Jonah Goldberg provides a little history lesson that helps one understand why it is that politicians are now credited with the country’s economic progress or lack thereof:
The idea that presidents “run” the economy is both ludicrous and fairly novel. Before the New Deal (which in my opinion prolonged the Great Depression), the notion that presidents should or could grow the economy was outlandish. But, as the historian H. W. Brands has argued, it was JFK who really cemented the idea that the president is the project manager for a team of technicians who create economic prosperity. “Most of the problems . . . that we now face, are technical problems, are administrative problems,” he explained, and should be kept as far away from partisan politics as possible.
It may have been JFK who “cemented” the idea, but it was FDR who first sold it and the myth that grew up around him that claimed he had saved us from the Great Depression. Subsequent study of the era has yielded pretty solid evidence that, in fact, his policies failed and it was a world war that dragged us out of the Depression.
That said, it really doesn’t matter – the perception and belief has been established that the President does indeed have an effect on the economy – right or wrong. That’s just the reality of the matter. Additionally, politicians haven’t been shy about cultivating that perception. It is another means of padding the resume (if the results during their term have been good) or attacking the incumbent (if the results haven’t been very good).
The truth is politicians do have an effect – usually when they chose to intervene, the economy does worse and when they get out of the way, it does better. For the most part, they have yet to realize that, however.
But that’s not really the point I’m interested in making. All of that said, what this race boils down too is a President, who has had poor results, claiming he should be given another 4 years to do better.
The problem with that? He’s already proven he doesn’t know what he’s talking about:
President Obama, a hybrid reincarnation of Kennedy and Roosevelt according to his fans, came into office with similar misconceptions. Controlling the White House, the House, and the Senate, his team of propeller-heads insisted that if we passed exactly the stimulus they wanted, the unemployment rate would top out at 8 percent and would be well below that by now.
They waved around charts and graphs “proving” they were right, like self-declared messiahs insisting they are to be followed because the prophecies they wrote themselves say so.They got their stimulus. They were wrong.
They were dead wrong.
So the question then, given their “know-it-all” claim and their assertions that their plan would work if we’d only give them the money, why should we trust them to do better the second time around, given the fact that we’re actually worse off now than when we were in the actual recession?
As Goldberg points out, their claim is the downturn was “so much worse than anyone realized” isn’t a good excuse given the assurance with which they made their previous claim.
Why didn’t they realize it? That’s a fair question.
A more important question though is why in the world would you give another chance to someone who didn’t drive the vehicle of the economy out of the ditch as promised, but instead put it into a telephone pole?
It makes absolutely no sense.
And Obama’s plan for his coming 4 years? As best as I can discern, pretty much maintain course and tax the rich. That’s it. We’re banging along the economic bottom, unemployment is trending worse, and Obama wants to raise taxes on a single group that would pay for a total of 11 hours of government spending.
You’re asked to buy into that nonsense as solid economic policy – i.e. giving him more time.
Are you actually going to do that?
If so, and if you give this incompetent president and his clueless advisers another 4 years, you deserve everything that comes with that choice – to include a hearty “I told you so” from me if I’m still around in 2016.
Of course the spin will be that the unemployment rate has dropped to 8.1%.
Unstated is the fact that the reason the unemployment rate dropped is because 368,000 more Americans left the labor force.
In fact, the labor participation rate in the US is at its lowest level since September of 1981. Had we not seen 350,000 dropped from the labor force last month, the unemployment rate would be 8.4%. And if the labor participation rate was the same as the day Obama took office, unemployment would be at 11.2%.
96,000 jobs, while better than nothing, isn’t even close to what is necessary to get this economy going again. And don’t forget, the average monthly gain in 2011 was 153,000 a month. In fact, the U-6, which includes part-time workers looking for full time work, is at 14.7%.
I keep telling you that when you talk about jobs or lack thereof and what that means to individual Americans, it’s personal. While they may care or not care particularly who has the best record in foreign policy or whether or not abortion is something they believe in, being jobless, struggling, and/or knowing someone in the family who is, has much more of a direct effect on a potential voter than the other issues.
14.7% fall into that category with probably twice to three times that many effected by what those 14.7% are struggling with. Believe what you will about the polls right now, but if history is any indicator, Obama isn’t going to get a round 2.
