Five years on and President Obama still refuses to assume responsibility for his woeful economic record. The buck stops with Republicans, other countries, changes in the weather, etc.—anywhere but the Oval Office. Of course, it’s not new having a chief executive who refuses to admit failure. What is rare is having a news media that does not hold the President accountable.
So let’s establish the record. At 2.2 percent annual growth, we are now witnessing the slowest economic recovery in generations. Even the Council on Foreign Relations says “the economic expansion following the 2008 recession has been the weakest of the post-World War II era.” This is true across a number of fronts: economic growth, housing prices, industrial production and capacity, etc.
Liberals cry that what we need is more government overspending, which without a trace of irony they call “stimulus.” In other words, they want us to ignore the fact that this Administration and the Federal Reserve have spent more on government-based economic “stimulus” than any other in America’s history, and with little to show.
Just this week, a former Federal Reserve officer admitted that this Administration’s big-government control of the economy has been an abject failure. Andrew Huszar, now of Rutgers Business School, wrote in The Wall Street Journal that “the Fed may have created and spent over $4 trillion for a total return of as little as 0.25% of GDP (i.e., a mere $40 billion bump in U.S. economic output). Both of those estimates indicate that QE [quantitative easing] isn’t really working.”
Remember shovel-ready? Crony-ready is more apt. Obama’s massive stimulus spending plan early in his Administration funneled money out of the real economy, where jobs are created among small businesses. Instead, his Administration gave multimillion-dollar projects to the politically connected, from labor unions to unproven green energy firms like Solyndra.
Predictably, this boondoggle did almost nothing to grow the economy or create permanent new jobs.
The reason nothing has worked is that President Obama’s and the liberal progressive movement’s belief in government-centric economic policies is antithetical to economic rationality. The recent miserable economic record is the result of an accumulation of these misguided liberal policies. Our own Federal Reserve, in its October 16 Beige Book, mentions Obamacare no fewer than 10 times. As Heritage’s James Sherk wrote last month about these reports from the Fed’s regional banks, “Several Districts reported that contacts were cautious to expand payrolls, citing uncertainty surrounding the implementation of the Affordable Care Act and fiscal policy more generally…each time, the districts report it has hurt employers, increased costs and/or depressed hiring.”
The same with Dodd-Frank, which effectively dried up small business credit. Tens of thousands of other new regulations flowing from this Administration every year have strangled economic growth and discouraged investment. Our James Gattuso and Diane Katz wrote last year that Obama-era regulations “are not just a problem for entrepreneurs. American workers and their families have been hit hard by the persistent lack of job creation that results, in part, from regulatory excesses.”
Obama and his media surrogates are trying to change the subject and divert attention from the primary causes of America’s economic woes: Obamacare, stifling regulations, and high taxes. Liberal journalists like Neil Irwin of The Washington Post place much of the blame for the dismal economic report on the sequester, writing, “The sequestration policy of automatic spending cuts that went into effect in March really are having an effect.”
We have to answer the spin. Citing research by Grover M. Hermann Fellow Romina Boccia, our analysts Sherk and Salim Furth point out that while the sequester did reduce the federal budget by $85 billion in 2013, Obama siphoned $150 billion out of the real economy this year with increased payroll taxes, income taxes, and taxes on savings and investment. Harvard economist Alberto Alesina and IMF researchers Jaime Guajardo, Daniel Leigh, and Andrea Pescatori have explained that tax increases have “a much more harmful effect on the economy than spending reductions.” Tax increases are rapidly and permanently harmful, while spending reductions can lead to higher growth over time.
The stubborn refusal of this liberal Administration to admit the obvious is hurting Americans and threatening the future of our country. Academic economists are nearly unanimous in warning against the damage that would be done by higher taxes, but Obama ploughs ahead heedlessly. Obamacare is another central planning disaster, yet the President and his allies were more willing to shut down the government than to accept a delay in the implementation of a law that has been unfairly enforced and proven to be completely unworkable. In contrast, conservatives have commonsense solutions to reform our health care system in a way that empowers patients and doctors, makes care more affordable, and improves our economy.
Liberal policies have weakened the economy with regulations and tax increases, and their champions are now demanding even more tax increases before considering any reductions in government spending.
The President expects us to believe that small and short-lived cuts in spending and a temporary government slowdown have caused all of our economic problems. Unfortunately, too many in the media have joined him. It’s time for the buck to stop where it should.