Friday, October 16, 2015

The Obama Economy

Over the past few months, I have repeatedly heard a lot of left-wing sources in the media and the blogosphere proclaim what a success the Obama presidency has been. The proclamation is how this brilliant man has managed to turn around the devastation to our country and its economy that was bequeathed to him by his Republican predecessor.

Now I am no fan of George W. Bush when it comes to how he governed our economy, and there absolutely is plenty of room for criticism there; however, has our current president really turned around our nation's economy?

When one refuses to listen to the Democrat spin-machine and looks at the actual data, the truth of the matter is readily apparent, and it is a truth that all but the most partisan progressives instinctively know.

The St. Louis Federal Reserve has a research wing (FRED) that pulls together from various governmental sources any number of economic data indicators that tell a much different story than those proclaimed on MS-NBC, by the DNC chair-woman, or from the Obama administration.  Let's take a look, shall we?

First, lets look at the total federal government debt as it relates to our gross domestic product.  In 2008, then-senator Obama rightly criticized President Bush for his "unpatriotic" and "irresponsible" spending.  It seems that when Obama took over the oval office though, his even-greater spending was no longer unpatriotic. Our economic output of our entire nation is the same as what our national debt is now.  Indeed our national debt has soared from $9 trillion when Bush left office to over $19 trillion today.  Irresponsible and unpatriotic indeed!

And here is another way of looking at our federal debt:

Next, the passage of the Affordable Care Act was touted as critical to providing health coverage to those that were uninsured and reducing health care costs for those that already had insurance.  President Obama said that his Obama-care would save the average family $2500 per year in costs.  The reality of it though is that the average family is now paying $2500 a year MORE in costs.

Of course taxes have been on the rise for many decades.  George W. Bush did cut taxes during his presidency, but the Democrat-controlled congress let the child credit provision expire under Obama's administration.  Further, net taxes increased along with increased spending and costly regulations.

With the economic recession that started in Bush's term in office, median family income continued to decline precipitously throughout the Obama administration.

With the higher costs of taxes, consumer goods, health care, and energy under Obama's leadership, the number of Americans that can afford to own their own homes has declined under his watch too.

Of course employment tanked during the end of 2008, but despite the sycophantic progressive medias' narrative to the contrary, Obama has not restored the real U-6 unemployment rate to pre-recession levels.  To further support this point, look at the labor force participation rate which shows how many people actually gave up looking for jobs and thus dropped out of the labor force.  (And this despite huge influxes of federal dollars to help put Americans to work with "shovel-ready jobs" that Obama later acknowledged never did exist.)

Our true unemployment rate for the nation is STILL in double digits today.

This next graph shows the effects of our money supply due to quantitative easings that began in the final months of the Bush administration and then continued with several additional rounds during the Obama administration.  This is a very dangerous policy that has the potential long term effect of creating hyper-inflation with the increased money supply based on no solid assets.  It is a dangerous policy that did not work during the great depression or for Japan in the early 2000's.  It's long term effects will most likely come back to haunt the U.S. economy severely... after Obama has left office.

There are many things that can be said about this next graph.  The first that comes to mind is that Obama so loved the poor, that he created millions more of them.  While the federal government touts their SNAP welfare program as a success, the fact that more people are in need of governmental assistance should be a sign that our economy is not going in the right direction.  Indeed, progressives gauge such programs' success by how many people are using them; conservatives gauge these by how many people no longer need them and are now self-sufficient.

Another arguably un-constitutional aspect of the misnamed Affordable Care Act was to remove private banks from loaning money for student loans and thus rolled that function into the federal government where lack of efficiency and greater government control holds sway on our higher educational system.

At the end of the day, despite the progressive media's sycophantic ravings to the contrary, our economy has not recovered and indeed its core underpinnings are in very precarious positions.  Unfortunately when things do start collapsing, Obama will likely have left office and thereby not be held accountable for his egregious mismanagement of our economy via failed progressive policies.

  Of course the media will dutifully find a way to spin this as the Republicans' fault accordingly. 

