When it comes to the economy, presidents, like quarterbacks, often get more credit or blame than they deserve. They inherit problems and policies that affect the economy well into their presidencies and beyond. Reagan inherited Carter’s stagflation, George H.W. Bush twin financial crises (savings & loan and Third World debt), and their fixes certainly benefitted the Clinton economy.
President Obama inherited a deep recession and financial crisis resulting from problems that had been building for years. Those responsible include borrowers and lenders on Wall Street and Main Street, the Federal Reserve, regulatory agencies, ratings agencies, presidents and Congress.
Mr. Obama’s successor will inherit his deficits and debt (i.e., pressure for higher taxes), inflation and dollar decline. But fairly or not, historians document what occurred on your watch and how you dealt with your in-box. Nearly three years since his election and more than two years since the economic recovery began, Mr. Obama has enacted myriad policies at great expense to American taxpayers and amid political rancor. An interim evaluation is in order.
And there’s plenty to evaluate:
an $825 billion stimulus package; the Public-Private Investment Partnership to buy toxic assets from the banks; “cash for clunkers”; the home-buyers credit; record spending and budget deficits and exploding debt; the auto bailouts; five versions of foreclosure relief; numerous lifelines to Fannie Mae and Freddie Mac; financial regulation and health-care reform; energy subsidies, mandates and moratoria; and constant demands for higher tax rates on “the rich” and businesses.
No sooner had President Barack Obama shocked the political world with a gloomy economic forecast — projecting 9.1 percent unemployment for this year and a re-election-killing 9 percent for 2012 — than the dismal August jobs report arrived showing no gain in non-farm payrolls. That’s right, no gain at all. Private jobs increased a scant 17,000, while hours worked and wages actually declined. Obama’s economic policies have failed.
Are we on the front end of yet another recession? This report alone suggests that we could be, although other data points disagree. But on the eve of President Obama’s so-called jobs speech, there’s a much bigger question here: Has the U.S. entered into long-term economic decline?
As a quintessential optimist who believes in American exceptionalism, I don’t even want to raise this issue. But the data tell me that I must.
For example, over the past 10 years, the U.S. has actually lost jobs on a net basis. In August 2001, non-farm payrolls calculated by the Bureau of Labor Statistics stood at 132 million. Through August 2011, payrolls stand at 131.1 million.
In fits and starts, a 4 percent unemployment rate has moved up to some kind of permanent 9 percent plateau. Following the Bush tax cuts of 2003, 8 million new jobs were created. But in the aftermath of the financial meltdown, those jobs have disappeared. The so-called Obama recovery over the past two years has made no dent in this gloomy picture.
And through this whole period, our economy has barely grown at a sub-par 1.6 percent yearly rate for real gross domestic product.
Meanwhile, the stock market — perhaps the best measure of our wealth and well-being — has been essentially flat for the past decade. And while the free enterprise private sector has barely muddled along, the government has grown fat. (more…)
The Obama administration repeats mistakes of the past by intimidating banks into lending to minority borrowers at below-market rates in the name of combatting discrimination.
Talk about not learning from past mistakes: A government department is again intimidating banks into lending to minority borrowers at below-market rates, all in the name of combating “discrimination.” Welcome to the next housing mess.
The 1990s may have brought us supercharged politicized lending, but Eric Holder’s Department of Justice is taking the game to an entirely new level, and then some. The weapon is a “fair lending” unit created in early 2010, led by special counsel Eric Halperin and overseen by Civil Rights Division head Thomas Perez.
A sampling of Mr. Perez’s thinking, from April 2010 congressional testimony: “The foreclosure crisis has touched virtually every community in this country, but it disproportionately touches communities of color, in particular African-Americans and Latinos.” And: “[C]ross burnings are the most overt form of discrimination and bigotry. Lending discrimination is some of the most subtle. It’s what I call discrimination with a smile.”
