The Ongoing Disgrace That Is Obamanomics
This column by ACRU General Counsel and Senior Fellow for the Carleson Center for Public Policy (CCPP) Peter Ferrara was published June 7, 2012 on Forbes.com.
President Obama has led America into an accelerating downward spiral. Destination: Argentina. Last Friday’s calamitous jobs report was just a signpost on the way.
Argentina enjoyed the world’s fourth highest per capita GDP in 1929, on par with the U.S. at the time. But then the nation lost its way through its embrace of a leftist, union allied government, which took control of the economy and imposed wildly irresponsible taxes, spending, deficits and debt. After World War II, the hugely popular Juan Peron came to power and institutionalized the madness. It has been all downhill for Argentina ever since. Sound familiar?
Today, Argentina ranks 53rd in the world in per capita GDP according to the International Monetary Fund, 57th in the CIA World Factbook, at a level less than one third that of the U.S. But its national debt at 51% of GDP is actually less than that of the United States under the Obama Administration, where we are rocketing towards 70% of GDP by the end of this year, and 200% in 25 years, according to CBO.
Friday’s jobs report shows Obama’s Juan Peron trend. While a measly 69,000 jobs were created in May, the report adjusted downward the jobs created in March and April by 49,000, leaving actually only 20,000 new jobs on net. The number of jobs created has declined every month this year.
While Obama and his propagandists claim 27 consecutive months of job growth, employment growth is the norm and not the exception for the American economy. In the 62 years from the end of World War II in 1945 until 2008, jobs grew in 86% of the months, or 640 out of 744. But Obama and his propagandists think you are too stupid to know the country you live in. They know at least their MSNBC base will believe them.
Reagan’s recovery produced job growth in 81 out of its first 82 months, with 20 million new jobs created in those first 7 years alone, increasing the civilian work force at the time by 20%. That grew into 50 million new jobs over the entire Reagan 25-year boom from 1982 to 2007. Compare that to the disgrace of Obamanomics. While Obama likes to claim 4.3 million new jobs created, total jobs by May, 2012 were still over half a million less than in January, 2009 when he entered office. Even George Bush oversaw 52 consecutive months of job growth, including 8 million new jobs created after his 2003 capital gains and dividends tax rate cuts became effective (which Obama is dedicated to reversing).
Besides the 12.7 million Americans still unemployed last month, another 8.1 million were employed part-time for economic reasons. The Bureau of Labor Statistics (BLS) says, “These individuals were working part-time because their hours had been cut back or because they were unable to find a full-time job.” The BLS further reports that another 2.4 million persons were marginally attached to the labor force, up from 2.2 million a year earlier.” (Further downward spiral). The BLS explains, “These individuals were not in the labor force, wanted and were available for work, and had looked for a job sometime in the prior 12 months. They were not counted as unemployed because they had not searched for work in the prior 4 weeks….” (emphasis added).
That makes over 23 million Americans still in the army of the unemployed or underemployed. Consequently, not only did the headline unemployment rate rise last month to 8.2%, the total U6 unemployment rate including the unemployed and underemployed jumped to nearly 15%.
All this 53 months after the last recession started, and 35 months after the recession supposedly ended in June, 2009. By contrast, since the Great Depression, and before this last recession, recessions in America have lasted an average of 10 months, with the longest previously lasting 16 months. Obama continues to barnstorm the country telling us “Right now, this country is still fighting our way back from the worst economic crisis since the Great Depression.” But the historical record is the deeper the recession, the stronger the recovery. Based on that American experience, we should be in the third year of a booming recovery by now. But Obama thinks you have no idea of the American experience.
What Obama has instead delivered is way too little, way too late. The unemployment picture is so bad because the economy is still not really growing, 3 years after the recession supposedly ended, and 4 &frac1/2; years after it began. Real economic growth for all of last year was a measly 1.7%. The first quarter of this year was just revised back downward to 1.9%. By contrast, by just the second full year of the Reagan recovery, the economy boomed with real economic growth of nearly 7%, the highest in 50 years.
Because of Obama’s continued stagnation, the number of long term unemployed for more than 6 months also rose in May from 5.1 million to 5.4 million. They now represent 42% of the unemployed, the highest since the Great Depression. Obama barnstorming the nation continues to mislead audiences by saying, “manufacturing is hiring at its fastest pace since the 1990s.” But the BLS reported last Friday that manufacturing jobs increased by all of 12,000 in May, after increasing by all of 9,000 in April, none of which is even worth mentioning. The truth is you can’t believe a word of what the man says, because he thinks you are as disconnected from the real world as he is, and so can be easily deceived.