I am sure that will provide great comfort to all of us Americans afflicted by this Obama economy.


Ryan said...

Neither Democrats nor Republicans have gotten to enact all of their desired economic policies, so each side can blame the other for obstruction, absolve itself of responsibility for economic decline, and claim responsibility for the economic improvement.

For example, there has been improvement in some areas since 2014's elections, where Republicans achieved a majority in the House and Senate. Republicans would like to take responsibility for it, claiming that it was possible because they were able to stop Democrats or Obama. Of course, we are not to blame them for any stagnation or decline. Democrats have the opposite story.

On to some criticism of your charts:

The chart about health insurance does not show that the average family is now paying $2500 more on insurance each year. It instead appears to show an increase that is either modest or typical of those of preceding years.

The chart about real median family income shows a significant decline that begins in 2007 and ends in 2011, then a stagnant period for a year, and finally an improvement. Naturally, you focus on the "precipitous decline" that began in 2007 rather than the improvement. What did you expect, that such a decline would not continue or stagnate? That we would instead see skyrocketing income the moment Obama took office? You judge according to your expectations, but you haven't made your expectations clear. What changes would have been reasonable to expect after Obama took office and why do you think so? Your take on this graph sounds rather partisan to me.

The homeownership graph does not show a decrease in the number of Americans who can afford to own a home. It shows a decrease in the number of Americans who do own a home. There are explanations for this besides "people don't have as much money anymore." For example, after the problems with the housing market, people may be less inclined to put so much of their money into a house. Or it may be that younger generations are less inclined to own in the first place. Or perhaps housing prices have not declined enough.

The U6 chart shows a dramatic rise in unemployment between 2008 and 2010, then a gradual but persistent decline. You choose to focus on the fact that it's still in the double digits, even though at ~10% it is only barely so. Your take on this graph as well sounds partisan to me, especially when you talk about the U6 rate as the "real" unemployment rate, as if previous administrations normally used these numbers while the Obama administration deceptively uses the nicer U3 figures instead.

I'm not sure where you got the idea that progressives gauge the success of welfare programs like SNAP by how many people use them while conservatives judge them by how many people no longer need them. That sounds like a conservative meme. In reality, we should judge them according to how effectively and efficiently they accomplish their goals. It would be silly to judge SNAP by whether or not people still need it, since the program is not designed to lift people out of poverty. It is designed to help people who are in poverty. Only those programs meant to lift people out of poverty should be judged according to that standard.

Ryan said...


Even if these charts and your partisan analysis thereof were the full story, I'm not sure how you think Obama should be held accountable. That usually comes in the form of voting for a different candidate, but that doesn't appear to be what you're suggesting.

Finally, I want to elaborate on a previous point about standards. When a Democrat is in office, Republicans criticize him for the bad but also for the Republican sense of "not good enough," which is almost never defined. For example: if Republicans had (1) collectively agreed to deem Obama's policies successful if the U6 rate reached 8% by 2015 and (2) laid out a clear and reasonable explanation of how they reached that number, then they would be justified in being disappointed that it sits around 10% today. But they didn't do either of those things, which allows them to complain about any number for any reason. (Similarly, if Democrats don't establish what success is when their own party has power, they can end up settling for very little and dismissing reasonable expectations for more.) A standard that is both unclear and unreasonable is doubly impossible to meet.

As for me, I don't pretend to know the full effects of any given recession, what it takes to get out of it, or the full effects of any given policy devised to address it. I don't pretend to know that something like an 8% U6 rate is a reasonable goal for any given year of a president's term following a financial crisis, especially if he can't pass any policy that he wants. I don't automatically blame the individuals or party "in charge" for stagnation or decline or credit them when there is improvement. And I don't pretend that I am an omniscient, master economist in a world where actual and well-respected economists disagree vehemently with each other about so much.