Oh, and just as a reminder of the depth of the failure:
UPDATE: Meanwhile at the Ministry of Truth the “Spin-o-matic” is in overdrive:
While there is more work that remains to be done, today’s employment report provides further evidence that the U.S. economy is continuing to recover from the worst downturn since the Great Depression.
It does? Wow … who knew? Certainly not the 350,000 who dropped out of the labor force this month. But hey, be happy, don’t worry … and ignore the chart.
So the question of the week is can the DNC via Obama reignite the “magic” of 2008 in dispirited voters?
Charlie Cook, the dean of Democratic strategists, takes a look at three demographic groups critical to Obama’s 7 point margin of victory in in 2008. While he finds one of the groups, African-Americans, still with Obama in numbers similar to 2008, two other groups are not at all showing the same enthusiasm they had then. They are voters 18-29 and Latinos. Obama leads comfortably in both demographics. However, the question is, will they vote in the numbers necessary to push Obama over the edge.
Cook says it doesn’t appear so.
In each case, the percentage who say they will definitely vote is significantly lower than it is among other demographic groups who view Obama less charitably.
Groups among those who see Obama “less charitably”, as Cook puts it, includes seniors (65 and older):
Voters ages 65 and older favor Romney by a 15-point margin, 54 percent to 39 percent, and 86 percent of those in that oldest cohort say they definitely plan to vote, compared with just 61 percent of those ages 18-29. Romney has a statistically insignificant 1-point edge (46 percent to 45 percent) among those 30 to 49 years of age, but 80 percent of them say they will definitely vote. Among the 50-to-64 age group, Romney leads by 3 points, 48 percent to 45 percent, with 86 percent of that cohort saying they will definitely vote.
Cook believes it is a matter of enthusiasm, or lack thereof:
But the study also found “consistent evidence that President Obama’s 2008 first-time voters are less supportive than other Obama voters, reflecting a decline in enthusiasm among a key voting bloc in the 2012 elections.”
Note, both polls are those of “registered voters”, however, the point is clear – enthusiasm for Obama isn’t at all near the fever pitch it was in 2008 and experts like Cook know that. As he says, there’s “consistent” evidence Obama’s support among those groups has eroded when it comes to enthusiasm. Cook also knows what has to happen for Obama to again grab the edge and win. How critical is the Democratic convention to that?
Very. It is there the spark needs to be lit again, where a message that resonates and energizes the same demographic groups that put him over the line last time.
Will it happen? Well that’s the “big question”.
And behind all these problems isn’t the “war on women”, “race” or “inequality”. It’s the economy. If, in fact, the Democrats concentrate on the diversion of the first three, the likelihood of them reenergizing their voters isn’t high. It may, however, even further energize the other side.
So you may see them tip-toe around mentions of the economy and attempt to push it off on Bush again. They’re already trying out “the Bush recession”, “the Bush economy”, etc. That’s unlikely to impress many (most polls have indicated that voters think, after 3 years, Obama owns the economy now), but it’s about all they have in that arena.
Of the two conventions, the DNC is likely to be the more interesting of the two by a long shot.
We’ve been told for months now about all the jobs that have been created by the laser-like focus on jobs that Barack and Sheriff Joe have given us.
Of course the inconvenient statistic that keeps dogging their claim is the unemployment rate.
As for the jobs themselves? Well, per the New York Times, not so hot:
While a majority of jobs lost during the downturn were in the middle range of wages, a majority of those added during the recovery have been low paying, according to a new report from the National Employment Law Project.
Lower-wage occupations, with median hourly wages of $7.69 to $13.83, accounted for 21 percent of job losses during the retraction. Since employment started expanding, they have accounted for 58 percent of all job growth.
Another of those indicators. Again something that effects voters personally. Not only are those in the 8.2% unlikely to be particularly happy about the current economic situation and those in charge, but those that are employed but earning far less than they were are unlikely to be very happy either.
Another indicator poll. Again, these polls, at this point, are much more valuable than the horse race polls at this point.
They indicate the mood of the public. They tell you what is bothering them (or what is pleasing them). They allow you then to consult electoral history to get an idea of what these sorts of indicators usually mean.
The one issue that Obama gets a majority approval on is really not even on the radar screen for most Americans. Terrorism is there but unless there’s a big event involving America, it’s not a major issue for this campaign.
