Economic Reality vs. Obama's Economic Fantasy
With the first month of the year 2016 behind us, expectations of economic growth remain one of the top concerns for voters in this year’s election cycle. Most presidential candidates have laid out their proposals for addressing the nation’s economic woes. Granted, the president of the United States doesn’t run the economy, but the ability to influence economic policy is a key characteristic of the presidency, and more often than not, a president’s success or failure is attributed to his ability to lead the nation in economic growth.
Economic growth has been scarce during the last seven years. Barack Obama may boast otherwise, but claims that aren’t backed up by evidence are completely meaningless. For starters, the advance report for U.S. Gross Domestic Product (GDP) — the value of everything a nation produces — shows that the economy expanded at a paltry 0.7% for the last quarter (Q4) of 2015. That is a significant drop from the 2% growth in the fall and 3.9% last spring.
Overall, the U.S. economy grew only 2.4% for 2015, which matches economic growth from 2014. Many factors contribute to the sluggish growth. In Q4 for instance, consumers spent less, mainly on higher ticket items such as cars; exports fell 2.5%; and businesses spent less on new equipment.
Yet some economists contend that the economy is healthy and well on its way to fully recovering. Consumers actually spent more money in 2015 than in each of the years of the previous decade, but this is likely attributed to the decline in oil prices and lower energy costs due to more favorable weather conditions overall.
However, the overall picture of the economy is abysmal when compared with economic growth in the decades following World War II. According to James Pethokoukis of the American Enterprise Institute, we have essentially suffered “a lost decade” — at least by American standards. From WWII until 2005, the U.S. economy grew at an average rate of 3.5%. That was the norm, but not in Obama’s America.
Growth over the last decade has yet to reach 3%, with the highest GDP growth being in 2006 at 2.7%. Recall that GDP growth for 2015 was just 2.4% overall. Forecasters from the Congressional Budget Office now claim that a 2% growth figure is now permanent.
Pethokoukis puts that in perspective: “It may not seem like such a big difference but it is. It’s the difference between having a $21 trillion economy in 2026 or a $23 trillion economy. (That $2 trillion difference, by the way, is the size of the entire Italian economy.) And that gap grows larger year after year, decade after decade. And with that growth gap come fewer jobs, lower incomes, and less opportunity.”
This is the economic reality we face. In addition to poor growth, there are additional indicators that the economy has not fully recovered and that we have a long way to go. Recall that back in December, the Federal Reserve raised interests rates for the first time in nine years under pressure that it was the time to do so because the economy had recovered. By all indications, that was a mistake.
The stock market — a barometer of economic confidence — has taken a hard hit, likely at least in part because of the rate hike. Yet there is talk that the Federal Reserve may raise rates again in the coming months. As noted by Investor’s Business Daily, “The Fed has been spectacularly wrong in recent years about its policy moves. Maybe it’s time it started listening to markets instead of dictating to them.”
Despite all of the evidence that our economy is weaker, not stronger, that our growth has remained stagnant, not expanded, and that there is enormous economic uncertainty among the American people, Obama refuses to acknowledge that his policies are largely to blame.
Instead, during his weekly address, he bragged, “I’ve never been more confident about our future.”
The Heritage Foundation notes in its 2016 Index of Economic Freedom that America’s economic freedom has declined rapidly during Obama’s tenure. When Obama took office, the U.S. ranked 6th in economic freedom in the world; now in 2016, we are ranked 11th.
The list below highlights several of the reasons. Since early 2009:
- Government spending has exploded, amounting to $29,867 per household in 2015.
- The national debt has risen to $125,000 for every tax-filing household in America — a total that just topped $19 trillion.
- The government takeover of health care is raising prices and disrupting markets.
- Bailouts and new government regulations have increased uncertainty, stifling investment and job creation.
The U.S also has the highest corporate tax rate in the developed world, which has resulted in companies moving overseas, fewer American jobs and lower wages. Further, the overall annual cost of meeting the regulatory requirements imposed on businesses by the Obama administration has risen astronomically since 2009.
As the 2016 presidential primaries are now underway, every voter needs to consider asking the following questions. Do we want to continue down Obama’s path of socialist policies that have resulted in economic ruin for America? If the answer is yes, then the choice is clear; Bernie Sanders or Hillary Clinton. Or do we want to halt the socialist policies of Obama and prevent the destruction of America’s economy? If that answer is yes, then the choice is equally clear; vote for the candidate that has the best understanding of our God-given rights, free-market principles and limited government, and who has a track record of lowering taxes and reducing regulations.