Greetings from the Left Coast!
Another of the most annoying lies of this election season is the one about how poor President Obama can't get things fixed because of the evil, obstructionist Republicans. It's as though the first two years of his Presidency never took place - you know, those two years when the Democrats had a majority in the House, and a filibuster-proof supermajority in the Senate, and the Republicans were completely powerless to stop anything. We talked about that just yesterday. It's how we got the stimulus bill that didn't stimulate, because the shovel-ready jobs turned out not to be as shovel-ready as we'd thought, and the 2,700 page health care bill that we had to pass so we could find out what was in it.
Since the Republicans took back the House in the 2010 election, they've at least passed a budget bill. The Democrat-controlled Senate refuses to even debate the House budget bill while also refusing to pass one of it's own. We haven't had an actual federal budget since 2009. We've just been kicking the can down the road by passing a series of "continuing resolutions" that simply agree to keep funding everything at its current level for a few more months...hence the unending string of trillion-dollar deficits. The last two budget proposals President Obama sent up the Hill failed to get even a single vote from anyone in his own party.
The only good thing about that is that at least spending hasn't continued to grow astronomically as it would have if his budget proposals had been approved. So remember that when you hear the spin about how federal spending has been flat over the last three years under President Obama. It isn't for lack of trying on his part - it's because the Democrats in Congress are too irresponsible to actually pass a budget bill, and too afraid to go on record as supporting the level of spending that they'd really like to have. They'd rather blame the Republicans and hope that we're too stupid to figure out what's really going on.
If President Obama is looking for someone to blame, all he needs to do is invite Nancy Pelosi and Harry Reid over for breakfast, then pull up a fourth chair and prop up a mirror in it.
Wednesday, September 12, 2012
Tuesday, September 11, 2012
How Long Can You Get Away with Blaming Bush?
Greetings from the Left Coast!
My rant of the day is against those purveyors of revisionist history that are maintaining that four years simply aren't enough for poor President Obama to clean up the gigantic mess that George Bush left behind.
Please. That doesn't fly with those of us who lived through it and were paying attention. For the benefit of those of you who didn't, or perhaps did but weren't paying attention (maybe you were just too young), here are the facts.
The economy is cyclical. Recessions come around every now and then, regardless of which party holds the Oval Office, and nobody has figured out yet how to stop them from happening. But what government does in response to them certainly can effect their severity and how long it takes to recover from them.
The economy was already in decline when George Bush took office in January of 2001. Before the end of the year, he was dealing with the double-whammy of the dot-bomb bubble burst and the aftermath of 9/11. Instead of whining about the horrible situation he had inherited from the Clinton administration, he took decisive action: he cut taxes. In response, by the beginning of 2002, the economy was growing again, and continued to grow through most of the rest of his term. Between 2001 and 2005, annual GDP growth averaged 2.8%. The number of jobs grew by an average of 6.5%. Median income increased. Average salaries increased. According to a report released by the U.S. Congress Joint Economic Committee, the U.S. outperformed its "peer group of large developed economies" (Canada, the European Union, and Japan) over that period - it led in real GDP growth, investment, industrial production, employment, labor productivity, and price stability. All while we were fighting wars in Afghanistan and Iraq. The budget deficit peaked at $600 billion in 2004, and was on its way back down...until the Democrats took control of both Houses of Congress in the 2006 elections. They took office in 2007, passed the 2008 budget, and, for the first time in history (but, unfortunately, not the last) we ran a deficit in excess of $1 trillion. The fact is that most of Bush's years in the White House were pretty good years economically. When he left office, the average price for a gallon of regular gas was $1.79. I don't know about you, but I'd love to see that again.
