The Obama Economic Record: The Worst Five Years Since World War II

From The Center for Vision & Values, Grove City College

By Tracy Miller

Editor’s note: This article first appeared The Daily Caller.

In spite of the claims by President Obama’s Council of Economic Advisors regarding his administration’s economic accomplishments, the U.S. economy has grown very slowly in the years since the Great Recession of 2008-09. After four years of slow growth, the latest data reveals that the U.S. economy shrank at a 2.9 percent annual rate during the first quarter of 2014.

That figure has been widely reported, but here are some figures that have not been reported, and they are quite eye-opening:

Over the first five years of Obama’s presidency, the U.S. economy grew more slowly than during any five-year period since just after the end of World War II, averaging less than 1.3 percent per year. If we leave out the sharp recession of 1945-46 following World War II, Obama looks even worse, ranking dead last among all presidents since 1932. No other president since the Great Depression has presided over such a steadily poor rate of economic growth during his first five years in office. This slow growth should not be a surprise in light of the policies this administration has pursued.

An economy usually grows rapidly in the years immediately following a recession. As Peter Ferrera points out in Forbes, the U.S. economy has not even reached its long run average rate of growth of 3.3 percent; the highest annual growth rate since Obama took office was 2.8 percent. Total growth in real GDP over the 19 quarters of economic recovery since the second quarter of 2009 has been 10.2 percent. Growth over the same length of time during previous post-World War II recoveries has ranged from 15.1 percent during George W. Bush’s presidency to 30 percent during the recovery that began when John F. Kennedy was elected.

Economic growth is usually faster than normal following a recession as entrepreneurs find more productive ways to employ the resources that were idle during the recession. How rapidly the economy grows and recovers depends partly on whether market forces are allowed to allocate resources, including labor, to their most productive uses. Unfortunately, the Obama administration has pursued several policies that make it harder for market forces to work. These include: bailouts, expansion of entitlement programs, regulation of the economy, tax increases, and huge government deficits.

Bailouts have resulted in capital being stuck in businesses that are either inefficiently run or have failed to produce goods and services that consumers’ value highly. In the absence of bailouts, some firms would have gone bankrupt and the capital reallocated to vibrant firms that are producing what consumers demand in a cost-effective way.

Expansion of government entitlement programs, such as food stamps and unemployment compensation, has reduced the incentive to be employed. The average benefit per recipient of food stamps jumped by approximately 25 percent between 2007 and 2010 due to rule changes. It also became easier to qualify for food stamps. As Richard Vedder points out in a Wall Street Journal editorial, the number of food stamp recipients rose by over 7 million between 2010 and 2012, a period of falling unemployment.

A number of changes associated with the American Reinvestment and Recovery Act (the economic stimulus package passed after Obama was elected) resulted in greater after-tax benefits to being unemployed. These include exempting part of unemployment insurance benefits from federal income taxes and subsidizing health insurance costs for laid off workers. Unemployment benefits also were extended for up to 99 weeks. In addition, the federal government developed mortgage modification formulas for banks to use, which resulted in a bigger reduction in interest payments for those with lower incomes.

The combined effect of a more generous food stamp program, more generous benefits for unemployed workers and mortgage modification formulas is to offset a considerable percentage of the reduction in income from being unemployed. This results in less incentive to work. If less people work, less output is produced and real GDP grows more slowly.

In addition to the policies described above, health care reform has also likely contributed to less employment and output in the economy. By requiring all firms employing more than 50 workers to provide health insurance coverage, the Affordable Care Act has discouraged some firms from hiring workers, while giving other firms an incentive to reduce hours or lay off workers.

Finally, uncertainty about the future direction of the economy has resulted in fixed investment that is only 93 percent as high as it was in 2006. This uncertainty likely stems from a combination of recent bailouts, huge and unsustainable government deficits, Federal Reserve monetary policy and growing government regulation such as Dodd-Frank and health care reform. Investment is what makes workers more productive thereby driving economic growth.

