President Barack Obama is at it again. The United States' economy stuck in
first gear, the president is again indulging in revisionist history - blaming
the rich and his predecessors for high unemployment and misadventures in
statism. Sadly, his claims are all too easy to debunk.
On 60 Minutes, Obama declared about the economy he "didn't overpromise
... And I didn't underestimate how tough this was going to be."
Certainly, Obama took office in a maelstrom - banks failing on the wreckage of
their own frauds, unemployment at 7.8% and gross domestic product (GDP)
falling. At his request, the congress funded a $759 billion stimulus package.
And congress looked the other way when the president misallocated Troubled
Asset Relief Program funds to bail out General Motors and Chrysler, and
awarded huge sums to start-up energy companies with significant involvement
from among Democratic Party faithful.
With his program implemented, Mr Obama issued new federal budget and economic
forecasts in May 2009 that projected unemployment and GDP growth would average
7.1% and 4.0% in 2011, and 6.0% and 4.6% in 2012. White House economists Larry
Summers and Christina Romer numerously repeated presidential assurances that
prosperity was just a few big government steps away.
Well, the books are closing on 2011, and unemployment and growth are on track
to average 9.0% and 1.7% for the year and the prospects for next year are not
much better - those are not even within the same time zone as White House
projections.
If the president did not overpromise and underestimate, then Bill Clinton had a
strictly platonic relationship with Monica Lewinsky.
To his credit, President Obama is correct to state "reversing structural
problems in our economy that have been building up for two decades, that's
going to take time". He talked about those problems when campaigning for the
presidency, but simply has not addressed those as effectively as promised, if
at all.
The US economy is suffering from too little demand for what Americans make.
Consumers have returned to the malls and new-car showrooms and businesses are
investing again, but a huge trade deficit with China and on oil sends too many
dollars abroad that do not return to buy US exports.
Campaigning in the Midwest, Democratic nominee Obama promised to take
substantive actions to redress China's undervalued currency and protectionism,
and soon after taking office he warned the Middle Kingdom if it didn't mend its
mercantilist ways, the United States could act unilaterally. Since then all we
have had is talk - the president has sent envoys to Beijing to plead for better
treatment, but Sino leaders sensing weakness called his bluff, and Barack Obama
has come up wanting.
All along, the president has acknowledged the need to develop more domestic oil
and gas, but in the wake of the BP disaster in the Gulf, he has punished all
oil companies for the sins of one, and rising prices for imported petroleum are
a huge tax on economic recovery.
With oil hovering near $100 a barrel and new internal combustion engine
technologies coming on line at Ford, Mazda and other manufacturers, it is
possible to raise US oil output to 10 million barrels a day, deploy more
domestic natural gas, and reduce oil imports by two thirds, and perhaps even
start exporting oil again. And have less CO2 emissions to boot, and without
driving fire trap all electric vehicles.
The Dodd-Frank act gave the president his financial sector reforms. The barons
of banking that caused the collapse are mostly still in their jobs, using cheap
Federal Reserve funds to make large bets and trade much like the bad old days
of 2005 through 2007. Many have acquired regional banks and together the Wall
Street banks hold more than 60% of the nation's deposits, and refuse to fund
loans to small and medium-sized businesses.
Though the president remains active raising money for Democratic candidates
among Manhattan's money moguls, his Treasury Department does little to uncork
all those deposits to build Midwestern businesses and create jobs for the
middle class.
This past week, Obama visited Ossawatomie, Kansas, to invoke memories of Teddy
Roosevelt's 1910 "New Nationalism" speech, where he again blamed the nation's
woes on the avarice and plundering of the wealthy.
Instead of pledging to redouble efforts to keep his campaign promises and fix
what's broke, Americans did not get a reprise of the bespectacled legend, but
instead a sad revival of Pinocchio - only lacking were the short pants and long
nose.
Peter Morici is a professor at the Smith School of Business, University
of Maryland School, and former Chief Economist at the US International Trade
Commission.
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