from 1980 to 2007, and created more than 50 million new jobs, massively expanding a middle class of working women, African-Americans and legal as well as illegal immigrants. Per capita income increased by 65%, and household income went up substantially in all income categories.” (emphasis added).
What Obama gave us, by sharp contrast, is the worst recovery from a recession since the Great Depression. That is because Obama inexplicably went back to the discredited Keynesian economics of the 1930s to 1970s, which is the failed doctrine that what restores economic growth and recovery is increased federal spending, deficits and debt, and runaway creation of fiat money by the Fed. By the time the Reagan Revolution was swept into office in 1980, that demonstrably illogical doctrine had given us simultaneous double digit inflation and double digit unemployment.
Reagan explicitly scrapped that old, outdated, Keynesian economics for the more modern supply side economics of the 1980s, which is what produced the historic, generation long, Reagan 25 year boom. That supply side economics has since swept the world, leading to the explosion of new middle classes in formerly third world economies from Brazil to India to even formerly communist China and Russia, and elsewhere.
Reagan’s new, modern, supply side economics involved exactly the opposite of every one of Obama’s economic policies—lower tax rates, instead of Obama’s higher tax rates across the board; liberating, cost reducing, deregulation, instead of Obama’s burdensome economic barriers of costly overregulation (see, e.g., Keystone Pipeline, War on Coal, Obamacare, minimum wage); restrained federal spending, instead of Obama’s runaway, first term, Keynesian “stimulus” spending; and restrained stable dollar monetary policy, instead of runaway Fed Quantitative Easing, which is only laying the ground work for trashing the dollar.
That is why Obama has gotten the opposite of the economic results of Reagan. And that is why last month’s unemployment report showed still no real economic recovery. While 169,000 new jobs were supposedly created last month, that was accompanied by downward revisions of 74,000 jobs during the prior two months. Fewer Americans (115,000 fewer) were employed in August as compared to July. That is some “recovery.”
The reported decline in the unemployment rate was only because still another 312,000 left the work force last month. That makes a total of nearly 10 million who have fled the work force since Obama became President. Without that continued work force decline, the unemployment rate last month would have increased to 7.5%. Counting those stuck in part-time jobs who want full time work, and those who have become discouraged and given up looking for work, the unemployment rate would be 13.7%.
The labor force participation rate last month of 63.2% is now the lowest since 1978, 35 years ago, before the modern influx of women into the work force during the Reagan boom in the 1980s and 1990s. The August labor force participation for men at 69.5% is the lowest on record.
These results represent Obama’s ongoing fundamental transformation of America, from an historic, world leading, economic and military superpower, to a third world banana republic like Argentina.