Ye olde “a picture is worth 1,000 words”:
IBD has the article. One of my favorite myths is the Bush “tax cuts” (tax rate) and deregulation cause the recession. Yeah, not so much:
It’s a standard Obama talking point. But it’s not true. Bush’s tax cuts did not cause the last recession.
In fact, once they were fully in effect in 2003, they sparked stronger growth — generating more than 8 million new jobs over the next four years, and GDP growth averaging close to 3%.
Those tax cuts didn’t explode the deficit, either, as Obama frequently claims. Deficits steadily declined after 2003, until the recession hit.
Nor was Bush a deregulator. Conservative Heritage Foundation’s regulation expert James Gattuso concluded, after reviewing Bush’s record, that “regulation grew substantially during the Bush years.”
Even the Washington Post’s fact-checker, Glenn Kessler, gave Obama’s claim three out of four “Pinocchios,” saying “it is time for the Obama campaign to retire this talking point, no matter how much it seems to resonate with voters.”
What did cause it? What we’ve been saying since it happened, that’s what:
The housing bubble. And that, in turn, was the result of a determined federal effort to boost homeownership by, among other things, pressuring banks to lower lending standards.
So while the rest of the surrogate media “fact checks” Romney, here’s a basic fact check on Obama. And yes, if you’re still wondering … he’s full of it.
Context is one of those tricky words for some. Because, when applied, it tends to trip up their attempts to shade news a certain way. Without it, they’re much more able to do their shading than when context is added to their formulation.
Take the unemployment numbers – the “official” unemployment numbers. We’re supposed to believe that everything is getting better because that number has come down from 10% to its current “official” level of 8.5%.
But when one digs into that number, it becomes apparent that one can only get to 8.5% if one is willing to write off over a million American workers who’ve somehow “vanished” from the labor force.
Or in other words, in context, with those workers being added back in as they should be, our unemployment rate is much higher than 8.5%. Dale has explained this many times. I’ve pointed it out a few times. Investors Business Daily does it this time:
In the 30 months since the recession officially ended, nearly 1 million people have dropped out of the labor force — they aren’t working, and they aren’t looking — according to data from Labor’s Bureau of Labor Statistics. In the past two months, the labor force shrank by 170,000.
This is virtually unprecedented in past economic recoveries, at least since the BLS has kept detailed records. In the past nine recoveries, the labor force had climbed an average 3.5 million by this point, according to an IBD analysis of the BLS data.
"Given weak job prospects, many would-be workers dropped out of (or never entered) the labor force," noted Heidi Shierholz of the Economic Policy Institute in her analysis of the BLS jobs report issued last Friday. "That reduces the measured unemployment rate but does not represent real improvement."
According to the BLS, the "labor force participation rate" — the ratio of the number of people either working or looking for work compared with the entire working-age population — is now 64%, down from 65.7% when the recession ended in June 2009. That’s the lowest level since women began entering the workforce in far greater numbers several decades ago.
That “labor force participation rate” hasn’t changed significantly. In fact, given our expanding population, it has probably remained at least the same. What the “official” number does is ignore the missing million plus workers and thereby misrepresent the true level of unemployment in this country. That official number also hides the real problem that IBD’s chart shows us – something unprecedented in past recoveries:
Labor force growth, as you might imagine, is one of the indicators of a recovering economy. Instead we seem to be in the middle of fooling ourselves that such a recovery is happening by viewing a falling “official” unemployment number as an indictor of progress in that area. I’m not sure how one can make that argument – in context, as provided by this chart.
IBD goes on to outline what this all means in the long run:
Not only does the shrunken labor force mask the real size of the unemployment problem in the country — since only those actively looking for work are counted as unemployed — it likely means that economic growth will be subpar going forward.
The weak job market has also helped depress wages. Real median annual household income has dropped 5.1% since the recession ended, more than the 3.2% decline during the recession itself — according to a new Sentier Research report.
The smaller labor force is just one of the problems with the current unemployment number. The other is that the jobs being created aren’t keeping pace with population growth. Since June 2009, the economy has added 1.4 million jobs, which is below the more than 2 million needed to keep up with population growth and far below the gains experienced at the same point in the previous 10 recoveries — which saw job gains average more than 4 million.