I think that most of us understand that the late-2008/early-2009 recession was largely the result of the bursting of the housing bubble - and specifically, the collapse of the sub-prime mortgage market, which took a lot of financial institutions down with it. Many will argue that this was Bush's fault, since it happened "on his watch." But I believe that the historians of the future will spread the blame more widely...and there is plenty to go around. Democrats had a very large role in fueling the growth of sub-prime mortgages by strong-arming lending institutions to make loans to low-income borrowers in the name of fairness and economic justice - low-income borrowers who, it turned out, were not capable of making their payments. The Congressional record is clear that the Republicans wanted more oversight of Fannie Mae and Freddie Mac. The hearings were filmed by C-SPAN, and are out there on YouTube for the world to see...as Democrat after Democrat expressed shock and outrage that anyone would imply that there was anything wrong with those fine institutions, particularly Fannie Mae under the direction of that outstanding leader Franklin Raines. That would be the Franklin Raines who ultimately took "early retirement" because the SEC was investigating accounting irregularities, which ultimately led to the filing of charges against him for cooking the books and overstating earnings by roughly $3 billion, helping him collect $20 million in compensation the last year he served as CEO. I'm still amazed that he and his two co-defendents aren't wearing orange jumpsuits.
But, be that as it may, the housing bubble burst, and the economy went off the cliff. That part certainly wasn't Obama's fault. But the cold truth is that pretty much nothing he has done since then has made things better. For the first two years of his Presidency, he could have done nearly anything. His party had a majority in the House, and a filibuster-proof "supermajority" in the Senate, rendering the Republicans completely powerless. But let us not forget the words of Rahm Emanuel: "You never want a serious crisis to go to waste. And what I mean by that is an opportunity to do things you think you could not do before." So we got a stimulus bill that was primarily a giveaway to the Democrats' union supporters - particularly public employees' unions - and large contributors (see "Solyndra") and that, as a result, didn't stimulate; and we got ObamaCare, which 2/3 of the country does not want, and which is suppressing job creation because employers don't know what the heck is coming at them next. We got more regulations, more government intrusion into our lives, and a virtual shutdown of the oil industry along the Gulf Coast. Yes, I know that the spinmeisters will point out that oil production is up these days, but that's because of increased production on private land, not public land. Production is up in spite of Obama's policies, not because of them, although he's still trying to take credit for it.
Unemployment is still above 8%, more than three years after the statistical "end" of the recession. And, if we had the same labor force participation rate today that we had when Obama took office, the unemployment rate would be over 11%. The only thing that's keeping it this low is the number of people who have given up looking for work and dropped out of the labor force (the labor force participation rate for men is now the lowest ever recorded). In August, the U6 unemployment rate, which includes people who would like to work but have given up looking, and those who are only working part time, but would like to work full time, was 14.7%. Median income has fallen during Obama's Presidency. Prices have soared. Businesses are afraid to invest. He will be, in all probability, the only President since the Great Depression to see fewer total Americans working at the end of his first term than were working when he took office.
Reagan arguably inherited a worse mess than Obama. Unemployment was higher when he took office, and inflation was running at over 10% per year. Yet by the third quarter of 1983, GDP was growing at an annualized rate of over 8%, and twice as many jobs were being created as are being created today - which had an even greater impact back then because the labor force was smaller. The average GDP growth during Reagan's 4th year in office was 7.75%. Where are we now? Oh, yeah, still struggling to break 2%.
The biggest problem is that Obama is an idealogue. He is philosophically incapable of changing course, which is why, in every speech he gives, he keeps trying to double down on the same policies that aren't working. Which, if I recall, is pretty close to Einstein's definition of insanity: continuing to do the same thing and expecting different results. If he somehow wins re-election, you can look forward to four more years of the same kind of economic stagnation, ballooning national debt, and growth in both the size of government and its intrusion in our lives as we've seen in the last four years. And I will get absolutely no pleasure out of saying I told you so.
My rant of the day is against those purveyors of revisionist history that are maintaining that four years simply aren't enough for poor President Obama to clean up the gigantic mess that George Bush left behind.
