The Obama economy is looking bleaker than ever. All recessions end, but this one’s going to last a lot longer than most because America remains overtaxed, overregulated and drowning in unfathomable debt.
We had the capacity to grow our way out of the 2008 recession within two years with the right growth policies, but President Obama and the Democrat-run Congress pursued impotent, anti-growth fiscal policies that drove spending to unprecedented levels at a time when the recession had sandbagged tax revenues. That forced the feds to sharply increase borrowing, which is devouring the lion’s share of our economy’s income.
When cooler heads, some within his own administration, were urging him to concentrate on the economy, he focused on a massive new government health care entitlement program. That’s in the process of running up a mountain of future bills - plus crushing anti-job-creating regulations - on an economy struggling to climb out of one of the severest recessions since the Great Depression.
When a recession hits and incomes fall, Americans instinctively tighten their belts, reduce spending, pay off credit cards and sock money away in savings in case things get worse. But Mr. Obama and his party did just the opposite. They expanded government, raised spending and burdened the economy with $3 trillion in higher debt.
The Obama crew lived in a separate reality of its own making, believing its exaggerated rhetoric that the economy was moving “in the right direction.” But as the economy grew weaker, revenues fell, budget deficits rose, and the unemployment rate climbed into the 9 percent range.
If anyone in the West Wing thought the economy was coming back, he or she was yanked into reality Tuesday when the Federal Reserve Board said the economy was growing so slowly it had decided to keep its ultralow interest rates where they were for two more years.
Previously, the Fed said it was keeping interest rates low for an unspecified “extended period.” But the Fed now says the economy has entered dangerous territory and things aren’t going to get much better until at least through mid-2013.
The Fed acknowledges what government data has shown for the past six months or more - that “economic growth so far this year has been considerably slower,” raising fears it is tilting into yet another recession.
After $1 trillion in stimulus spending, which has all but been spent, the economy is falling backward again.
“Indicators suggest a deterioration in overall labor-market conditions in recent months. Household spending has flattened out, investment in nonresidential structures is still weak and the housing sector remains depressed,” the Fed said.
Wall Street got the message. The stock market has plunged in a frightening roller-coaster ride that has wiped out $3 trillion in U.S. market value in worker retirement and savings investment. That has forced Americans who still have jobs to cut back spending sharply in recent months, hurting retail sales and businesses throughout the country, undermining investment and slowing future job creation.
“Nearly three-quarters of Americans polled said they have little or no confidence in Washington to repair the economy. Confidence is down 21 percentage points from October 2010 and is less than half its 2002 levels. Roughly four in 10 have no confidence at all in the federal government when it comes to dealing with the economy,” The Washington Post reported Thursday in a poll of the country’s souring mood.
The Gallup poll’s numbers are even worse, with 77 percent saying the economy is “getting worse” and 55 percent rating it “poor.”
Gallup’s daily survey this week showed Mr. Obama’s job-approval rating has sunk to nearly 40 percent, with 51 percent saying they disapprove of the job he is doing as president.
If there is any remaining confidence in Mr. Obama’s ability to fix the economy, that’s disappearing fast. “Confidence in Obama to make the right decisions for the country’s economic future is down 10 points, to 33 percent, since January,” The Post said Thursday.
Meantime, a dark mood of anxiety and frustration is sweeping across much of the Democrats’ rank and file who fear that Mr. Obama’s failure to deal with the economy will wreak political disaster at the polls next year and make him another one-term president.
While the economy burns and the markets tank, he seems stuck in the same agenda - more taxes, spending and unemployment benefits - with no new plan to spur investment, growth and jobs.
Economist Robert J. Shapiro, a top adviser in Bill Clinton’s 1992 presidential campaign, thinks the White House doesn’t want to offer anything dramatic because it would “tacitly acknowledge that [Mr. Obama’s] first-term program didn’t deliver the prosperity his economic team promised.”
“The truth is, everybody in the country thinks it failed,” Mr. Shapiro told The Post, adding that “it didn’t work to create a strong recovery.”
One statistic in all of this suggests that help is on the way. A USA TODAY/Gallup Poll reported this week that a 51 percent majority of Americans say Mr. Obama doesn’t deserve re-election.
Donald Lambro is a syndicated columnist and former chief political correspondent for The Washington Times.
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