Job growth under Obama has been the slowest of any recovery since the Great Depression. As a result, only 58% of the civilian working age population is working, the lowest since the late 1970s. Investors Business Daily reports that the rate of new business start-ups, historically the source of most new jobs, has plunged to an all time low of 7.87% of all businesses. These are the reasons why over half of recent college graduates under 25 are jobless or underemployed, and 3 in 10 young adults can’t find jobs and live with their parents, the highest since the 1950s. Obama’s campaign slogan is “Forward,” but under his misleadership America is hurtling backward to the past, like Argentina under Peron.
Unemployment for African Americans under Obama has been well into depression level double digits for his entire term, remaining today still at 13.6%. Black teenagers continue to suffer depression unemployment at 37%. Hispanics too have suffered long term double digit unemployment under Obama, still stuck at 11% in May.
But we know Obama loves the poor, because his policies are creating so many of them. Census reports that almost 1 in 6 Americans is poor, higher than when the War on Poverty started in 1965, with 49.1 million Americans suffering poverty, the highest in the 51 years that Census has been tracking poverty. The 45 million Americans on food stamps is also an all-time record. Hispanic poverty at 28.2% is higher than African-American poverty at 25.4% for the first time ever. Yet with this poverty and unemployment record, Obama tells Hispanics they should be voting for 4 more years of him.
An all time record of 47% of Americans are now government dependents receiving some form of government benefits. Yet virtually half of all Americans (49.5%) pay no income tax. Census reports the national home ownership rate at 65.4% is the lowest in 15 years. African American home-ownership under Obama has fallen 30 percentage points below white home ownership, the biggest difference in 20 years, and one of the biggest on record.
This sorry record is the disgrace of Obamanomics. But the greater disgrace is that Obama came into office pretending not to know anything about the spectacular success of the new supply side economics since Reagan adopted it in 1981. Instead he went all the way back to the failed Keynesian economics of the 1970s that Reagan and all other thinking people left for dead when it managed to create both double digit unemployment and double digit inflation at the same time.
Keynesian economics is the doctrine invented in the 1930s, holding that what drives economic recovery and growth is increased government spending, deficits and debt. If you have been listening to Obama the past 3 ½ years this will sound familiar. And if it sounds nuts, that’s because it is. Borrowing a trillion dollars out of the economy, as Obama did with his stimulus, to spend a trillion dollars back into the economy, does nothing to advance the economy on net.
This is why there has been no real recovery from the recession under Obama. He should have known that would be the result, since Keynesian economics is not only illogical, but has never worked, in the US during the depression and since, or anywhere else in the world. But Obama’s foolish pursuit of Keynesian policies is why federal spending under his Administration has been the highest since World War II, as documented by CBO and Obama’s own budgets. It is why, Investors Business Daily also reports, federal spending excluding defense and interest is the highest in American history at 17.6% of the economy. And it is why federal deficits and debt have hit all time records under Obama as well. These have been Obama’s deliberate policies, a community organizer’s vision of how to create economic recovery, growth and prosperity.
But what drives economic recovery and growth is not government spending, deficits and debt, but incentives for productive activities, like savings, investment, expanding businesses, starting new businesses, job creation and entrepreneurship. Those incentives come from reduced tax rates (not tax credits and deductions), reduced regulatory costs and barriers, and stable, sound money. These are the policies of the new supply side economics of Reaganomics, which achieved the supposed impossible in solving double digit inflation and double digit unemployment at the same time.
Obama should have known that as well. But instead he has play acted the role of Rip Van Winkle, going back to the Keynesian economics of 1970s as if nothing has happened since. This is why he should not even be running for reelection, let alone drawing any support after this gross public policy malpractice.
But he is the beneficiary of the rise of the New Irrationalism vibrant in the New Left Democrat Party, as featured on MSNBC. That New Irrationalism empowers its followers to deny established facts, to accuse anyone who professes the facts of lying for money, and to denounce anyone who disagrees with them as immoral and corrupt.
Fortunately, that New Irrationalism infects only a modest minority of the American people. America is not Argentina. The American people are not going to follow Obama’s American version of Juan Peron, and vote for the decline and fall of America. What is happening instead is the revival of the real America, which this year will vote for vast Reagan Republican majorities, and a new age of American politics, which will complete the Reagan revolution.