Please. That doesn't fly with those of us who lived through it and were paying attention. For the benefit of those of you who didn't, or perhaps did but weren't paying attention (maybe you were just too young), here are the facts.
The economy is cyclical. Recessions come around every now and then, regardless of which party holds the Oval Office, and nobody has figured out yet how to stop them from happening. But what government does in response to them certainly can effect their severity and how long it takes to recover from them.
The economy was already in decline when George Bush took office in January of 2001. Before the end of the year, he was dealing with the double-whammy of the dot-bomb bubble burst and the aftermath of 9/11. Instead of whining about the horrible situation he had inherited from the Clinton administration, he took decisive action: he cut taxes. In response, by the beginning of 2002, the economy was growing again, and continued to grow through most of the rest of his term. Between 2001 and 2005, annual GDP growth averaged 2.8%. The number of jobs grew by an average of 6.5%. Median income increased. Average salaries increased. According to a report released by the U.S. Congress Joint Economic Committee, the U.S. outperformed its "peer group of large developed economies" (Canada, the European Union, and Japan) over that period - it led in real GDP growth, investment, industrial production, employment, labor productivity, and price stability. All while we were fighting wars in Afghanistan and Iraq. The budget deficit peaked at $600 billion in 2004, and was on its way back down...until the Democrats took control of both Houses of Congress in the 2006 elections. They took office in 2007, passed the 2008 budget, and, for the first time in history (but, unfortunately, not the last) we ran a deficit in excess of $1 trillion. The fact is that most of Bush's years in the White House were pretty good years economically. When he left office, the average price for a gallon of regular gas was $1.79. I don't know about you, but I'd love to see that again.
I think that most of us understand that the late-2008/early-2009 recession was largely the result of the bursting of the housing bubble - and specifically, the collapse of the sub-prime mortgage market, which took a lot of financial institutions down with it. Many will argue that this was Bush's fault, since it happened "on his watch." But I believe that the historians of the future will spread the blame more widely...and there is plenty to go around. Democrats had a very large role in fueling the growth of sub-prime mortgages by strong-arming lending institutions to make loans to low-income borrowers in the name of fairness and economic justice - low-income borrowers who, it turned out, were not capable of making their payments. The Congressional record is clear that the Republicans wanted more oversight of Fannie Mae and Freddie Mac. The hearings were filmed by C-SPAN, and are out there on YouTube for the world to see...as Democrat after Democrat expressed shock and outrage that anyone would imply that there was anything wrong with those fine institutions, particularly Fannie Mae under the direction of that outstanding leader Franklin Raines. That would be the Franklin Raines who ultimately took "early retirement" because the SEC was investigating accounting irregularities, which ultimately led to the filing of charges against him for cooking the books and overstating earnings by roughly $3 billion, helping him collect $20 million in compensation the last year he served as CEO. I'm still amazed that he and his two co-defendents aren't wearing orange jumpsuits.
But, be that as it may, the housing bubble burst, and the economy went off the cliff. That part certainly wasn't Obama's fault. But the cold truth is that pretty much nothing he has done since then has made things better. For the first two years of his Presidency, he could have done nearly anything. His party had a majority in the House, and a filibuster-proof "supermajority" in the Senate, rendering the Republicans completely powerless. But let us not forget the words of Rahm Emanuel: "You never want a serious crisis to go to waste. And what I mean by that is an opportunity to do things you think you could not do before." So we got a stimulus bill that was primarily a giveaway to the Democrats' union supporters - particularly public employees' unions - and large contributors (see "Solyndra") and that, as a result, didn't stimulate; and we got ObamaCare, which 2/3 of the country does not want, and which is suppressing job creation because employers don't know what the heck is coming at them next. We got more regulations, more government intrusion into our lives, and a virtual shutdown of the oil industry along the Gulf Coast. Yes, I know that the spinmeisters will point out that oil production is up these days, but that's because of increased production on private land, not public land. Production is up in spite of Obama's policies, not because of them, although he's still trying to take credit for it.