Although some of the policies responsible for slow growth began before Obama took office, he has expanded those policies and added new ones as well. It is necessary that those policies be reversed if the U.S. economy is going to again grow as rapidly as it did during most of the 20th century. Such growth is vital both as a means to lift people out of poverty and  to raise the revenue necessary to pay for Social Security and Medicare benefits to a growing population of retirees. Unfortunately, in the meantime, the lack of growth under Barack Obama during the last five years has been literally the worst for any president since World War II.

Dr. Tracy C. Miller is an associate professor of economics at Grove City College and fellow for economic theory and policy with The Center for Vision & Values. He holds a Ph.D. from University of Chicago.

The Recovery is Dead

 

There’s a damning number regarding our economy that Obama doesn’t want to talk about. It’s a number, but for him, would be lower. And, lower, in this case would be a good thing for the economy. 

“Although estimates vary,” says Joel Kurtzman, a senior fellow at the Milliken Institute, “American companies have between $4 and $5 trillion in liquid assets, a sum greater than the size of the German economy.”

How is it that companies can now have more cash than anytime in history, while unemployment remains so high, inflation in many goods so low, and national income grows so anemically?

Oh, yeah. Democrats at work. Shhhh.

If all that was needed to bring us a juggernaut economy was more money, we’d be in boom times boys.

But alas, while more money is the Democrat recipe for success in everything-- and generally good in the corporate sense-- in this case it’s a telltale sign that something is wrong with policies coming out of Washington.

Because those high cash balance sheets are telling us a few things. 

Read more at Townhall Finance >>

Peter Schiff Warns of Economic Collapse, Civil Unrest and Martial Law

From Inforwars.com

American investment broker, businessman, author and financial commentator Peter Schiff warns us that we are in worse shape now economically than we were just before the 2008 financial crisis, which we still have yet to recover from.

“I think the U.S. has been in a depression or a recession for the entirety of the Obama presidency,” Schiff said. “I think there’s going to be a depression, but I don’t think it’s going to be global.”

“When the dollar collapses and when the rest of the world stops wasting their resources, propping up our economy, buying our debt, selling us products that we can’t pay for, I think you’re going to have a global economic boom outside of the United States.”

“I just hope that one day we’re smart enough to jump in on it by adopting free market principles.”

“I hope we can reclaim our former glory,” he continued. “But to do that’s we’re going to have to reclaim the values that we have abandoned and those are the ones that our Founding Fathers wrote into our Constitution, not the ones that we’re following now.”

Obama Stimulus Made Economic Crisis Worse, `Black Swan' Author Taleb Says

From Bloomberg

By Frederic Tomesco

U.S. President Barack Obama and his administration weakened the country’s economy by seeking to foster growth instead of paying down the federal debt, said Nassim Nicholas Taleb, author of “The Black Swan.”

“Obama did exactly the opposite of what should have been done,” Taleb said yesterday in Montreal in a speech as part of Canada’s Salon Speakers series. “He surrounded himself with people who exacerbated the problem. You have a person who has cancer and instead of removing the cancer, you give him tranquilizers. When you give tranquilizers to a cancer patient, they feel better but the cancer gets worse.”

Today, Taleb said, “total debt is higher than it was in 2008 and unemployment is worse.”

Obama this month proposed a package of $180 billion in business tax breaks and infrastructure outlays to boost spending and job growth. That would come on top of the $814 billion stimulus measure enacted last year. The U.S. government’s total outstanding debt is about $13.5 trillion, according to U.S. Treasury Department figures.

Obama, 49, inherited what the National Bureau of Economic Research said this week was the deepest U.S. recession since the Great Depression. Even after the stimulus measure and other government actions, the U.S. unemployment rate is 9.6 percent.

Governments globally need to cut debt and avoid bailing out struggling companies because that’s the only way they can shield their economies from the negative consequences of erroneous budget forecasts, Taleb said.

Errant Forecasts

“Today there is a dependency on people who have never been able to forecast anything,” Taleb said. “What kind of system is insulated from forecasting errors? A system where debts are low and companies are allowed to die young when they are fragile. Companies always end up dying one day anyway.”

Taleb, a native of Lebanon who gave his speech in French to an audience of Quebec business people, said Canada’s fiscal situation makes the country a safer investment than its southern neighbor.