So, what has happened? Well there are all sorts of explanations being bandied about – Baby Boomers choosing retirement instead of seeking work, etc. But the fact remains, as IBD points out, “the labor force had been climbing until Obama took office. In fact, it peaked in May 2009, the month before the recession officially ended.”
That sort of dampens the “Baby Boomer retirement” explanation and leaves us again searching for an answer.
The whole point of this post, however, isn’t so much wrapped up in the answer, but the context of the problem. Or said another way, you’re being led down the primrose path with the “official” unemployment number and here’s why.
Context. A dirty word to those who would prefer to feed you false sunshine via their “official” numbers. But when you look at their numbers remember that you’re mostly looking at contextless nonsense.
Oh, and if you’re not depressed enough:
The Economic Policy Institute calculates that when you add the number of jobs lost in the recession and the growth in the working age population over the past few years, the "jobs deficit," as EPI calls it, "remains well over 10 million."
There’s also the problem of people who want full-time work not being able to find it. The BLS offers a different unemployment measure that counts not only those currently looking for a job, but those who’ve given up looking, as well as those who are underemployed because of the soft job market.
That measure has unemployment at a whopping 15.2%.
But don’t look for this administration to ever tell you that.
This has been a week for CEOs speaking out against the Obama administration. This time it’s someone I actually admire. Bernie Marcus, co-founder and CEO of Home Depot, has given an interview to Investors Business Daily and it is a pretty frank denunciation of the policies this administration has followed since coming into power. It’s one of the things I admire about Marcus – he pulls no punches:
IBD: What’s the single biggest impediment to job growth today?
Marcus: The U.S. government. Having built a small business into a big one, I can tell you that today the impediments that the government imposes are impossible to deal with. Home Depot would never have succeeded if we’d tried to start it today. Every day you see rules and regulations from a group of Washington bureaucrats who know nothing about running a business. And I mean every day. It’s become stifling.
If you’re a small businessman, the only way to deal with it is to work harder, put in more hours, and let people go. When you consider that something like 70% of the American people work for small businesses, you are talking about a big economic impact.
Remember that Home Depot was launched during the then worst recession in 40 years and Marcus took it public 3 years later. He’s built a business from the ground up and created thousands of jobs. He actually understands what it takes. He also clearly understands what will kill it.
Here is one of the key points one has to understand about this administration and Marcus is on it:
IBD: President Obama has promised to streamline and eliminate regulations. What’s your take?
Marcus: His speeches are wonderful. His output is absolutely, incredibly bad. As he speaks about cutting out regulations, they are now producing thousands of pages of new ones. With just ObamaCare by itself, you have a 2,000 page bill that’s probably going end up being 150,000 pages of regulations.
We’ve been warning you from the beginning to pay no attention to the man’s words and instead scrutinize his deeds. Often they are the opposite of what he has said he’d do. For example:
In January, however, he issued an executive order requiring federal agencies to review their regulations, looking for rules that are inefficient or outdated. His aim, he explained on The Wall Street Journal‘s op-ed page, was to "root out regulations that conflict, that are not worth the cost, or that are just plain dumb."
But there’s a catch: All those new regulations Obama put in place will not be subject to review. Just days after the president issued his order, an anonymous administration official conceded to the Journal that "new regulations will not be priorities for the look back." Meanwhile, more than a dozen federal bureaucracies—including the Securities and Exchange Commission, the Federal Communications Commission, and the National Labor Relations Board—are exempt from the review because they are independent agencies.
That’s another in a long list of many examples of him saying one thing and doing something else. His speeches are politically driven and designed to give him political cover while his actions are ideologically driven and part of an agenda.
Marcus is then asked about the debt talks:
IBD: Washington has been consumed with debt talks. Is this the right focus now?
Marcus: They are all tied together. If we don’t lower spending and if we don’t deal with paying down the debt, we are going to have to raise taxes. Even brain-dead economists understand that when you raise taxes, you cost jobs.
With all the talk about tax increases it means we have a lot of zombie politicians who haven’t a clue, unfortunately. I mean how difficult is this? When you raise taxes in a recession, many businesses are going to have to make a decision aren’t they? Use the money to pay the tax or hire. Any guess which will win out? You can’t go to jail for not hiring.
