We will continue that discussion today, but rather than use a variety of sources we will focus on a list that was tabulated by the American Enterprise Institute (AEI). We have covered several points made by the AEI list already but will include them here again as a refresher. The list is extensively documented relative to the nonpartisan and government sources of their data and conclusions so it is not biased in its presentation of the sorry state of our economy, relative to the inability of our politicians to understand and formulate coherent economic policies.
Here is the AEI's findings and observations along with a few tweaks from me:
1. U.S. publicly held debt as a share of GDP was 41% in 2008. It is projected to be 76% next year — and more or less stay at that historically high level for another decade under the most recent Obama budget. Then it really gets bad.
2. During the more than three-year Obama recovery, we’ve recovered only 4.8 million private-sector jobs of the 8.9 million lost during the Great Recession. During the Reagan recovery, it took just a year to recover all the lost jobs.
3. At the current pace of job creation the past two years — and assuming labor force participation stays constant — the economy won’t return to the Bush low of 4.4% unemployment for 9 more years. This assumes that another recession or substantial economic downturn does not occur in the meantime, a highly unlikely scenario.
4. The current level of private sector jobs remains nearly 13 million below where it would be if the labor market was back to normal and creating jobs at what economists call a “trend recovery.” Lots of catch up still to be done.
5. The output gap — the difference between where the economy would be if it was recovering normally (the blue line below) and where it actually is (the red line) — remains wide (you can double click on the graph for a larger view):
6. The United States now ranks 7th in the World Economic Forum competitiveness rankings out of 144 nations. It was 1st back in 2008.
7. There are fewer new firms being formed today than two years ago when the recession ended, according to a Hudson Institute study. In fact, the rate of startup jobs during 2010 and 2011 — years in which the economy was technically in full recovery — are the lowest on record.
8. Real average hourly earnings fell 0.2%, seasonally adjusted, from September 2011 to September 2012, according to the Labor Department.
9. Too Big To Fail still exists despite Dodd Frank, as evidenced by the cost-of-funding advantage big banks hold over small banks. In fact, the borrowing edge is virtually the same as it was four years ago. Also, the biggest five banks are about the same size they were prior to the recession and prior to Dodd Frank when measured on just about any aspect of the banking industry, i.e. we are no different and not better from a banking vulnerability perspective than we were before the economy tanked.
10. Median household income has fallen 5% on an inflation- adjusted basis since the recession ended in June 2009, according an analysis of U.S. Census Bureau data by Sentier Research. That’s more than the 3% drop during the Great Recession itself.
11. When Obama took office, the U.S. had a fiscally unsustainable safety net (Social Security, Medicare, Medicaid), an uncompetitive tax system (70,000 pages long), an unwieldy, inhibiting, and insane set of Federal regulations which he as radically expanded to over 165,000 pages, and an anti-innovation immigration policy. All are still true today.
Einstein once said: "The definition of insanity is doing the same thing over and over and expecting different results." I would update today to read: "The definition of insanity is following the same failed economic policies of the past four years over and over and expecting different results."
If this insanity has shown us anything it is that we are in the middle of insanity when it comes to believing our current set of politicians, from Obama on down, have the slightest clue on how to implement effective and efficient economic policies. We will conitnue to prove this point over the next two days.
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