Next comes education. What Obama gets there is a passing grade – barely. But again, that’s not a top issue in this campaign. Nor are foreign affairs.
Immigration is important in certain regions of the country and he’s doing poorly there.
But his worst job approval comes in the three top issues for 2012. Jobs, the economy and the budget deficit.
In all three categories Obama’s is dismal. His disapproval rating is very high.
While most of the issues above pertain to the country, the jobs and economy categories are much more personal in nature. They have a great impact on individuals. And it is individuals who vote. Right now, only 37% of voters think he’s doing a good job creating jobs (and 58% think he’s doing a poor job), 36% approve (60% disapprove) of his handling of the economy and only 30% (64% disapprove) of his handling of the budget deficit.
That means he now “owns” the economy. And note the percentages of approval he gets are just about the same percentage of those who self-identify as Democrats.
So, what must Obama do? Well here’s Gallup’s advice:
Nearly six in 10 Americans approve of Obama’s handling of terrorism; however, that is where majority approval of the president ends in the current poll. He earns his lowest issue ratings on the economic issue areas tested in the survey, with approval on the federal budget deficit the lowest at 30%, and his approval on the economy not much higher, at 36%.
While Obama’s issue ratings are largely unchanged from where they have been over the past year, that stability may be a problem given his overall job approval rating is 45%. Historically, presidents who won a second term had near-50% job approval ratings or better prior to the election. To move closer to that range, Obama may want to focus singularly on raising his approval rating on the economy, as with previous presidents it seems to have been the issue approval most closely linked to overall job approval.
However, Team Obama wants to do anything but focus on the economy since doing so would also focus on how poorly it has performed and provide an opportunity to the GOP to point out why (policy, etc.). He wants nothing to do with that sort of focus. Thus the alternate campaign of distraction characterized by “small ball” where Obama et al try to divert attention from these issues to irrelevant issues that have no real bearing on these issues but capture the media’s attention and are exploitable by the Obama campaign.
Result? Well, we’ll see. I don’t believe he can hide from this forever. And as the election nears, it will become more and more difficult to avoid these issues (and more obvious if he attempts it). He’s eventually going to have to explain the 8.3% unemployment rate, the failure of the stimulus, the dramatic increase of the deficit (to no avail) and the planned trillion dollar deficits for the future.
And when that happens, and since its obvious the public now charge him with responsibility for the economy, it’s unlikely his ratings are going to improve.
Let this paragraph, given the economic circumstances we now find ourselves in and the policies we’ve suffered under with this administration in reference to fossil fuels, sink in:
U.S. energy supplies have been transformed in less than a decade, driven by advances in technology, and the economic implications are only beginning to be understood. U.S. natural gas production will expand to a record this year and oil output swelled in July to its highest point since 1999. Citigroup estimated in a March report that a “reindustrialization” of America could add as many as 3.6 million jobs by 2020 and increase the gross domestic product by as much as 3 percent.
In case you missed those numbers, that’s plus 3.6 million jobs and kicking up the GDP by as much as 3% by 2020.
And imagine the tax revenues that would bring as well.
Low cost fossil fuel will also do much, much more:
[T]here are signs the economic gains have begun to expand beyond the oil and gas fields and that the promise of abundant, low-cost fuels will give a competitive edge to industries from steel, aluminum and automobiles to fertilizers and chemicals.
In other words, low cost fuels will make our manufacturing sector more competitive which means more of it and more jobs as well. Right now (and for the foreseeable future) our natural gas is much less expensive than that in the UK and Europe. And we have literally trillions of cubic feet of it that is recoverable.
That’s starting to drive some massive private investment:
Companies plan to invest $138 billion in more than 700 natural gas storage, pipeline and processing plants in the U.S., and another $88 billion in more than 500 gas-fired power generation units, according to Joseph Govreau, vice president and editor-in-chief of Industrial Info Resources. The
firm tracks projects from planning stages through construction.
That’s only a portion of what this will spur, if allowed to go ahead. Fertilizer production, petrochemicals, etc., all could see a revival with cheap fossil fuel.
Democrats keeps saying that reviving the manufacturing sector should be a priority.
So here’s a valid means of doing so.
Yet for 3 plus years, this administration has done everything it can to slow walk or block increased production and exploration on federal lands and off our coasts. There’s no sign it plans on changing that.