Even for the Obama administration’s antidiscrimination cops, this is a shocker: A political appointee who’s supposed to neutrally enforce the law loosely equates bankers with Klu Klux Klan thugs. But let’s move from what may be Mr. Perez’s personal bias, and focus on the broader brush strokes of the Justice Department—which seem designed to paint bankers into a corner. (more…)
The arc of the Obama presidency bends towards failure.
Peter Wehner
August 29, 2011, Vol. 16, No. 46
Now more than halfway through his third year in office—with the economy flat-lining, American prestige evaporating, and public anxiety spiking—Barack Obama is the most vulnerable incumbent president since Jimmy Carter. The election is still 14 months away, but it’s not too early to see the broad outlines of the GOP’s case against the president.
Economic Malpractice:Obama inherited a tough economy, but his stewardship has in many respects made the situation worse.
The unemployment rate stands at 9.1 percent (it was 7.8 percent the month Obama took office). July marked the 30th consecutive month in which the unemployment rate was above the 8 percent level that the Obama administration said it would not exceed as a result of its stimulus program. Chronic unemployment is worse than during the Great Depression, while the share of the eligible population holding a job (58.1 percent) has declined to the lowest level since the early 1980s.
The housing crisis is also worse than in the Great Depression. Home values are worth roughly one-third less than they were five years ago. Consumer confidence has plunged to the lowest level since the Carter presidency. And from the first quarter of 2010 through the first quarter of 2011, we experienced five consecutive quarters of slow growth. America’s GDP for the second quarter of this year was an anemic 1.3 percent; in the first quarter, it was 0.4 percent. Even more problematic for the president, there are virtually no signs that things will improve anytime soon. He now has to hope for an economic miracle. (more…)
“Tell me again why Barack Obama has been such a bad president?” Jonathan Alter writes in his column.
Alter tells us he’s not talking here about Obama as a tactician and communicator, and he’s not interested in hearing ad hominem attacks or about people’s generalized “disappointment.” (Neither am I.) He wants to know on a substantive basis why Obama should be judged to have failed so far.
In Alter’s words, “Your mission, Jim [or anyone else for that matter], should you decide to accept it, is to be specific and rational, not vague and visceral.”
Consider the mission accepted.
In one sense, the answer to the Alter challenge is obvious: Obama has failed by his own standards. It’s the Obama administration, not the RNC, that said if his stimulus package was passed unemployment would not exceed 8 percent. It’s Obama who joked there weren’t as many “shovel-ready” jobs as he thought.
It’s Obama who promised to cut the deficit in half. It’s Obama who said if we passed the Patient Protection and Affordable Care Act, the health care cost curve would go down rather than up. It’s Obama who promised us recovery and prosperity, hope and change. What we’ve gotten instead is the opposite. (more…)
Financial markets are in turmoil, investors are fleeing to safe havens, and the chances of another recession are rising. This would seem to be a moment when government should be especially careful to do no harm, to talk and walk softly, and to reassure business that Washington wants more private investment and hiring.
But this is not how our current government behaves. Day after day brings headlines of another legislative, regulatory or enforcement action that gives CEOs and investors reason to hunker down, retain as much cash as possible and ride out whatever storms are ahead. This is not the way to nurture an already fragile recovery, much less help the economy to endure shocks from Europe, natural disasters or a big bank failure.
Consider the headlines only from last week, a slow week by Washington standards, with Congress out of session and President Obama campaigning for three days before going on vacation. Even in the dog days of August, your government was hard at work undermining economic confidence.
• Monday: “Warren Buffett right about taxes, says Obama.” The week began with a one-two tax punch from Warren Buffett and President Obama. The Omaha stock-picker wrote an op-ed begging Congress to raise taxes on millions of Americans who make less than he does, and the President used the first stop of his bus tour, in Cannon Falls, Minnesota, to agree.
