American Elephants

Not Even Half by The Elephant's Child

This Recovery is the Worst Since World War II. by The Elephant's Child

Recovery? What recovery? In almost every speech, President Obama proudly claims that he inherited the worst recession since the Great Depression. He has added new jobs each month, and while we need to do more, we are heading in the right direction.

According to the Federal Reserve Bank of Minneapolis which tracks economic performance for each recovery, compares the growth of gross domestic product for each recovery, and job growth for each recovery; there have been 11 recessions and 11 recoveries over the past 60 years. This recovery is near the bottom of all 11.

Average normal job growth is 6.5%.  Cumulative non-farm job growth is just 1.9% 34 months into the ‘recovery.’ Cumulative growth of GDP is just 6.8% 11 quarters into this ‘recovery.’ The average is 15.2%, and GDP growth is the worst of all 11 recessions.

The administration has tried every Keynesian method for achieving economic growth to no avail. The recovery remains one of the worst since World War II. The problem lies with the way the “stimulus” was carried out, the uncertainty of a looming tax Armageddon,  the anti business rhetoric, and the piles of new regulation. This is, I believe, the first President that has ever run for office opposing capitalism and the free market.

The monetary policy of the Federal Reserve has resulted in extraordinarily low interest rates — almost zero for the past three years. In a normal world, low interest rates wold lead to increased borrowing by individuals and businesses — increasing economic activity. What it has done instead is to help the government to borrow more cheaply, the big banks to recapitalize quickly, and homeowners to refinance at low rates.

The uncertainty concerning ObamaCare and what it will do to business and individuals, higher taxes on business combined with anti-business rhetoric from the administration, and the constant threat from EPA actions has discouraged the kind of borrowing and lending that low rated usually encourage. The low interest rates have meant historically low yields on savings, and encouraged riskier investments.

The president’s fiscal policy has increased expenditures by about $700 billion per year since 2008. The increased spending has had a temporary stimulating effect, but has resulted in an increase in the national debt of over $5 trillion. Where has all the spending gone? The money for the most part, was badly spent. Billions went to reward government employees, and the auto unions. More billions went to training programs that don’t work, (the government has 49 job training programs administered by nine agencies —  all ineffective), extended unemployment insurance that reduces the incentive to find work. That which was directed to infrastructure was mostly wasted because those “shovel-ready” jobs weren’t shovel ready.

In Obama’s first three years, 105 major federal regulations have added more than $46 billion per year in new costs for Americans.  32 new major regulations in 2011 increased regulatory costs by another $10 billion annually with an additional $6.5 billion in one-time implementation costs.

The mindset that says that innovation, growth,and  job creation come from government; and that the economy will perform better if government tells people what to do; is a real problem.  It’s not just the hubris that assumes that they know better, nor the contempt they have for the American people.  It is that they simply do not understand who Americans are.

We are a courageous people who picked up our lives and went forth to an unknown country in the hopes of more freedom and a burning desire for a better life. That’s true for the first immigrants, and the most recent. Those who were lacking in courage or content with things the way they were stayed put.

Those who didn’t find what they dreamed of on the East coast picked up and struck out for the West. Americans don’t need a lot of regulation, they don’t need to be told what to do, and they just want government to get out of their hair, and leave them alone to innovate, create, to try, fail, and succeed.

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