Obama Epic Fail Series, Part 2B - Economics

We are going to take a few days and discuss the track record of the Obama Presidency across several perspectives. The impetus for this discussion and review was the fact that when the world leaders and millions of French men and women rallied in France to protest and take a stand against global Islamic terrorism, this President embarrassed himself and the United States by NOT attending the gathering of world leaders in Paris. In our opinion, this was an epic fail and a missed historical opportunity.

Not only did he not attend, no high ranking member of his administration bothered to make the trip either. While world leaders of over 40 countries attended and high ranking officials of other countries made the trip, the highest ranking U.S. person was just the current French ambassador.

This snub of the French is a tremendous, and possibly historic, missed opportunity. This could have been a defining moment in the Obama Presidency where he rallied the rest of the world in its fight against global terrorism. The whole world was watching but apparently the President was back in the White House, rumored to be watching NFL football games instead of leading in Paris.

If Obama was a true leader, he could have used the commonality of the fight against terrorism to also work on other global issues. The leaders of Israel and the PLO were at the rally with a common, shared goal of fighting terrorism. What a great time in might have been of using that common objective to move onto other problem resolution opportunities.

The Russian Foreign Minister was also at the Paris rally. Why not use the common goal of fighting terrorism to talk about the Ukraine and other troubling Russian and U.S. issues? But the President missed this historic window of leveraging this common objective across most of the world.

But missed opportunities seems to be the theme of this President. Whenever an opportunity to be bold, productive, eic, and a leader arose, this President, and the administration he has put in place, has usually failed and failed miserably. Bad economic policies, divisive race politics, a failing health care reform law, a clumsy foreign affairs management history, bad management processes as a Federal government bureaucracy teeters on the edge of total incompetence, etc., this administration has not been able to get out of its own way to attain any problem resolution at all.

Given that we are comfortable calling his absence in Paris an epic fail, we are going to take a few days and see if there are other epic fails that this administration has attained. We will discuss the policies track records of this Presidency over the next few days according to the following general topics and see if the failure as epic as his absence in Paris has been repeated in other areas of governance:

• Transparency and integrity
• Economic policy
• Foreign policy
• Healthcare policy
• Government management policy

Economic Policy

I am not denying that Obama came into a difficult economic situation when he came into office. The country was in the midst of the Great Recession. Banks were failing, unemployment was sky high, and economic growth was lousy.

However, he was not the first President that inherited a tough economy. Reagan took office after the disastrous Jimmy Carter Presidency. During that Presidency, a new economic term was coined, stagflation. Previous economic theory stated that you could not have high inflation and high unemployment at the same time. However, Carter mangled the economy so much that we had high inflation, high unemployment, sky high interest rates, and anemic economic growth all at the same time.

But what did Reagan’s economic policies and strategies produce:

• Seven consecutive years of economic growth that never fell below 3.5% a year.
• In four of the seven years, economic growth was above 4.0%.
• One year economic growth was over 7%.

All this robust economic growth came from a place of stagflation. Thus, the argument to protect Obama’s economic performance because of the Great Recession is an empty one compared to what Reagan accomplished.

Even Clinton’s Presidency recovered nicely from a recession, averaging 4% growth coming out of a recession. And both Reagan and Clinton did not have the economic tailwinds that Obama enjoyed:

1. Spending over $800 billion on an economic stimulus program that failed miserably.
2. Adding over $7 trillion of government deficit spending to the economy and the national debt.
3. Benefiting from over $3 trillion of Federal Reserve printed money that was added to the economy.
4. An energy revolution that caused energy prices to drop substantially and created loads of high paying energy industry jobs.

So given this historical background, let’s see how badly the Obama Presidency has come up short and decide if this is also an epic fail.

First, the good news:

• The traditional unemployment rate has been slowly decreasing over the past few years.
• The weekly filing of first time unemployment benefits has been slowly decreasing over the past few years.
• Inflation has been under control during the entire run of the Obama Presidency.

Now the bad news:

• According to an Obama promise, if his economic stimulus program was enacted, unemployment would not go higher than 8% and the unemployment rate would shortly drop back down to 5%. His stimulus program was passed and unemployment soared past 8% and the unemployment rate has yet to drop to the promised 5%.
• But the traditional unemployment rate measure, the so-called U-3 unemployment rate, is now a somewhat deceptive measure since this measure does not take into account the part time workers that want full time work and the workers that want a full time job but have become too discouraged to look for one in the past four weeks. These populations of workers have been increasing in these tough economic times but this trend is not captured by the U-3 measurement.
• The truer measure is the U-6 unemployment measure which takes into account these types of workers. The latest monthly measure of the U-6 unemployment rate is 11.2% vs. the U-3 rate of 5.6%. Thus, the more realistic unemployment rate is twice what the government claims is the unemployment rate.
• This 11.2% is equivalent to about 10 million Americans not being able to reach their full employment desires, either because they are stuck with part time work only or cannot find a job at all.
• This U-6 rate has not been this high since 1994, over twenty years ago, certainly not an economic record to be proud about.
• The economy has been so anemic that ever higher college graduates are having to live back home with their families after graduation due to anemic job growth:

• At the end of the recession in 2009, median U.S. household income was estimated by the government to be $54059. However, since the recession ended, median household income has decreased, not increased, during the recovery, bottomed out at just under $52,000, when adjusted for inflation, according to the Federal Reserve Board, a decrease of about 4%.
• While household income has decreased after the recession ended, wage and salary growth has been flat and anemic, averaging only about 1.5% during the so-called recovery, probably less than the rate of inflation:

• While the economy has been in recovery for years. most, if not all of that recovery was in Texas, a low tax, business friendly state:

Is the economy improving? Yes. Is unemployment down? Yes. Is inflation under control? Yes. Did Obama inherit a difficult economic situation? Yes. These are all true statements.

However, despite record deficit spending, hundreds of billions of dollars spent on an economic  stimulus plan, trillions of dollars of aid from the Federal Reserve Board, and an energy revolution, this recovery has been anemic, weak, delayed, and geographically focused with household income and wage/salary growth behaving as if the recession never ended.

The 70% or so increase in national debt as a result of Obama’s economic plans will place tremendous financial pressure on American families for generations to come. Young Americans have not seen the economic opportunities that previous generations have enjoyed despite being five years out of the recession.

And most Americans agree with this assessment. According to a recent Economist/YouGov poll:

• While Americans in general believe the economy is getting better. they do not think, on average, that their personal financial situation is getting better.
• Americans are far more likely to believe that unemployment and the economy are improving because of themselves and American businesses, not Obama and Congress.
• According to the poll, only one in four think they are better off than when Obama first came into office, with one in three saying they are worse off.
• 52% of those polled do not even believe the government’s unemployment numbers, saying unemployment is worse than what the government admits to.

When the majority of Americans do not believe or trust your basic economic numbers, think they are worse off than before you came into office despite being five years removed from the recession, and do not give you credit even for the weak, delayed, and expensive economic recovery, that can be classified as nothing else than an epic fail.

A long but necessary post to cut through the hype of economic spinning from this administration. Stay tuned over the next few days as we investigate whether there are other epic fails from this administration in other areas of governance.

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