Obama's "Recovery" Worst in Modern Times
July 8, 2011
The evidence that President Obama’s economic policies have failed continues to mount.
The unemployment rate notched up to 9.2 percent in June. The Bureau of Labor Statistics reported that the labor force fell by more than a quarter of a million workers, dropping the labor force participation rate to 64.1 percent - the lowest rate of labor force participation in nearly 30 years.
While no one expected our economic problems to be solved “overnight,” there was the reasonable expectation that our bounce back from the downturn that began in 2007 would proceed along the lines of previous recoveries after recessions. History tells us that today, more than three years after the recession began, things should be getting better. But they aren’t.
Every economic statistic, from the housing market to economic growth to employment, indicates a struggling, depressed economy—not one on the rebound.
Take unemployment. In the 28 months since the signing of an $814 billion “stimulus” bill—which White House economists claimed would prevent unemployment from reaching even 8 percent—the unemployment rate has remained stubbornly above 9 percent, and 4.2 percent higher than it was at the beginning of the recession. That compares to an average increase of only 1.1 percent in past recessions.
Even more worrisome, at the same point in past recoveries total employment had grown by 3.9 percent; in the Obama “recovery” total employment has fallen more than 5 percent. Instead of getting back to work, Americans are dropping out of the workforce.
Or look at housing. Despite unprecedented amounts of federal spending and a host of tax credits aimed at reviving the faltering housing market, the bust continues. In the estimation of most analysts, the real estate market collapse was the primary driver of the downturn, and most believe that a moderate recovery in home prices is a prerequisite for a sustainable recovery.
Yet foreclosures remain extremely high, and a record 28 percent of homeowners are now underwater on their mortgages. The median single-family home price has declined 15.5 percent since the start of the recession; over the same period in previous recessions, the average home price increased 24.1 percent.
If we turn our eyes to economic growth, we see the same story. In the first quarter of 2011, the economy grew at an anemic 1.9 percent. Since the recession began, real GDP has risen by less than 1 percent, compared to an average increase of 9.9 percent after past recessions.
Simply put, the approach of the Obama administration to get this economy on its feet again has been a patent failure. All the money spent trying to “stimulate” the economy has turned out to be counter-productive, sucking resources and capital out of the private sector and pouring them down the black hole of the federal government, while reducing individuals’ and businesses’ spending and hiring out of fear over rising debt and taxes.
This is unquestionably the worst recovery in modern times. Still, the President continues to push for policies like tax increases that will further weaken our economy. The better approach to raising revenue is to grow our economy, not by raising taxes on America’s job creators.
Along with 20 of my colleagues, I have proposed the “Cut, Cap, and Balance” Act, legislation aimed at growing our economy by reigning in government spending. The bill would reduce total spending next year by $142 Billion, set caps on spending over the next decade, and require Congress to pass a balanced budget amendment before it can raise the debt ceiling. Reducing our annual deficit and national debt will accomplish at least two things to help get our economy back on track: (1) decrease the “dead weight loss” of tax receipts as interest payments swallow an increasing larger share of total budget outlays and (2) lessen the “crowding-out” of private investment by large amounts of federal spending.
It is past time to turn the page on the failed Keynesian approaches of this administration and reverse course. If we make a concerted effort to deal with the deficit by getting government spending under control once and for all, the American economy will come roaring back, as it always has in the past.