Any discussion about who is ultimately responsible for the recession would not be complete without a clear definition what a recession is. In economics, a recession is a business cycle featuring a general slowdown in economic activity over a period of time; usually two fiscal quarters or longer. The other criterion for identifying a recession is an increase in unemployment of greater than 1.5%. It is clear based on the generally accepted criteria that the recession began under George Bush with the third quarter of 2008 showing a 2.7% decrease in GDP and the decline jumping to 5.7% in the forth quarter of 2008 and a corresponding increase in unemployment from 5.8% to 7.2% over the same period.
Except for the last two quarters of 2008, unemployment during the Bush administration had cyclically fluctuated between four and six percent just as it had during most of the Clinton administration. Clinton stepped into office with unemployment at 7.3%; remaining at or near that level until October of 1993. Of course the banking system was still generally believed to be in good shape then and since we found out that most of the deregulation that nearly collapsed the system had not occurred yet, it probably was. I find in curious that the real reduction in unemployment during the Clinton years did not take place until he abandoned his plans for healthcare reform. Apparently, the business community had the same reservations about the future of their profitability with Clinton-care as they do with Obama-care. While Clinton did not lower taxes, his advisors did convince him to reduce the capital gains tax and that made the risk of investment more palatable.
Obama has not enjoyed a reprieve from high unemployment because the threat of his agenda has kept the business community from investing in labor or expansion. The measly incentives he proposed to help small business during his State of the Union Address lost weight and credibility when juxtaposed against his assertions in the same speech that he intended to follow through with healthcare, cap and trade and the hair-brained scheme of debt forgiveness for student loans for anyone that could avoid paying them for twenty years (ten, if you were employed in the service of the government).
There is nothing in the President’s agenda that does not take from those that earn wealth only to be given to those that don’t and that is what is killing new job creation. In fact, it took all eight years of the Bush administration for unemployment to rise 3%; Obama nearly achieved that in his first year in office. The President may have inherited a large national debt, high unemployment and a sagging economy; but he did not inherit the agenda proposals that have made all of these indexes far worse. That agenda is all his (or at least, it belongs to whoever is pulling his strings).
For all the damage that his proposals have wrought on the economy and no matter how many people tell him that this is what has stalled business, he still intends to follow through. I haven’t decided if that is just stubbornness on his part or if these are the marching orders from his number one White House visitor, Andy Stern. I think it is fair to question his motives and when you follow the money and the intent of the people that are pressing heavily for these socialist programs like Andy Stern, some interesting things happen.
Obama has recently made some very impassioned speeches where he says that he promised healthcare would pass and that is exactly what he is going to do. Well, he promised to close Guantanamo Bay in the first year and it is still open. He promised transparency in his administration; that healthcare debates and meetings would take place on C-Span. Not only have the meetings on healthcare barred C-Span coverage but congressional Republicans have been barred as well. He said there would be no more back room deals and then offered $300 million to Mary Landrieu for her vote and only God knows how much for Ben Nelson. Bernie Sanders got billions for community health services but in all fairness, that was to expand national programs and not just those in Vermont. All of that money and more had been handed out in closed door, back room deals.
Obama also said there would be no middle class tax increases. Those of us that watch this nonsense knew that was a lie of semantics from the start. His plans and programs, not to mention the FY2011 budget, call for a whole host of new taxes on goods and services; taxes that will be passed on to you by the businesses they affect. He could stand firm on his promise of not taxing you directly while taking it from business knowing they were taking it from you. Now apparently he is going to make the same mistake George H.W. Bush made. Remember “Read my lips – no new taxes”? Bush reneged on that and Clinton never let you forget it during the campaign.