Finally, and this one is devastating in its forthrightness, Marcus is asked what he’d tell Obama if he could sit down with him and talk about job creation. His answer is a classic:
IBD: If you could sit down with Obama and talk to him about job creation, what would you say?
Marcus: I’m not sure Obama would understand anything that I’d say, because he’s never really worked a day outside the political or legal area. He doesn’t know how to make a payroll, he doesn’t understand the problems businesses face. I would try to explain that the plight of the businessman is very reactive to Washington. As Washington piles on regulations and mandates, the impact is tremendous. I don’t think he’s a bad guy. I just think he has no knowledge of this.
One can only wish Contessa Brewer was around to ask about economic degrees. Marcus is right about Obama’s lack of knowledge. He’s surrounded by a lack of knowledge in this area if his policies are any indication. As has been pointed out repeatedly, a president who was really concerned about jobs would be green lighting oil and gas exploration as fast as he could make it happen. And he’s certainly made speeches about doing just that, but as usual, his actions betray his words.
Marcus has got a bead on this administration and this president. As long as they are in power and continue with the course of their regulatory policies, the economic malaise that has settled over this country will continue.
For new readers, Questions and Observations is, in full, what QandO means.
- Still pining for that “public option” Bunky? Well you might want to take a gander at a public option our government has been operating for quite some time. That would be the Indian Health Service for Native Americans. It would be no pun to say the natives are restless about the service they get.
- Irwin Stelzer lays out 7 lessons learned from Cash for Clunkers. My favorite is “government forecasters are really bad at their job”. Wow, there’s a surprise. Anyone – can you name a single major program that was touted by government at one cost that didn’t actually end up costing far, far more than their estimate?
- It appears that President Obama’s pledge that “95% of Americans won’t see their taxes go up one dime” is being modified to add “but I didn’t say anything about a nickle – or a bunch of nickles”. Yes, given the rosy deficit projections that we’ve seen it appears higher taxes – much higher taxes – are now in the “when” not “if” category. As the Brookings Institute’s William Gale said:
“If you rule out inflating our way out of the problem and defaulting on the debt, there are two ways: Cut spending or raise taxes”.
Of course, I’m on the “cut spending” bandwagon personally.
- Here’s an announcement that should warm the cockles of your heart – Wells Fargo Home Mortgage, Inc., the California Housing Loan Insurance Fund (CaHLIF) and Freddie Mac, have put together a program that allows teachers working within the state to purchase a home with a downpayment of just $500. Wait a minute – isn’t that exactly the sort program that supposedly got us into this mess in the first place?
- Investors Business Daily finds that its rather roundly panned claim that Stephen Hawking wouldn’t have fared well under the NHS is, in fact, correct, but certainly not for the reason that he isn’t British. In fact, Hawking didn’t fare well at all with the NHS which didn’t even provide what anyone would call minimal care for his condition. His care ended up being provided for by private donations and private health care providers.
- Apparently Democratic Colorado Representative Betsy Markey didn’t get the talking points memo in which President Obama claims there won’t be any cuts to Medicare benefits. Either that or she’s actually read the bill and in a fit of honesty said, to a constituent asking about that very point:
“There’s going to be some people who are going to have to give up some things, honestly, for all of this to work. But we have to do this because we’re Americans.”
Actually we don’t have to do this and for precisely the same reason.
- The real astroturfing of townhalls has begun in earnest as Organizing For America – the successor to the campaign’s “Obama For America” – begins to finally stage a supposed “grassroots” push back against the rabble from the other side. Of course OFA claims they’re all about grassroots movements. BTW, if you’re wondering which side is which at a townhall, OFA is the “grassroots” organization with same color t-shirts and the preprinted signs.
- Wandering through Europe, Roger Simon is hardly surprised that the predominant English language news channels carried there are the BBC and CNN International. What did surprise him was discovering English language Al Jazerra and finding it more balanced and better than the BBC or CNN International.
- Anyone know who or what really saved the whales? Well it wasn’t Greenpeace – whales were saved well before Greenpeace ever became an organization. No it was actually capitalism and the petroleum industry which saved them. When petroleum became available in large quantities and at a low cost, the whale oil business went extinct almost over night. You’re not likely to read that in any environmental, animal liberation, “man is an eco-tumor” literature you might pick up. But think about it …