Wednesday, October 7, 2015

October, 2015, Part 5, Political Class Insanity: Epic Mismanaging The Economy at Epically Bad Levels Continued

It is the beginning of another month which means it is time again to review the latest political class insanity from the American political class. Each month it takes us multiple posts to cover the wasteful spending, incompetent government organizations and employees, government programs that usually make a problem worse than resolving it, inane and idiotic politician comments, etc.

To review past posts on this insanity and idiocy, just click on the first few posts in each month listed to the right of this page. After reviewing just a handful of these insanity posts we think you will agree that we are currently being served by the worst set of American politicians ever to hold office in our entire history

Today we will focus on economic insanity and incompetence from the American political class. Keep in mind the following realities when reading about the economic insanity and low performance generated by our Washington politicians:
  • This Presidential administration spent a whopping $800 billion in a so-called economic stimulus package.
  • This Presidential administration had the benefit of an energy revolution that significantly reduced the energy costs of businesses and households, freeing up money to be spent throughout the economy.
  • This Presidential administration had the benefit of the Federal Reserve Board printing trillions and trillions of dollars and putting them in play to jump start the economy.
Despite these tailwinds of almost a trillion dollars in Federal government stimulus spending, a once in a generation energy revolution, and trillions of dollars of Fed money stimulus, the Washington political class in general and this administration in particular produced a record anemic economic recovery. The recovery is so weak that annual GDP growth never attained its long term average and in fact never broke 3%, household income and wage growth has stagnated, and so many people got discouraged by the horrible job market that the workforce participation rate is at a 40 year low.

That is insanely poor economic planning, strategy, and knowledge. And as a result, we are stuck with the following economic insanity:

1) Yesterday we did a lot of reviews on how bad the unemployment and job creation situation is in America. But other data shows that it is even worse for American citizens than yesterday’s bad news. According to the latest Bureau of Labor Statistics reports, “foreign born” workers saw their job numbers increase by 14,000 in September while “native born” Americans saw them lose 262,000 jobs.

In the past quarter, the job results for native born Americans are even worse. Native born Americans lost almost 1 million jobs in the past three months while jobs filled by immigrants increased by 218,000. And the President and Secretary of State want to admit upwards of 100,000 Syrian war refugees into the country in the next year, many of whom willbelooking for jobs. You do the numbers.

2) Yesterday we discussed the reality that the U.S. labor participation rate is at a forty year low because Washington and Obama economic policies have not beeen able to generate enough economic growth and resultant job growth. The latest Bureau of Labor Statistics report details how bad things are in sub-sectors of the job market:
  • The percentage of American men in the labor force hit a record low in September.
  • 71.3% of men aged 20 or older held a job or actively sought one in September while only 68.7% of men over 16 had a job or were looking for one.
  • When Obama took office in 2009, the respective men labor participation rates were 75.3% for male adults over 20 years of age and 72.4% for males over 16 years of age.
  • In other words, despite six and a half years of the Obama Presidency and its economic policies, American men are NOT working at record rates, over five years after the last recession.
  • And American female workers have not done any better under Obama's economic policies with the latest labor participation rate for women over 16 years of age hitting 56.4% in September, a 27 year low, vs. 59.4% when Obama took office.
  • For American women aged over 20 years of age, the labor participation rate was a little better last month at 57.9%, a 24 year low, and down from 60.9% when Obama took office.
Horrible management of the economy during the entire Obama administration. We are over five years removed from the recession, the Federal government spent over $800 billion to stimulate the economy, energy costs plummeted, and the Fed printed trillions of dollars and still the Obama administration cannot get enough jobs created for Americans. Epic failure.

3) Okay, last discussion on the political class insanity when it comes to managing a robust economy and how our politicians cannot do such a thing. The following nine charts from the Federal Reserve summarize how poorly Washington has managed the economy over the past seven years, the trends are clear and not good:
  • Student loan debt, and the economic fiasco potential it represents, has skyrocketed.
  • The number of Americans on food stamps/assistance is up about 50% since AFTER the recession ended.
  • Federal debt has skyrocketed after four years of Obama’s trillion dollars annual deficits.
  • The nation’s money supply has exploded in the past seven years with no underlying economic wealth to justify it. 
  • Health insurance costs continue to escalate despite Obama’s promise it would go down upwards of $2,500 a year for American families.
  • As we have hammered over the past two days, the labor participation rate is dropped significantly over the past six years AFTER the recession ended.
  • Median family income has continued to crater years AFTER the recession ended.
  • Home ownership has dropped substantially years AFTER the recession ended.

Einstein once said that the definition of insanity is doing the same thing over and over and expecting different results. This is so applicable to this Presidential administration and the others in the Washington political class: despite the incredible economic tail winds of a massive economic stimulus, dropping energy costs, and trillions in Federal Reserve money, they still could not come up with a strategy for a robust economy.

How about we do a few things differently and see if we can stop the insanity:
  1. How about we fix our public education system so that the trillions of dollars we spend on it over the years actually produces productive and intelligent graduates?
  2. How about we severely reduce the huge amount of unnecessary regulations and rules that American businesses have to follow which takes away from time and energy that could be used to productively expand the economy and job opportunities?
  3. How about we overhaul the entire tax code so that businesses and consumers have more money to spend in the real economy rather than giving it to the black hole that is Washington D.C. where nothing productive is ever done with taxpayer wealth?
  4. How about we revise the tax code so that the trillions of dollars in corporate profits that are kept overseas are encouraged to be brought back for investment in this country?
  5. How about we dump Obama Care so that the taxes and regulations that are strangling businesses from that legislation go away?
How much worse could it get economically if we tried something else because the current economic policies of Obama and Washington have given us low employment, low wage growth, dangerously high student loan levels, skyrocketing debt and health care costs, etc.? Somewhere Einstein is chuckling as today's Washington political class prove him right….again.

One last set of general political class insanity tomorrow.

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