Now that Obama has blown through four years worth of Bush deficit spending in his first year in office, the nation is crying for fiscal conservatism. Fiscal conservatism for most of us in this country means cutting spending to live within our means. For a tax and spend Progressive, fiscal conservatism means making sure you have enough tax revenue to cover your planned spending. It was announced this week that the President is considering a middle class tax increase now that the Congress has passed “Paygo”. Paygo simply means Pay as you go; a mandate that Federal spending increases have to be offset by a decrease in spending elsewhere or an increase in taxes. So now, in a recession, the President wants to tax the middle class twice; once directly and then again by turning overtaxed businesses into tax collection middlemen. That is why they are trying to sell us on the notion that the recession is finally easing.
There was a modest gain in GDP and a slight easing of unemployment last month. Both of which are easily explained by the billions spent in stimulus money and the increase in government employment as they ramp up for the 2010 census. Neither of these small increases are the result of real economic growth and neither will be lasting. So now that he is planning to raise taxes to show his fiscal conservatism, where are the corresponding spending cuts? Well, the President of semantics has the answer to that too. He increased discretionary spending 25% in 2009 and will add another 20% in 2010 but he promises to freeze discretionary spending in FY2011. Mr. President that is not a spending cut; that is freezing your insane increases so they can’t be cut.
Early in the Twentieth Century, America had a similar crisis. After World War I, America was faced with a deep recession brought on mostly by huge increases in the personal income taxes imposed to pay for the war. By 1920 we had slipped into depression and unemployment had topped 12% but unlike this President, the drastic steps that were needed were actually taken. Congress halved government expenditures and slashed taxes to nurture the economy. The result was a period of unprecedented growth not seen since the creation of America and that brought the country out of depression within two years when unemployment had dropped to just over 3%.
Until there is a recognition that government is the problem and not the solution there will be no meaningful progress in spending cuts, debt reduction or economic development. If there is ever going to be an epiphany in Washington on this, it certainly will not begin with this President. If America can elect a Congress this November that can put an end to Obama’s agenda that will be a good start. They might even be coerced by an active and involved electorate to propose legislation to finally restrain the wasteful ways of Washington. The bad news is that unless those daring individuals are elected in numbers sufficient to override a Presidential Veto; that new legislation will have to wait until a responsible President can be elected in 2012.
None of this would be needed if Washington actually obeyed the Constitution and had not ignored the Tenth Amendment for the past hundred years. Tomorrow, we will discuss what our government would look like if we had a Federal Government that actually resembled the intentions of the founding fathers.
Paul
Except for the last two quarters of 2008, unemployment during the Bush administration had cyclically fluctuated between four and six percent just as it had during most of the Clinton administration. Clinton stepped into office with unemployment at 7.3%; remaining at or near that level until October of 1993. Of course the banking system was still generally believed to be in good shape then and since we found out that most of the deregulation that nearly collapsed the system had not occurred yet, it probably was. I find in curious that the real reduction in unemployment during the Clinton years did not take place until he abandoned his plans for healthcare reform. Apparently, the business community had the same reservations about the future of their profitability with Clinton-care as they do with Obama-care. While Clinton did not lower taxes, his advisors did convince him to reduce the capital gains tax and that made the risk of investment more palatable.
Obama has not enjoyed a reprieve from high unemployment because the threat of his agenda has kept the business community from investing in labor or expansion. The measly incentives he proposed to help small business during his State of the Union Address lost weight and credibility when juxtaposed against his assertions in the same speech that he intended to follow through with healthcare, cap and trade and the hair-brained scheme of debt forgiveness for student loans for anyone that could avoid paying them for twenty years (ten, if you were employed in the service of the government).
There is nothing in the President’s agenda that does not take from those that earn wealth only to be given to those that don’t and that is what is killing new job creation. In fact, it took all eight years of the Bush administration for unemployment to rise 3%; Obama nearly achieved that in his first year in office. The President may have inherited a large national debt, high unemployment and a sagging economy; but he did not inherit the agenda proposals that have made all of these indexes far worse. That agenda is all his (or at least, it belongs to whoever is pulling his strings).