Canada has the lowest ratio of net debt to gross domestic product among the Group of Seven industrialized countries and will keep that distinction until at least 2014, the country’s finance department said in March. Canada’s ratio, 24 percent in 2007, will rise to about 30 percent by 2014. The U.S. ratio, now above 40 percent, will top 80 percent in four years, the department said, citing IMF data.

“I am bullish on Canada,” he told the audience. “I prefer Canada to the U.S. or even Europe.”

Mortgage Interest

Canada’s economy also benefits from the fact that homeowners, unlike their U.S. neighbors, can’t take mortgage interest as a tax deduction, Taleb said. That removes the incentive to take on too much debt, he said.

“The first thing to do if you want to solve the mortgage problem in the U.S. is to stop making these interest payments deductible,” he said. “Has someone dared to talk about this in Washington? No, because the U.S. homebuilders’ lobby is hyperactive and doesn’t want people to talk about this.”

Taleb also criticized banks and securities firms, saying they don’t adequately warn clients of the risks they run when they invest their retirement savings in the stock market.

‘Have Fun’

“People should use financial markets to have fun, but not as a depository of value,” Taleb said. “Investors have been deceived. People were told that markets go up regularly, but if you look at the last 10 years that’s not been the case. The risks are always greater than what people are told.”

Asked by an audience member if returns such as those posted by Berkshire Hathaway Inc. Chief Executive Officer Warren Buffett -- who amassed the world’s third-biggest personal fortune through decades of stock picks and takeovers -- are the product of luck or talent, Taleb said both played a part.

If given a choice between investing with Buffett and billionaire investor George Soros, Taleb also said he would probably pick the latter.

“I am not saying Buffett isn’t as good as Soros,” he said. “I am saying that the probability Soros’s returns come from randomness is much smaller because he did almost everything: he bought currencies, he sold currencies, he did arbitrages. He made a lot more decisions. Buffett followed a strategy to buy companies that had a certain earnings profile, and it worked for him. There is a lot more luck involved in this strategy.”

Soros gained fame in the 1990s when he reportedly made $1 billion correctly betting against the British pound.

Taleb’s 2007 best-seller, “The Black Swan: The Impact of the Highly Improbable,” argues that history is littered with rare, high-impact events. The black-swan theory stems from the ancient misconception that all swans were white.

A former trader, Taleb teaches risk engineering at New York University and advises Universa Investments LP, a Santa Monica, California-based fund that bets on extreme market moves.

PRAVDA SAYS 'AMERICAN DESCENT INTO MARXISM HAPPENING WITH BREATHTAKING SPEED'!

Sunlit Uplands is rightly accused of having a bias. We readily admit it. We hate godlessness, socialism, totalitarianism, and those who would impose their will in place of God-given rights and freedoms.

But do you think those working for what was the propaganda arm of the former Soviet Union might know something about totalitarian Marxism? We've presented a column by the head of the Communist Party USA exulting in the coming of Obama. Now PRAVDA has told its readers that the "American descent into Marxism is happening with breath taking speed." 

From PRAVDA

It must be said, that like the breaking of a great dam, the American decent into Marxism is happening with breath taking speed, against the back drop of a passive, hapless sheeple, excuse me dear reader, I meant people. 

True, the situation has been well prepared on and off for the past century, especially the past twenty years. The initial testing grounds was conducted upon our Holy Russia and a bloody test it was. But we Russians would not just roll over and give up our freedoms and our souls, no matter how much money Wall Street poured into the fists of the Marxists. 

Those lessons were taken and used to properly prepare the American populace for the surrender of their freedoms and souls, to the whims of their elites and betters. 

First, the population was dumbed down through a politicized and substandard education system based on pop culture, rather then the classics. Americans know more about their favorite TV dramas then the drama in DC that directly affects their lives. They care more for their "right" to choke down a McDonalds burger or a BurgerKing burger than for their constitutional rights. Then they turn around and lecture us about our rights and about our "democracy". Pride blind the foolish. 