Unemployment is still above 8%, more than three years after the statistical "end" of the recession. And, if we had the same labor force participation rate today that we had when Obama took office, the unemployment rate would be over 11%. The only thing that's keeping it this low is the number of people who have given up looking for work and dropped out of the labor force (the labor force participation rate for men is now the lowest ever recorded). In August, the U6 unemployment rate, which includes people who would like to work but have given up looking, and those who are only working part time, but would like to work full time, was 14.7%. Median income has fallen during Obama's Presidency. Prices have soared. Businesses are afraid to invest. He will be, in all probability, the only President since the Great Depression to see fewer total Americans working at the end of his first term than were working when he took office.
Reagan arguably inherited a worse mess than Obama. Unemployment was higher when he took office, and inflation was running at over 10% per year. Yet by the third quarter of 1983, GDP was growing at an annualized rate of over 8%, and twice as many jobs were being created as are being created today - which had an even greater impact back then because the labor force was smaller. The average GDP growth during Reagan's 4th year in office was 7.75%. Where are we now? Oh, yeah, still struggling to break 2%.
The biggest problem is that Obama is an idealogue. He is philosophically incapable of changing course, which is why, in every speech he gives, he keeps trying to double down on the same policies that aren't working. Which, if I recall, is pretty close to Einstein's definition of insanity: continuing to do the same thing and expecting different results. If he somehow wins re-election, you can look forward to four more years of the same kind of economic stagnation, ballooning national debt, and growth in both the size of government and its intrusion in our lives as we've seen in the last four years. And I will get absolutely no pleasure out of saying I told you so.
Friday, September 7, 2012
August Jobs Numbers Are Out
The August jobs numbers are out, and it's not a pretty picture. Only 96,000 jobs were created, which was (surprise!) "lower than expected." Four times that many people gave up on finding a job and dropped out of the work force - which lowered the U3 unemployment number from 8.3% to 8.1%. (As we've discussed before, the U3 unemployment number, which is the one that's always reported, only counts people who are actively looking for work.) The labor force participation rate - that's the percentage of the working age population that is either working or looking for a job - is now 63.4%, the lowest it's been since 1981. For men, it's 69.8%, which is the lowest EVER on record.
According to the "Jobs Gap" calculator at http://www.hamiltonproject.org/jobs_gap - which calculates the amount of time it will take to return to pre-recession employment levels while also absorbing the people who enter the labor force each month, at that rate of job creation, the Jobs Gap won't be closed until sometime after 2025. To put that in perspective, five years after the start of the last three recessions ('82, '90, and '01), private sector employment levels were well above their pre-recession levels.
We need to be creating jobs at the average rate of about 325,000/month to close the gap in the next four years - but, over the last 30 months, we've only created an average of 157,000/month. (Feel free to click through to the calculator, and play with the numbers. You can enter any number greater than 88,000 and it will tell you how long it will take at that rate to close the jobs gap.)
But, hey, the good news for the President is that if enough additional people give up looking for work and drop out of the labor force, the reported U3 rate might actually be under 8% by election day!
According to the "Jobs Gap" calculator at http://www.hamiltonproject.org/jobs_gap - which calculates the amount of time it will take to return to pre-recession employment levels while also absorbing the people who enter the labor force each month, at that rate of job creation, the Jobs Gap won't be closed until sometime after 2025. To put that in perspective, five years after the start of the last three recessions ('82, '90, and '01), private sector employment levels were well above their pre-recession levels.
We need to be creating jobs at the average rate of about 325,000/month to close the gap in the next four years - but, over the last 30 months, we've only created an average of 157,000/month. (Feel free to click through to the calculator, and play with the numbers. You can enter any number greater than 88,000 and it will tell you how long it will take at that rate to close the jobs gap.)
But, hey, the good news for the President is that if enough additional people give up looking for work and drop out of the labor force, the reported U3 rate might actually be under 8% by election day!
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