T. Paine said...

Ryan, you are correct that with a divided government it is not always easy to assign blame or kudos to any particular party; however, there are some issues that have results that can reasonably be laid at certain folks' feet. For instance, you cite my chart regarding the rise in health care costs as being "typical" of the preceding years, and yet Obamacare was passed under the guise that it would REDUCE the average family's health care by $2500.00 a year. Instead we see the continuing increases that this debacle was supposed to alleviate while insuring others. I lay the fault on the Democrats accordingly.

Regarding median income, you are right that the decline began under Bush's term when. Obama through his first full term (4 years) did nothing to correct this rapid decline and only now are we beginning to see a very slight increase in median income. That said, it would appear to me that his policies did not help this problem created by progressive governance started under Bush.

Next, while you do offer some plausible explanations for the decline in home ownership, I personally suspect that the people that fall into the categories you listed are a minority. With real income being down, unemployment still high, and taxes still being high, it is reasonable to assume that most of those that do not own a home are in that state because they cannot afford to do so.

As for that U6 unemployment rate, I do acknowledge that this is not the rate that previous administrations have broadcast as their employment indicator too. My point here is that the economic recovery under Obama, including the unemployment rate has been very anemic in its long, very-slow improvement. The labor force participation rate points to those millions of Americans that are still out of work due to this economy.

I further acknowledge that my take on this data can be construed as being partisan. It is not my job to try and spin things to support the Democrat side of the aisle. We have a vast majority of the mainstream media to do that. I simply am looking at government data though and drawing what many people would consider to be reasonable conclusions. If that tells a story that goes more against Obama and progressives, then perhaps that is because there is indeed some culpability there.

As for your comments about standards, I agree with your assessment. Both parties intentionally set ambiguous or not clearly defined standards for success or improvement so that they can trumpet their own successes or bludgeon their opponents accordingly. I am sure this is done intentionally.

I too am hardly a master economist, however, I do have a pretty good BS detector. When Obama touts his summer of recovery and other various nonsensical self-aggrandizing kudos, the reality of where the economy truly is seems to indict him on his prevarications.

John Myste said...

Thank God for Ryan. When I read your article, I thought how I could not let some things go un-rebutted (charts!), but then he handled it.

To ignore that under Bush jobs was taken from the economy every month and under Obama were added, seems specious.

That the economy turned around is beyond obvious. That does not mean that it is good or that it will not collapse again. We also have no proof that Obama actually "did it." Anecdotally, my sister's wages went up. She works in a factory. The handful of other people I know (programmers), all had significant wage increases (and I did also). My brother's income declined, but he left corporate America and opened his own practice. I knew several unemployed people. They are all employed now. "Head hunters" started calling me again, trying to recruit me (quite a large number). I do not believe your analysis of a continuing "Bush economy."

If it helps, I do think that it is highly possible that there is no such thing as a "Bush Economy," but that he simply had the misfortune of presiding over a recession.

Anyway, housing regulations are more stringent now. You cannot get a house you cannot afford
as easily and many people lost the houses they could not afford. Ryan did not mention that, so I thought I would remind you.

If you want to give a more credible attack on Obama's improved economy, I would attack it this way:

One of the main drivers of our economic policies have been the debt ceiling debates. Sequestration and arguments concerning running deficits partially addressed our lack of fiscal responsibility and ultimately gave many people confidence that there was someone fighting against our spiraling into financial ruin. Consumer confidence is a strong economic driver. Who was doing the fighting? Who forced the "more balanced" budget? Not Obama, but the Tea Party. The Tea Party has driven the economy as much as Obama has. The Fed, for better or for worse, has driven the economy as much as Obama has. What did Obama do again? I have trouble figuring it out.

You could make that argument. I don't necessarily agree with all of it, but I would find it more credible and harder to rebut.

Ryan said...

I am not interested in trying to defend Obama's claim that the average family would pay $2500 less per year on health insurance. Whether he knew in advance that that would not happen, was merely hopeful, failed to anticipate how costs would change, or lied, I cannot know, but he should have known better. Furthermore, I agree that Obamacare is a policy with at least some clear and measurable effects, so I don't have a problem with anyone identifying and criticizing them.