Then their faith in God was destroyed, until their churches, all tens of thousands of different "branches and denominations" were for the most part little more then Sunday circuses and their televangelists and top protestant mega preachers were more then happy to sell out their souls and flocks to be on the "winning" side of one pseudo Marxist politician or another. Their flocks may complain, but when explained that they would be on the "winning" side, their flocks were ever so quick to reject Christ in hopes for earthly power. Even our Holy Orthodox churches are scandalously liberalized in America. 

The final collapse has come with the election of Barack Obama. His speed in the past three months has been truly impressive. His spending and money printing has been a record setting, not just in America's short history but in the world. If this keeps up for more then another year, and there is no sign that it will not, America at best will resemble the Wiemar Republic and at worst Zimbabwe. 

These past two weeks have been the most breath taking of all. First came the announcement of a planned redesign of the American Byzantine tax system, by the very thieves who used it to bankroll their thefts, loses and swindles of hundreds of billions of dollars. These make our Russian oligarchs look little more then ordinary street thugs, in comparison. Yes, the Americans have beat our own thieves in the shear volumes. Should we congratulate them? 

These men, of course, are not an elected panel but made up of appointees picked from the very financial oligarchs and their henchmen who are now gorging themselves on trillions of American dollars, in one bailout after another. They are also usurping the rights, duties and powers of the American congress (parliament). Again, congress has put up little more then a whimper to their masters. 

Then came Barack Obama's command that GM's (General Motor) president step down from leadership of his company. That is correct, dear reader, in the land of "pure" free markets, the American president now has the power, the self given power, to fire CEOs and we can assume other employees of private companies, at will. Come hither, go dither, the centurion commands his minions. 

So it should be no surprise, that the American president has followed this up with a "bold" move of declaring that he and another group of unelected, chosen stooges will now redesign the entire automotive industry and will even be the guarantee of automobile policies. I am sure that if given the chance, they would happily try and redesign it for the whole of the world, too. Prime Minister Putin, less then two months ago, warned Obama and UK's Blair, not to follow the path to Marxism, it only leads to disaster. Apparently, even though we suffered 70 years of this Western sponsored horror show, we know nothing, as foolish, drunken Russians, so let our "wise" Anglo-Saxon fools find out the folly of their own pride. 

Again, the American public has taken this with barely a whimper...but a "freeman" whimper.

So, should it be any surprise to discover that the Democratically controlled Congress of America is working on passing a new regulation that would give the American Treasury department the power to set "fair" maximum salaries, evaluate performance and control how private companies give out pay raises and bonuses? Senator Barney Franks, a social pervert basking in his homosexuality (of course, amongst the modern, enlightened American societal norm, as well as that of the general West, homosexuality is not only not a looked down upon life choice, but is often praised as a virtue) and his Marxist enlightenment, has led this effort. He stresses that this only affects companies that receive government monies, but it is retroactive and taken to a logical extreme, this would include any company or industry that has ever received a tax break or incentive. 

The Russian owners of American companies and industries should look thoughtfully at this andthe option of closing their facilities down and fleeing the land of the Red as fast as possible. In other words, divest while there is still value left

.

The proud American will go down into his slavery with out a fight, beating his chest and proclaiming to the world, how free he really is. The world will only snicker. 

Stanislav Mishin

Revolution

From American Thinker
By Herbert E. Meyer

During the last 30 years we Americans have been so politically divided that some of us have called this left-right, liberal-conservative split a "culture war" or even a "second Civil War." These descriptions are no longer accurate. The precise, technical word for what is happening in the United States today is revolution.

Because of our country's history, we tend to think of revolutions as military conflicts, and of the revolutionaries as the good guys; the image of Minutemen fighting valiantly against the British forces at Lexington and Concord lies deep within our DNA. But sometimes -- quite often, actually -- revolutions aren't military conflicts, and the good guys are the ones trying to keep the revolution from happening. In January 1933, Adolf Hitler was appointed chancellor of Germany by its elected president; he would spend the next two years consolidating his power with the legislative connivance of his political allies in the Reichstag. In October 1917, Lenin and his Bolsheviks took control of Russia from Kerensky and his Social Democrats -- who had overthrown the Czar earlier that year -- entirely through parliamentary maneuvering in Russia's fledgling Duma.

What defines a revolution -- and this is the crucial point to grasp -- is that when it's over a country has changed not merely its leaders and its laws, but its operating system.

