The recent Obama administration scandals shift the spotlight from the economy. Yet the recovery remains depressingly sluggish, with the labor force participation rate at a 34-year low as millions of able-bodied, able-minded Americans simply stopped looking for work.
With President Obama in the fifth year of his presidency, let us examine the effect of the stimulus program, tax hikes, Obamacare and additional regulation on the economy. It isn’t pretty.
For the richest Americans, their net worth has fully recovered. For the non-rich, the recovery tells a very different story. At the start of “recovery” in 2009, the mean net worth of the lower 93 percent of households was $139,896. By the close of 2011 – the latest year available – it had fallen 4 percent, to $133,817. Food stamp usage sets new records. So far this fiscal year, over 22 million households have received food stamps, up from less than 15 million in 2009. While the stock market has recovered, most Americans have not. The biggest investment for most Americans is their home, and the equity in average home remains 28 percent below its 2006 peak.
How does this recovery compare to other post-World War II recoveries?
An Associated Press article said: “Since World War II, 10 U.S. recessions have been followed by a recovery that lasted at least three years. An Associated Press analysis shows that by just about any measure, the one that began in June 2009 is the weakest. … Economic growth has never been weaker in a postwar recovery. Consumer spending has never been so slack. Only once has job growth been slower. More than in any other post-World War II recovery, people who have jobs are hurting: Their paychecks have fallen behind inflation.” According to Wall Street Journal economist Stephen Moore, “We’ve had the worst, by far – not by a little bit, by far – the worst recovery from a recession since the Great Depression.”
Before President Obama entered office, the national debt stood at about $9.9 trillion. It is now estimated at $17.4 trillion for 2013. Obama added more debt in his first term than President George W. Bush did in two terms. And to what end?
What about Obamacare, marketed as way to provide the uninsured with health-care coverage – all while “bending the cost curve” down?
During last year’s presidential campaign, House Minority Leader Nancy Pelosi, D-Calif., said, “Everybody will have lower rates.” But according to independent analysts, those purchasing insurance through an individual plan – the way about 10 percent of Americans currently get their insurance – will likely see substantial rate hikes. The state of California recently released estimates showing increases from 64 to 146 percent.
Economist Jonathan Gruber designed the Massachusetts plan known as Romneycare. Obama hired Gruber to design Obamacare. In November 2009, Gruber told the Washington Post’s Ezra Klein: “What we know for sure the bill will do, is that it will lower the cost of buying non-group health insurance.” After Obamacare passed, Minnesota, Colorado and Wisconsin hired Gruber as a consultant to estimate the impact of the law on their states. For Colorado, Gruber found that individual policy buyers would pay 19 percent more. For Minnesota, he estimates an increase of 29 percent. For Wisconsin, he expects a 30 percent increase.
Obamacare also applies to full-time workers and defines them as working 30 hours or more, so many employers are simply reducing hours of employees to get under that threshold. Reuters found that half of the Wal-Marts they recently surveyed have hired only temporary employees. One Wal-Mart manager in Alaska says: “Everybody who comes through the door I hire as a temporary associate. It’s a company direction at the present time.”
What about the Obama tax hike on the “rich”?
The Federal Reserve Bank of San Francisco just released a report that called Obama’s tax hikes a “drag” on the economy: “Surprisingly, despite all the attention federal spending cuts and sequestration have received, our calculations suggest they are not the main contributors to this projected drag. The excess fiscal drag on the horizon comes almost entirely from rising taxes.”
Obama has also imposed billions of dollars in new regulations. According to the Heritage Foundation, regulatory costs increased by almost $70 billion during the first term of the Obama administration.
Bottom line: The policies of this tax, spend and regulate administration have produced an anemic recovery. Head-in-the-sand partisans try to explain it away by blaming Bush, the “unpaid for wars,” recalcitrant House Republicans or the luck of the draw. Compared to five years ago, 8 million more people are no longer in the workforce today. Twenty-three million are underemployed, meaning people are working fewer hours than they would like or have accepted a job for which they are over-qualified.
The one silver lining is this: Obama’s left-wing collectivism is getting a full airing – and it is not working. Obama has inadvertently taught – or in some cases re-taught – one of the most important laws of economics: There ain’t no such thing as a free lunch. Not even in a rock-star administration.