We are four years into the worst recession I’ve ever experienced and two and one-half years deep into the most confused administration in my lifetime. Stagflation is now setting in to further compound the misery index (I remember it well). The economic malaise that bedeviled President Jimmy Carter and all but drove him from office (together with the Iran hostage crisis) appears to be back. The combination of anemic economic growth and rising inflation appears to have settled over the nation like a giant wet blanket, damping consumer spending and keeping the housing market in the toilet. Consumer spending this year is down and the forecast for 2011-12 is not optimistic. The housing market continues to sink with a forecast for new home starts this year of only 582,000. That is a decline of 70% since the high of 2 million starts just six years ago.
Following last year’s record (3.8 million) for foreclosures, 2011 is looking to set a record yet again. While it may be a buyers’ market out there, there are fewer buyers to snap up the good deals because they are struggling to sell their existing homes. It all amounts to a vicious circle in anybody’s book.
What about unemployment? The most obvious and painful indicator of our torpid economy has to be the on-going and seemingly immovable, unemployment number. Currently at 9.1 percent, we all know it is likely higher than that. In addition, there are those who’ve fallen off the rolls after collecting their 99 weeks of unemployment benefits. There are those who have taken minimum wage jobs at McDonald’s or Starbucks and are seriously under-employed. I’ve been there and done that and, while all legal work has dignity, it doesn’t necessarily pay the bills or provide for one’s normal lifestyle.
And just how has the administration focused laser-like and so vigorously attacked this problem? Well, there was the massive stimulus packages that did not provide the shovel-ready jobs the President promised, and thus, stimulated nothing but communal ire, giving rise to the Tea Party movement. Bank and auto company bailouts may have slowed the recession and saved GM jobs, but these also saw the government injecting its influence into new and different corners of the economy. Fannie Mae and Freddie Mac? They helped fuel the housing market collapse and yet, they continue to operate, costing taxpayers dearly. They are now under government control and underwriting almost 90% of the mortgages in the country. Scary thought, isn’t it? Does this mean bigger government is lurking in the shadows?
Of course it is! The misleadingly-named Patient Protection and Affordable Care Act mandates coverage for all by the government. If you refuse to buy their coverage, they’ll fine, er, tax, er, incentivize you to buy it. One way or another, whether you want it or not, you will be covered. Waivers galore have been doled out, based on criteria known only to HHS and the President apparently (oh, and San Fran Nan, too). This legislation represents one of the largest-ever government usurpations of the free market, and by most estimates, will do nothing to bring down the cost of healthcare, while adding tremendously to the deficit and imposing new costs on companies and individuals. Why else would so many companies be seeking waivers if it were such an affordable, effective and efficient program? The org chart for this monstrosity reads like a wiring diagram for the space shuttle and the only jobs it will add will be public sector jobs at significant expense to the taxpayers. This law is headed to the Supreme Court where, hopefully, they’ll determine that the government does not hold sway over an individual’s inaction and that people cannot be forced by the government to buy something provided by the government. The only good Obamacare is the one Congress repeals or the Supreme Court rules as unconstitutional.
The much-touted green jobs revolution has morphed into tedious evolution with natural selection weeding out the weak. At least three green energy firms visited by the President and given subsidies to operate and grow have closed their doors. While we as a nation must continue to exploit renewable energy sources and technologies, it cannot be done at the expense of carbon-based fuels. It must not be a zero-sum game. We need all kinds of energy and energy development, but we need more oil for the foreseeable future. Most everything we use for power and transport burns oil, gas or coal. Abandoning oil and coal, or penalizing their use, will not make renewable energy more viable, particularly in the short run. The necessity is that we must exploit our wealth of carbon-based resources at the same time that we develop renewable energy resources and generate viable markets for them.
Then there’s the President’s shrinking economic team. The exodus began with Larry Summers and he was followed by Christina Romer and most recently, Austan Goolsbee. And now, the word is that Geithner wants to leave as soon as the debt ceiling issue is resolved? Back to academia for them, where real world economics is simply another theoretical construct to be toyed with, along with that Keynesian stuff. Why hasn’t Obama appointed any experienced business leaders to his economic team? Where are his economic leaders who have hired and fired people, managed to increase profit and reduce loss, and tried to satisfy shareholder demands? The answer – there are none on his staff; it’s just a conglomeration of academicians and theoreticians.
Put all this together and the question of where are the jobs? is easy to answer for most all of us out here. Yet the White House seems utterly confounded and confused by the consistently dismal unemployment numbers and the slowdown in growth (not that it was ever blazing along). Why? Because pointy-headed academics can’t grasp the human factor in all of this and that human factor has to do with trust and credibility. The simple answer is that businesses aren’t growing and they’re not hiring because they don’t trust this administration, they don’t believe this President, and they don’t trust his policies. In the face of government interference in commerce, increased regulation, onerous, profit-squashing legislation like Obamacare, businesses large and small cannot afford to take risks on hiring or investing in new equipment when they don’t know what to expect next.
The President has presented a decidedly unfriendly face to the business community and that is where job growth originates, contrary to government claims. When business leaders have no trust or confidence in the President’s economic and tax policy, they will play it safe. Risk and innovation end up as second and third priorities to survival. They are what made this country an engine of economic prosperity, but this administration penalizes risk and innovation as it seeks and assumes greater control in the private sector. If you need further evidence, look no further than the NLRB’s blockage of Boeing’s new South Carolina plant.
The unfortunate news is that this administration is what it is and one cannot expect it to change. Government as the answer is what they believe; we have to hope that the Republican House might block any future growth-stifling legislation (income tax increases, Cap and Trade) to prevent the further shrinkage of the consumer dollar and the continued decline of private industry. If the President wins re-election, however, the recovery might be on permanent hold.
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