However, the health care bill was not even ideal to Democrats when they passed it, despite it passing 60-39 in the Senate along party lines. Many wanted single-payer, for example, but recognized that it was not politically viable. Obamacare represented perhaps the best of what could be expected from Congress at that time from a liberal perspective. This is not to say that Democrats are not responsible for what they passed; I only mean that it doesn't really represent ideal progressive legislation.

Moreover, the health insurance chart was just one of many in your list. It is substantially harder to show that Obama or Democrats (or Republicans, for that matter) are responsible for the numbers in most of the other charts. Of course, politicians invite blame for the bad when they take credit for the good, so if Obama wants the latter, he can't avoid the former. By the same token, however, those who are eager to place blame for the bad should be just as eager to give credit for the good.

I choose to do neither. That includes not blaming Bush for the recession, even if in hindsight we might be able to identify some things that we could have changed to prevent or weaken it. It also includes not blaming our leaders for military incidents that went wrong when they could have just as easily gone right or when no one really could have expected the events that did happen.

It seems to me that the country is a little too inclined toward outrage and placing blame whenever things don't turn out as desired. I know that I would never want to be a politician on the state or federal level.

T. Paine said...

Mr. Myste, I was channeling our long lost friend, Heathen Republican, so of course I had to use charts. That said, I do like your one paragraph, so I am using it here to gain your acceptance:

One of the main drivers of our economic policies have been the debt ceiling debates. Sequestration and arguments concerning running deficits partially addressed our lack of fiscal responsibility and ultimately gave many people confidence that there was someone fighting against our spiraling into financial ruin. Consumer confidence is a strong economic driver. Who was doing the fighting? Who forced the "more balanced" budget? Not Obama, but the Tea Party. The Tea Party has driven the economy as much as Obama has. The Fed, for better or for worse, has driven the economy as much as Obama has. What did Obama do again? I have trouble figuring it out.

T. Paine said...

Ryan, I do indeed think you are ultimately correct in your analysis. Yes, fault can be found in those charts that may point to policies on both sides of the political aisle. I think that is a huge part of the reason why our friend John Myste hates them so much.

That said, I took information from the Federal Reserve using government data and drew my own conclusions based on those numerous charts. I don't feel it is incumbent upon me to try and argue Obama's side of the debate as well. Frankly, while a few points can be made in his defense, a huge preponderance of the statistical evidence supports my assertion, in my opinion. If others disagree, then they can certainly make those points, as you have done here.

For the record, were I ever to lose my mind and run for office, I would want to have someone on my staff that could play devil's advocate and punch holes in any policy I advocated with your thoroughness and ferocity. It is by listening to our critics, even if we disagree, that we can then do a better job.

TOM said...

Tax cuts intended to bring in more income to the treasury through economic growth has never worked. It didn't work in the 1920's, the 1980's, the 1990's, or during Bush (2) administration in the 21st century.
Since economic growth through tax cuts has been an exclusive Republican policy for decades, it's justified to say it is a failed economic policy.
Reagen's mistake (the same mistake Republicans have been making for decades) was to not cut spending at the same time they give tax cuts. Bush (2) only vetoed one spending bill in 8 years while in the presidency. And as the deepening debt proves, Obama has been no better.
I consider it immoral to not pay our debts, and pass those debts onto another generation. Baby boomer parents taxed themselves high enough to pay off the debts of WWII (including the Marshall Plan) and not pass those debts onto the baby boomers. While building superior government services and a large middle class.
It's simple Math. As soon as we cut taxes, our debt began to grow. 2-1/2 trillion left by Reagan, 5-1/2 trillion left by Bush (1), 12-1/2 trillion left by Bush (2), and probably 20 trillion by the time Obama leaves office.
Even if the next generation gets serious about the debt, they will be too broke to do anything about it, not to mention the infrastructure and other spending which must occur. Boomers have always been out for their own good time regardless of the consequences.
I wonder why Americans are not willing to pay for the best country in the world. America is not cheap. One generation cannot pay of this high a debt, and should not be expected to.