Why All Incumbents Need To Be Dumped In November, 2012, Economically Speaking

If we look at where the economy sits today, a little over a year before the next national elections, it has become unmistakeably clear that we need to make some serious changes to the economic policies, strategies, and directions of the country. Keeping the same people in office, the ones that gave us these failed economic policies, strategies, and directions, beyond next November would seem foolish since these are the same people who created the following malaise:

- Most people should know that the overall unemployment rate in America has been unacceptably high in the 9% range, equivalent to about 14 million Americans, for what seems forever with the underemployed rate adding millions more to the 14 million. However, according to a recent article on the Mainstreet website, for those adults that are over 25 years old:

• The unemployment rate for those adults with only a high school or less education is 14%.
• The unemployment rate for those with less than a four year college education is 9.7%.

- In the first quarter of 2011, the average number of private sector jobs created was 191,000 per month. In the second quarter, the average number of private sector jobs created was 138,000 per month. In the third quarter, the average number of private sector jobs created was 117,000.

Obviously, the economy seems to be weakening as we go through the year even though we are out of the recession. Unfortunately, Harry Reid thinks just the opposite relative to job growth with his recent, inane statement that the private sector job situation is just fine. More on his denial of reality in a few days in another post.

- The number of Americans in the long term unemployed situation (unemployed more than 27 weeks) was 6.1 million in September, 2010 and despite the end of the recession, was 6.2 million in September, 2011. As with the private sector job creation trend, the long term unemployment trend is also not positive.

- At the end of 2008, the average price of a gallon of gas was about $1.61. At the end of 2010, the average price of a gallon of gas was about $3.00. Today, I doubt anyone in America is buying gas for less than $3.20 per gallon. Thus, American households are spending more and more on gas which leaves less and less disposable income to grow the economy in other market areas.

Bernard Baumohl, chief global economist of the Economic Outlook Group, told Mainstreet he expects gas prices to stay in the $3 to $5 range for the next three years. If true, this will contribute little relief to any improvement in overall economic conditions.

- Mr. Baumohl's view of 2012 is pretty consistent with many, many economists. He foresees a little uptick in consumer spending in the fourth quarter for the holidays but once the holiday bills hit early in 2012, the potential for economic contraction is a real and growing threat.

- Household income at the end of the last recession was estimated to be $53,528. Two years later, after the recession, Sentier Research estimates that average household income has decreased by 6.7% to only $49,909. But what is worse than the overall average:

• Single parent households have seen their average household income decrease 7.3%.
• Households headed by a young adults less than 25 years old lost about 9.5% of their household income on average.
• African-American households saw their average household income decline 9.4%.

- A recent survey conducted by consulting firm FICO of bank risk managers said housing prices are unlikely to return to pre-recession 2007 levels before 2020, nine years from now. Thus, housing is unlikely to contribute to economic growth in the coming years. 73% of those surveyed expect to see home foreclosures to be a major problem for at least another five years, further depressing housing industry economic activity.

- In August of 2011, there were about 8.8  million Americans who considered them selves involuntary part time workers, workers who were working at part time jobs but who desired full time employment. Unfortunately, within one month, by September, 2011 9.3 million Americans considered themselves involuntary part time workers.

The Mainstreet article reporting these statistics correctly point out that these involuntary workers have less disposable income given their part time status, are more likely to not have company benefits which imposes additional costs on the part time workers, and the typical part time worker is likely to have higher work-related expenses since they could be traveling to more than one job to increase their income. All of these factors are a drag on consumer spending and the potential for the economy to grow.

- The Census Bureau recently reported that the percentage of Americans living below the poverty line was up to 15.1% in 2010 vs. 14.3% in 2009, despite the end of the recession.

- A recent Gallup survey found that American adults with health care insurance coverage dropped from 85.9% in September, 2008 to 82.3% in September, 2011 despite the end of the recession.

- IRS tax return statistics show that the number of American tax filers who had Adjusted Gross Incomes above one million dollars has dropped by about one third when you compare total 2007 tax returns vs. 2009 tax returns.

- Mainstreet reports that home mortgage defaults and student loan defaults are up significantly despite the end of the recession. These defaults will likely severely damage the future credit worthiness rating of many Americans, especially younger Americans, making it more difficult for them to get affordable credit treatment in the future, further depressing the potential for economic growth.

- Mainstreet reports that the Federal government's national debt load has already gotten to about the $14.9 TRILLION level, placing an individual debt burden on every American household of about $130,000. Since there is no indication that the political class has any clue or inclination on how to reduce this number, we can assume that the $130,000 load will only get worse, further burdening economic growth going forward.

So, where will economic growth come from:

• If the negative housing, foreclosure, and mortgage trends do not change, economic growth will not come from the housing industry.
• If the negative unemployment and underemployment trends do not change, economic growth will not come from putting more people to work.
• If the negative trend in private sector job growth does not change, economic growth will not come from putting more people back to work, regardless of what Harry Reid says.
• If the negative trends in household and student defaults do not change, the inability to get credit for future purchases and economic growth will not come from credit worthiness improvement.
• If the negative trend in gasoline prices does not change, disposable income will continue to be diverted into increased gas prices and not be available for economic growth.
• If the negative trends in those without health care insurance does not change, the amount of household income at risk to cover unexpected health costs will not be available for economic growth.
• If the negative trend in government spending and national debt does not change, more and more of taxpayer wealth will be diverted to pay interest on the national debt and not be available for economic growth.

Certainly not a pretty picture. It is especially grim for the long term unemployed, single parent households, younger adults, African Americans, the chances of becoming a millionaire earner, and the less educated in America, as the above statistics show. In other words, given the gross mismanagement of the American economy, no American of any type should think that any Washington politician deserves to be in office a single day longer than their current term.

From President Obama to long term Congressional veterans to first time Congressional members, they all need to go. I am now convinced that they are 1) unable to grasp the complexities of their office and responsibilities and 2) are also unwillingly to step up and learn and work at solving the nation's major issues. They are so preoccupied with their own self importance, their own re-election campaigns, and their long term political and financial status that they have allowed the economy and the nation's future to degenerate into the above situation, a situation where sources of future economic seem non-existent.

What have our incumbent politicians been involved with recently in the face of these dire economic conditions:

• President Obama has been on a campaign tour bus and on Air Force One traveling around the country on his perpetual re-election campaign, pushing his weak, likely ineffective, and unimaginative short term jobs package.
• Congress gave itself a five week vacation in August despite the economic conditions.
• Over the past week or so Congress has been debating legislation that would establish how many potato servings should be served to kids in school cafeterias.
• Rumors have it that the Congressional Super Committee that is supposed to come up with rational, sane plans to cut government spending is making no progress.

What a disgrace. The country is facing serious, long term economic growth challenges and these people are worried about potato servings. No obvious focus on problem resolution, no obvious desire for problem resolution, no obvious ability to execute problem resolution.

Long term we need to implement term limits on Federal government politicians as outlined in Step 39 of "Love My Country, Loathe My Government." Short term, we need to implement our own form of term limits by dumping out all incumbents in 2012. I do not believe the country's economy can survive re-election of many current incumbents.

Rich or poor, young or old, African-American or not, highly educated or not, there should be no American who is happy or satisfied with the disastrous and failed economic leadership, policies, and strategies of the current crop of Washington  politicians. Dump 'em!




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