“I put a deal before the Speaker of the House, John Boehner, that would have solved this problem,” Mr. Obama said, “and he walked away because his belief was we can’t ask anything of millionaires and billionaires and big corporations in order to close our deficit.” So America’s main job creators are still on notice that a tax increase is in their future in 2013, if not sooner.
• Tuesday: “Federal mortgage role to be preserved: Obama is working to develop new housing policy.” A Washington Post story reported that Mr. Obama has directed a White House team to develop a housing plan that would keep the feds deeply involved in mortgage markets, with subsidies and loan guarantees, perhaps even preserving Fannie Mae and Freddie Mac. (more…)
Small wonder the Chinese news agency was on gloat mode during the week of Aug. 8. The U.S. stock market fell off a cliff, bounced briefly, and then fell again. The Federal Reserve admitted the economy is close to stalling. And in China? Oh, just the usual. Exports surging to record heights, that sort of thing.
At first sight, recent events have exemplified the great shift from West to East that is the biggest story of our time. Even before the odds of a “double-dip recession” shot upward, the International Monetary Fund was forecasting that China’s gross domestic product would overtake that of the United States by 2016. And as everyone knows, China is now America’s biggest foreign creditor.
And yet, in several weeks of traveling through China, I’ve found myself wondering if Beijing is tempting fate by so openly relishing America’s current misfortunes. Apart from a few days in Beijing, I’ve eschewed the favorite destinations of Western visitors. I’ve been to Yanan, where Mao established his grip on the Communist Party in the 1930s, and where people in outlying villages still literally live in caves. I’ve been to Xian, to see the burial place of Qin Shi Huang, the first emperor, who hammered China into a single Middle Kingdom more than two millennia ago.
I’ve sweltered in Chongqing, the exponentially growing mega-city far up the Yangtze. I’ve choked on the dust of Changsha in Hunan province. And I’ve stifled in the muggy air of Hefei in Anhui.
Women walk past a Louis Vuitton store in downtown Beijing., Alexander F. Yuan / AP
President Obama has directed a small team of advisers to develop a proposal that would keep the government playing a major role in the nation’s mortgage market, extending a federal loan subsidy for most home buyers, according to people familiar with the matter.
The decision follows the advice of his senior economic and housing advisers, who favor maintaining the government’s role as an insurer of mortgages for most borrowers. The approach could even preserve Fannie Mae and Freddie Mac, the mortgage finance giants owned by the government, although under different names and with significant new constraints, said people knowledgeable about the discussions.
A decision to preserve a major government role would mark a big milestone in the effort to craft a new housing policy from the wreckage of the mortgage meltdown and could mean a larger part for Fannie and Freddie than administration officials had signaled. (more…)
By Charles Krauthammer – Washington Post Writers Group
Published in: Other Views
August 6, 2011
WASHINGTON Conventional wisdom holds that the congressional super-committee established by the debt-ceiling deal to propose further deficit reduction will go nowhere. I’m not so sure. There is a grand compromise to be had. It does, however, require precise sequencing. To succeed it must proceed in three stages:
1 Tax Reform. True tax reform that removes loopholes while lowering tax rates is the Holy Grail of social policy. It appeals equally to left and right because, almost uniquely, it promotes both economic efficiency and fairness. Economic efficiency – because it removes tax dodges that distort capital flows (and thereby diminish productivity) while cutting marginal tax rates (thereby spurring growth). Fairness – because a corrupted tax code with myriad breaks grants deeply unfair advantage to the rich who buy the lobbyists who create the loopholes and buy the lawyers who exploit them.
Which is why the 1986 Reagan-Bradley tax reform was such a historic success. It satisfied left and right, promoted efficiency and fairness, and helped launch two decades of almost uninterrupted economic expansion.
But didn’t that agreement take years to hammer out? Yes. Today, however, the elements are already laid out by the Simpson-Bowles commission. The super-committee doesn’t have to reinvent the wheel. It simply has to make choices.
REAL CLEAR POLITICS