Since most of us think of computers when we hear the phrase "operating system" let me use this analogy to illuminate my point: Every computer has an operating system, and most of us are using either the Microsoft or the Apple operating system. If you want to do something with your computer -- send an email, watch a DVD, read an online essay like this one -- you must do it the way your computer's operating system is designed to work.

No operating system is perfect, which is why Microsoft and Apple send updates to their customers from time to time. And every so often these companies launch new versions of their operating systems that incorporate a lot of modifications at once. Can you change the operating system you use? Of course you can. Two years ago I threw out every Microsoft-based machine in our company's office and replaced them with Apple products. Last month I met a corporate CEO who had just done the opposite, and replaced the Apple computers in his office with ones that run on the Microsoft operating system.

Democracies and Dictatorships

Now, just as computers have operating systems so too do countries. In fact, countries have dual operating systems - one political and the other economic. Broadly speaking, there are two kinds of each: Politically you can be a democracy or a dictatorship, and economically you can have either a free market or a command economy. Because countries don't buy their operating systems off the shelf, the way we buy our computer operating systems, each country develops its own versions. This is why our country's democracy is somewhat different from Canada's, which in turn is slightly different from Australia's, and so forth. These countries all have free-market economies, but again they aren't quite the same. Still, the similarities among democracies and free-market economies are more striking than the differences. Likewise, while no two dictatorships are the same, and no two command economies work in exactly the same way, the differences among them are comparatively trivial.

Since no country's operating systems are perfect, can they be improved? Of course they can. Every time our Congress passes a new law, or enacts a new regulation -- or whenever the Supreme Court issues an opinion -- that's the equivalent of an update to our political or economic operating system. Can you change a country's operating system? Yes, you can. And the precise, technical word for replacing one political or economic operating system with another is -- revolution.

When politics in a democracy is normal, the political parties all agree to preserve the operating system while they compete to improve it. This is what is actually happening when one party in Congress introduces a new piece of healthcare or education legislation and the other party opposes it or introduces its own healthcare or education bill, or when two candidates for the Senate argue over whether or not to change our immigration laws. Honorable people often will disagree about what to do -- sometimes quite strongly, just as the software engineers at Microsoft and Apple will sometimes argue through the night about whether a proposed change in the operating system's code is an improvement or just "kludge." But in normal politics the outer limits of all these disagreements are marked by a shared commitment to preserving and improving the operating system.

In abnormal politics, the objective of one party isn't to improve the operating system, but to overthrow it.

With this analogy in mind, now we can see clearly what's been happening in the United States during the last three decades. While conservatives have been working to improve our democracy and our free-market economy, liberals have been working to replace our democracy with a dictatorship, and our free-market economy with a command economy controlled by the government. The liberals couldn't say this aloud, because if they did the American people would have tossed them out of office on their ears. So the liberals worked covertly, feigning support for democracy and for the free market while working diligently to undermine both.

This is why our politics has been so partisan, so vicious, and so deadlocked. This is why words have lost their meaning in Washington, why we can never get to the bottom of anything, why we lurch from one manufactured scandal to another. It's all been part of a decades-long effort by the liberals to throw sand in our eyes -- to keep us from seeing clearly where they really want to take us. (And this explains why, when we question their judgment on some issue, they go berserk and accuse us of questioning their patriotism. They're afraid we're on the verge of catching on. If you want to have some fun, the next time you're chatting with a liberal and he goes nuts when you call him a socialist, say to him: "I'm so sorry you're offended. Please tell me, what is there about socialism you don't like?" You won't get a coherent answer; he'll just accuse you of a hate crime.)

Obama's Two-Front Offensive

With the election of Barack Obama as president, the liberals have launched a massive, two-front offensive they believe will end in victory. They have judged that our public education system is so degraded that only a few Americans are left who even understand what a democracy is, and how the free market actually works. They are convinced that the majority of Americans are too frightened by the current recession to care about preserving the principles that made us the most powerful, productive and innovative country the world has ever known. In short, the liberals are reaching for victory because they believe that history now is on their side.

The speed of their offensive is breathtaking.

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