Commentary by James H. Shott
Although the technical criteria for judging recessions – which is two consecutive quarters of positive economic growth – means that the latest recession ended some months ago, other factors affecting the American people make it clear that the recession still rages.
President Barack Obama and his supporters in and out of the media like to call this the “Great Recession,” a rhetorical device eliciting visions of the 1930s that is designed to make the economic situation he inherited seem worse than it is. More than anything else, he seems to believe this will enable him to blame George W. Bush if his policies fail to turn things around, which they have.
In the interest of accuracy, however, let’s not forget that foolish government policies that began in the late 70s during the Carter administration laid the foundation and fertilized the seeds of the downturn that occurred near the end of Mr. Bush’s second term.
That said, President Obama’s campaign to shirk responsibility for today’s economic chaos is wearing thin. He has been in charge since January 20, 2009 – almost 30 months to the day – which is plenty of time to turn things around if his government had put sensible economic policies in place. Plainly, Mr. Obama and the Democrats who controlled both houses of Congress from 2007 through 2010 have not done the right things.
The numbers tell the story, and Merrill Matthews, writing for Human Events, provides the details for us, comparing prices when President Obama took office to prices today:
• Energy: Gasoline was $1.67 a gallon then. It's now $3.64.
• Food: Average cost of a gallon of milk was about $2.65. It's about $3.50 today.
• Housing: The median cost of a home was $229,600. Today it's $217,900.
• Budget deficit: We fell $438 billion short of balancing the federal budget in 2008. We missed it by $1.4 trillion this year—nearly four times higher.
• U.S. debt: Total federal debt was $10.7 trillion then. It's $14.5 trillion now—nearly 50 percent higher.
• Unemployment: Then, 7.3% of Americans were unemployed and 9.2% are unemployed today.
Two of the most serious and persistent problems facing the country are jobs and the debt, and the Obama administration has done nothing on either issue, except to make both worse.
For example, Mr. Matthews tells us: “to be fair, not everyone has done poorly under Obama. Federal government employees have made out like bandits. Mercatus Center (George Mason University) economist Veronique de Rugy noted last January that ‘federal employment has grown by 98,000 employees since the start of the recession.’"
Today, depending upon which report you select, 15 percent to 22 percent of American workers can’t find a job or can’t find a suitable job, or have simply quit looking for work. Since taking office, Mr. Obama’s government has managed to spend well over $1.4 trillion (that’s 1.4-thousand-billion dollars) more than it takes in each year, and it can’t pay all of its bills unless we borrow even more than the $14.3 trillion we have already borrowed.
In order to twist enough arms to get Congressional approval to borrow billions more dollars, Mr. Obama falsely tells us that the U.S. will default on its debts, senior citizens won’t get their Social Security checks, and military personnel won’t be paid, either. None of that is true, and the president knows it isn’t true. He is simply scaring people trying to gain support for his manic desire to borrow even more money.
The U.S. Treasury collects $180 billion on average each month, and that’s plenty of money to pay interest on the debt, which averages only about $20 billion. And that leaves enough to pay important obligations like principal due on bonds, military personnel, and Social Security and other similar things. So, if the U.S. defaults on interest payments or principal payments or military personnel paychecks or Social Security payments, etc., it will be because Barack Obama consciously chose not to pay them, not because the Treasury doesn’t have the money.
But he is correct when he says there’s not enough money in “the till” to pay all the bills, because all the bills add up to 43 percent more than the government collects in revenue; you can’t spend $100 if you only have $57. So, some hard choices have to be made, and making hard choices when that is required is what we elected the president, our representatives and senators to do.
Since all economic activity originates in the private sector, stimulating the private sector is the most important single factor in solving this problem. Make operating a business as easy and profitable as possible by having reasonable levels of taxation; through removing uncertainty by establishing operational stability that will last for several years into the future; and relaxing or removing cost-increasing regulations. Do those things and business activity will flourish, and jobs will be created.
New jobs produce new taxpayers and more people buying more things, and that increases the amount of taxes being paid to government. Greater employment also means that government pays out less money on unemployment payments. That is exactly what the country needs.
The president and his cohorts in Washington want to do essentially the opposite. They want to continue to punish business by leaving in place the barriers to their development, and to further stifle the economy by raising taxes on some people, like private jet owners and other wealthy Americans who have the most to contribute to the economy through their great purchasing power.
Barack Obama is the president of all Americans, not just those who share his leftist political perspective. In times like this, the president must lay aside his ideology and do what is right for the country.
Cross-posted from Observations