American Elephants


Is Relying on Lies a Winning Campaign Strategy? by The Elephant's Child

Obama has been out on the campaign trail telling anyone who will listen that”we tried our “economic plan “and it worked.” Whoo-eee. Well, as he said a few days back: “the private sector is doing fine.” Possibly related: Obama hasn’t received his daily economic briefing since April 2011. The last one was at 10:00 a.m. on April 24, last year.  As press secretary Jay Carney says”the President has a lot on his plate.”

Then he veers off into imaginary world. He claims that the country has tried Mitt Romney’s economic policies already, and they were a dismal failure. Romney, he says, wants to do two things: Cut taxes for the rich and massively deregulate the economy.

“The truth is,” Obama says, “we tried (that) for almost a decade, and it didn’t work.” Bush-era tax cuts and deregulation resulted in the most sluggish job growth in decades” he claims, along with “rising inequality, surpluses turned into deficits, culminating in the worst economic crisis in our lifetimes.” Oh, my. Another whopper.

History was never the president’s strong point. You remember the maternal grandfather who liberated Auschwitz, the paternal grandfather who was tortured by British imperialists in Kenya, and the Indonesian step-grandfather who was killed by the Dutch while fighting for independence. That was made-up personal history. He didn’t do well with historical references in his speeches either, though it’s hard to know whether it is the speechwriters, the president, or both, who are unfamiliar with history. It is economics that seems to be his weakest point.

He congratulates himself for “rescuing the automobile industry” and not letting them slide into bankruptcy.  But we have very good bankruptcy laws that would have reined in the auto workers unions whose overblown salaries and benefits were the major reason the car companies were in financial trouble. in the first place.

What Obama did was illegally shaft the bondholders who had first legal claim on company assets, the unions got ownership of a big chunk of the companies— because Obama supports the unions who support him. Many auto dealers were put out of business, though they are separate, private businesses. A big chunk of Chrysler was given to Fiat. The whole thing smells to high heaven. The taxpayer funds invested will never be paid back, and GM still owes us something over $35 billion.

But aside from aggrandizing his own efforts, Obama tells tall tales about the Bush years. He has consistently tried to blame the financial collapse on George W. Bush.” Bush-era tax cuts and deregulation” he claims “resulted in the most sluggish job growth in decades” along with “rising inequality, surpluses turned into deficits, culminating in the worst economic crisis in our lifetimes.”

Big problem. His claims are all false. Bush was no big deregulator, he actually imposed dozens of major new rules. Regulatory staffing climbed 44% during the Bush years, and federal spending on regulations shot up 45% in real terms under Bush. Much of that came as the result of government takeover of airport security in the wake of 9/11.

Romney, Obama says, wants to cut taxes for the rich and deregulate the economy. “The truth is,” Obama says “we tried (that) for almost a decade, and it didn’t work.”

When the Bush tax cuts kicked in, from June 2003 to December 2007, the economy added 8.1 million jobs, according to the Bureau of Labor Statistics. The unemployment rate fell to 5% from 6.3%. Real GDP growth averaged close to 3% in the four-plus years after that, and the budget deficit fell steadily from 2004 to 2007. 5% unemployment is considered full-employment, a far cry from Obama’s 8.2% unemployment, which is the best-sounding. Unemployment for Blacks, Hispanics and kids is far higher, and most unemployed have just quit looking.

A study by University of California economist Emmanuel Saez found that inequality has climbed much faster under Obama. It was unchanged under Bush. The rich ended up paying a larger chunk of the federal income tax burden after the Bush tax cuts went into effect, with the share by the top 1% rising to 40% by 2007, up from 37% the year before Bush took office.The federal income tax was more progressive in 2007 than it was is 1979,  and is the most progressive anywhere.

The one thing Obama actually got right was that the country has tried a combination of deregulation and tax cuts before. That happened in the Reagan administration

President Reagan aggressively deregulated entire industries, and put the brakes on new federal rules. Regulatory compliance costs fell 8% during his time in office, and staffing dropped about 7%. At the same time tax cuts reduced taxes as a share of GDP by 6%. The result was an eight-year economic boom in which real quarterly GDP growth averaged 4.3%.                                                              (click to enlarge)


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