We argue all the time that Obama's high-tax, high-regulation, union-friendly policies have hurt the U.S. economy, but arguments about economic policy are tricky things. The other side will point to their own numbers. When they start talking about unemployment being down to 5.6 percent, they say they can't believe we're still criticizing Obama's policies. When they start talking about the deficit being down to $600 billion (!), they wonder what we think the problem is.
Arguing about the economy and really getting somewhere means you need to be able to show what it's doing, what it should be doing, and why certain policies are actually having good or bad effects. That's hard for economists to do, let alone the average lay person. And it really doesn't help when partisan pundits throw talking points around.
But there's a very useful column this morning by former U.S. Senator Phil Gramm that lays it out in a clear, easy-to-read fashion. Writing in the Wall Street Journal, Gramm compares the performance of the current recovery (since the recession ended in 2009) to previous recoveries, and demonstrates how specific Obama policies have led us to a much weaker performance than we could and should have experienced:
How bad is the Obama recovery? Compared with the average postwar recovery, the economy in the past six years has created 12.1 million fewer jobs and $6,175 less income on average for every man, woman and child in the country. Had this recovery been as strong as previous postwar recoveries, some 1.6 million more Americans would have been lifted out of poverty and middle-income families would have a stunning $11,629 more annual income. At the present rate of growth in per capita GDP, it will take another 31 years for this recovery to match the per capita income growth already achieved at this point in previous postwar recoveries.
When the recession ended, the Federal Reserve projected future real GDP growth would average between 3.8% and 5% in 2011-14. Based on America’s past economic resilience, these projections were well within the norm for a postwar recovery. Even though the economy never came close to those projections in 2011-13, the Fed continued to predict a strong recovery, projecting a 2014 growth rate in excess of 4%. Yet the economy underperformed for the sixth year in a row, growing at only 2.4%.
. . .
Marginal tax rates on ordinary income are up 24%, a burden that falls directly on small businesses. Tax rates on capital gains and dividends are up 59%, and the estate-tax rate is up 14%. While tax reform has languished in the U.S., other nations have cut corporate tax rates. The U.S. now has the highest corporate rate in the world and the most punitive treatment of foreign earnings.
Meanwhile, federal debt held by the public has doubled, so a return of interest rates to their postwar norms, roughly 5% on a five-year Treasury note, will send the cost of servicing the debt up by $439 billion, almost doubling the current deficit.
Large banks, under aggressive interpretation of the 2010 Dodd-Frank financial law, are regulated as if they were public utilities. Federal bureaucrats are embedded in their executive offices like political officers in the old Soviet Union. Across the financial sector the rule of law is in tatters as tens of billions of dollars are extorted from large banks in legal settlements; insurance companies and money managers are subject to regulations set by international bodies; and the Consumer Financial Protection Bureau, formed in 2011, faces few checks, balances or restraints.
There's a lot more than I can fairly excerpt here, so be sure to click the link and read the whole thing.
Without the useful context Gramm provides here, it's hard to really grasp how weak the economy has been throughout Obama's presidency. You hear a lot of things in the media that make it seem like things are OK. You hear that we had 200,000 jobs created in a month, and you don't know that in the context of history that's not really all that good. You hear that the U3 unemployment rate is under 6 percent and you don't know that much of that owes to a record number of people leaving the workforce. You hear that more people have health coverage, but you don't really understand the distortions of the market that were necessary to make that happen.
Obama likes to say that "by every measure, people are better off." But how can you test that statement? Gramm has done so here in a very effective way, and the statement fails the test. We should have spent these past several years experiencing much more robust growth in the aftermath of such a deep recession. If we had simply had the same basic economic policies we'd had for generations, we probably would have.
But Obama and congressional Democrats saw their massive majorities of 2009-2010 as an opportunity to introduce the kinds of command-and-control elements that left-wingers dream about. They seized control of the health care market. They rigged union elections. They began the process of regulating the Internet as if it were a public utility. They made it much harder for banks to lend, even as they beat them up over it publicly. And all along they have discouraged U.S. companies who operate overseas from bringing their capital home.
And of course, they gave us the spending blowout that only started with the massive $862 billion "stimulus package" of 2009 - a supposed one-time event that was quietly added to future budget baselines without the media paying much attention. Meanwhile, they've manipulated interest rates to make the effect of this added debt appear much less than it will actually be over the long term.
You don't know about a lot of this because the mainstream media either don't understand it themselves or they cover it up. So bookmark this piece and the one by Senator Gramm, and refer to it whenever you need to. The Obama economy is a disaster. By the way, the Republican majorities in Congress have so far proven pretty feckless in turning these policies around. Hopefully that will change, and soon, because it's their job to make policy better, not to avoid criticism from the media over being mean to their favorite president.