This boom we’re talking about has taken place in a relatively very few areas, mostly privately owned:
So far, the economic benefits have been confined to states such as Louisiana, Texas and North Dakota, while the national jobless rate has stayed above 8 percent for 42 straight months in the wake of the worst recession in seven decades.
Seems like the proverbial “no brainer” doesn’t it? Open up federal lands and let oil companies responsibly and in an environmentally safe way explore for and exploit the natural resources we have and the country is put in the position to reap the benefits:
“This is one of those rare opportunities that every country looks for and few ever get,” said Philip Verleger, a former director of the office of energy policy at the U.S. Treasury Department and founder of PKVerleger LLC, a consulting firm in Carbondale, Colorado. “This abundance of energy gives us an opportunity to rebuild our economy.”
Or we can repeat these past 3 plus years.
According a report by Reuters, much of it is related to the looming crisis in Europe:
Only 23 percent of the firms polled in June plan to add to staff in the next six months, the National Association for Business Economics said on Monday.
NABE’s prior survey, conducted in late March and early April, had shown 39 percent of companies planning to add workers.
The point, of course, is now is certainly not the time, with unemployment at 8.2%, to give business another reason to delay hiring, right? That would seem, to most, to be a reasonable point. While the European problem unfolds and comes to some sort of resolution, you’d think government would be attempting to encourage and enable domestic businesses to do some hiring anyway, right?
Instead, as demonstrated in the story below, you have a president (and a party) who seem dedicated to killing whatever possibility there is for such hiring in the bud by calling for higher taxes on the “rich”.
Of course they count on the bulk of the public being ignorant of what comprises the “rich” that the administration wants taxed (small business which produces 85% of the jobs in the US) and certainly, to some extent, they’ve been successful in that endeavor.
Many will tell you that there’s really not much government can do economically. That they get blamed or praised when it goes south or does well, but in fact that’s more political tradition than reality.
I disagree. Economic policy can have a profound effect on the economy. A policy that encourages and enables business will have a net positive effect economically. One that discourages or unsettles the business climate (increased regulation, increased taxation, etc.) will have the opposite effect.
Right now we have an example of the latter. The 8.2% unemployment rate we now endure isn’t a result of the “European crisis”, it is the result of an unsettled and hostile domestic business climate, much of it created by the current administration’s policies. Europe’s woes will only add to that. Instead of doing everything they can domestically to encourage expansion and hiring, this administration has decided to again lobby for taxing the job creators at an even higher level.
Of course be prepared for the ready excuse that the crisis in Europe presents. Blaming Bush doesn’t work as well now as it did 4 years ago. ATMs and tsunamis won’t work either. But President “It’s the Other Guy’s Fault” will try very hard to shift the blame of any economic downturn in the next few months across the Atlantic.
But remember – we are at 8.2% now. And that has much more to do with this President’s policies than anything that has happened in Europe.
But the “official” unemployment rate stayed at 8.2%. The broader measure of unemployment – includes job seekers as well as those in part-time jobs – inched up from 14.8% to 14.9%.
Federal Reserve officials last month lowered their economic-growth projections to between 1.9% and 2.4% this year, and forecast the jobless rate would hold between 8.0% and 8.2%.
That’s not a recovery rate by any means (and given how accurate former predictions have been, I wouldn’t count on the unemployment rate staying as low as 8.2%). But it is the reality of the situation and one that will definitely have an effect on the election. That is if people are reminded of some promises made by the administration. You remember these:
Can you say “utter failure”? Of course you can. As with ObamaCare, the people were sold a bill of goods about the recovery plan. In fact it ended up being a huge political payoff plan while our leaders told us they were focused like lasers on recovery. 4 years later, here we are.
We were supposed to be at 5.6% now, with the stimulus plan enacted.
That was the promise.
Of course, this administration has promised all sorts of things it hasn’t delivered, so I’m sure that their failure here doesn’t necessarily come as a surprise to anyone but the media.
This week, Bruce, Michael and Dale talk about the economy and the election.
The direct link to the podcast can be found here.
As a reminder, if you are an iTunes user, don’t forget to subscribe to the QandO podcast, Observations, through iTunes. For those of you who don’t have iTunes, you can subscribe at Podcast Alley. And, of course, for you newsreader subscriber types, our podcast RSS Feed is here. For podcasts from 2005 to 2010, they can be accessed through the RSS Archive Feed.