For all the damage that his proposals have wrought on the economy and no matter how many people tell him that this is what has stalled business, he still intends to follow through. I haven’t decided if that is just stubbornness on his part or if these are the marching orders from his number one White House visitor, Andy Stern. I think it is fair to question his motives and when you follow the money and the intent of the people that are pressing heavily for these socialist programs like Andy Stern, some interesting things happen.
Obama has recently made some very impassioned speeches where he says that he promised healthcare would pass and that is exactly what he is going to do. Well, he promised to close Guantanamo Bay in the first year and it is still open. He promised transparency in his administration; that healthcare debates and meetings would take place on C-Span. Not only have the meetings on healthcare barred C-Span coverage but congressional Republicans have been barred as well. He said there would be no more back room deals and then offered $300 million to Mary Landrieu for her vote and only God knows how much for Ben Nelson. Bernie Sanders got billions for community health services but in all fairness, that was to expand national programs and not just those in Vermont. All of that money and more had been handed out in closed door, back room deals.
Obama also said there would be no middle class tax increases. Those of us that watch this nonsense knew that was a lie of semantics from the start. His plans and programs, not to mention the FY2011 budget, call for a whole host of new taxes on goods and services; taxes that will be passed on to you by the businesses they affect. He could stand firm on his promise of not taxing you directly while taking it from business knowing they were taking it from you. Now apparently he is going to make the same mistake George H.W. Bush made. Remember “Read my lips – no new taxes”? Bush reneged on that and Clinton never let you forget it during the campaign.
Now that Obama has blown through four years worth of Bush deficit spending in his first year in office, the nation is crying for fiscal conservatism. Fiscal conservatism for most of us in this country means cutting spending to live within our means. For a tax and spend Progressive, fiscal conservatism means making sure you have enough tax revenue to cover your planned spending. It was announced this week that the President is considering a middle class tax increase now that the Congress has passed “Paygo”. Paygo simply means Pay as you go; a mandate that Federal spending increases have to be offset by a decrease in spending elsewhere or an increase in taxes. So now, in a recession, the President wants to tax the middle class twice; once directly and then again by turning overtaxed businesses into tax collection middlemen. That is why they are trying to sell us on the notion that the recession is finally easing.
There was a modest gain in GDP and a slight easing of unemployment last month. Both of which are easily explained by the billions spent in stimulus money and the increase in government employment as they ramp up for the 2010 census. Neither of these small increases are the result of real economic growth and neither will be lasting. So now that he is planning to raise taxes to show his fiscal conservatism, where are the corresponding spending cuts? Well, the President of semantics has the answer to that too. He increased discretionary spending 25% in 2009 and will add another 20% in 2010 but he promises to freeze discretionary spending in FY2011. Mr. President that is not a spending cut; that is freezing your insane increases so they can’t be cut.
Early in the Twentieth Century, America had a similar crisis. After World War I, America was faced with a deep recession brought on mostly by huge increases in the personal income taxes imposed to pay for the war. By 1920 we had slipped into depression and unemployment had topped 12% but unlike this President, the drastic steps that were needed were actually taken. Congress halved government expenditures and slashed taxes to nurture the economy. The result was a period of unprecedented growth not seen since the creation of America and that brought the country out of depression within two years when unemployment had dropped to just over 3%.
Until there is a recognition that government is the problem and not the solution there will be no meaningful progress in spending cuts, debt reduction or economic development. If there is ever going to be an epiphany in Washington on this, it certainly will not begin with this President. If America can elect a Congress this November that can put an end to Obama’s agenda that will be a good start. They might even be coerced by an active and involved electorate to propose legislation to finally restrain the wasteful ways of Washington. The bad news is that unless those daring individuals are elected in numbers sufficient to override a Presidential Veto; that new legislation will have to wait until a responsible President can be elected in 2012.
None of this would be needed if Washington actually obeyed the Constitution and had not ignored the Tenth Amendment for the past hundred years. Tomorrow, we will discuss what our government would look like if we had a Federal Government that actually resembled the intentions of the founding fathers.
Paul
