Obama’s $1.5 Trillion Recovery Deficit
The financial crisis already averted, upon entering office in 2009, President Barack Obama inherited a poor economy.
But Obama didn’t face 10.8 percent unemployment, 14 percent inflation, 21 percent mortgage interest rates, accelerating deindustrialization or an extended bear equity market.
In 1981, President Jimmy Carter left President Ronald Reagan all that — and a lousy economy.
In five years since the recession ended, Obama’s economy has grown by 11.1 percent. The average five-year gain for 10 previous post-World War II recoveries was 21.4 percent. At the same point in Reagan’s presidency, the economy had grown by 24 percent.
According to Congress’s bipartisan Joint Economic Committee, Obama’s recovery is $1.5 trillion below average.
Had Obama’s economy expanded like Reagan’s, America’s economy would be more than $2 trillion larger today, about $17,000 more per household.
If Obama’s recovery matched President John Kennedy’s, the economy would be nearly $3 trillion larger.
Ironically, Kennedy was the only Democrat to cut income tax rates; Obama the latest to raise them.
During Obama’s "recovery," an average family has lost about $2,000 in income.
Investor’s Business Daily: "These aren’t just abstract numbers. Obama’s weak recovery explains why household incomes are lower than they were when the recession ended, why millions are long-term unemployed and millions more have given up looking for work, why government dependency is at all-time highs and why confidence is so low."
Stephen Moore, the Heritage Foundation’s chief economist asks: "What happens to an economy when you do just about everything wrong? Say you spend $830 billion on a stimulus stuffed with make-work government-jobs programs and programs to pay people to buy new cars, you borrow $6 trillion, you launch a government-run health-care system that incentivizes businesses not to hire more workers, you raise tax rates on the businesses that hire workers and on the investors that invest in the businesses that hire workers, you print $3 trillion of paper money, you shut down an entire industry (coal), and try to regulate and restrain the one industry that actually is booming (oil and gas)."
Moore: "Reagan cut tax rates, slashed regulations, trimmed excess money supply (with the help of Fed chairman Paul Volcker), and let the private businesses — the supply side — grow their operations less hindered by government interference."
Following the dot.com crash and the 9/11 terrorist attacks, another robust recovery occurred during President George W. Bush’s presidency, one that liberal economists like to describe as a "classic Keynesian recovery" based on deficit-financed national security and war expenditures.
In reality, 2001 and 2003 Bush-era tax rate reductions stimulated economic activity and Treasury receipts to record levels. With reasonable controls on discretionary spending, the wars could have been fully funded and the budget balanced by 2009.
Monumental incompetence, flawed ideology and unsound policies explain Obama’s anemic recovery. Obama’s policies diametrically oppose Reagan’s, Bush’s and Kennedy’s — all of whom cut taxes.
Moore challenges the Keynesian narrative: "Why is it that after Obama borrowed twice as much money (as Bush), his Keynesian recovery has proceeded at half (Bush’s) pace? I’ve never heard an answer to that one. Never."
That’s because the compulsive spenders have no plausible answer.