The further to the left or the right you move, the more your lens on life distorts.

Sunday, March 23, 2014

Economic Growth?

Every president, whether a Democrat or Republican, tends to spin economic statistics to his administration's benefit. That's normal politics, and we've all learned to discount such claims in an effort to find reality. But where other presidents spin at a rate that is equivalent to a hand held toy top, Barack Obama's spin is more like a high speed dental drill. This is what the president claimed in a speech a few weeks ago:
"We've now seen over four years of economic growth ... We've seen 8.5 million new jobs created. We've seen the housing market bounce back. We've seen an auto industry that has come roaring back. We've seen manufacturing return for the first time since the 1990s."
Think: high speed dental drill. Unfortunately, Obama's trained hamsters in the media repeat his spin without investigating whether it's accurate. presents a discussion (using the following chart where blue is forecast and red is actual) that examines the success or failure of Obama's economic agenda based on the administration's own projections and promises when Obama took office in 2009. By every measure—GDP, debt and deficits, unemployment, spending—Barack Obama's economic performance has been weak, very, very weak.

Of course, Obama's supporters and his media hamsters immediately jump into the breach, trying desperately to explain away the historically poor recovery under Obama's watch. considers some of the excuses:
But, his backers say, the recession was deeper than Obama expected at that point. Except that nominal gross domestic product in 2010 turned out to be exactly where Obama said it would be. It was only after then that growth fell short.

Others will say that Obama just did in his first budget what every president does: Paint a rosy picture of future economic growth. This doesn't hold water either, since Obama's projections were in line with the nonpartisan Congressional Budget Office and other economic forecasters, all of whom expected a normal recovery.

Then again, the economy might have suffered from what Obama likes to call "self-inflicted wounds" imposed by Republicans — the threat of default, the sequestration, the turn to "austerity" policies, etc.

The problem here is that federal spending from 2010 to 2013 was almost exactly where Obama pegged it in his first budget, and it's much higher as a share of GDP. Deficits were also far higher than Obama expected.

From a standard Keynesian perspective, these should have provided additional stimulus to the economy — above what Obama initially forecast.

So the GOP's efforts to rein in spending can't be blamed for Obama's failure to meet his economic targets.

What can? Perhaps it's the combined effect of the massive Dodd-Frank financial regulations, ObamaCare, the hugely expensive new EPA regulations and two enormous tax hikes on investment income.

None of these policies are pro-growth.
It's worth remembering that the Obama administration and his cabinet have a historically low percentage of senior people with private sector experience. Put bluntly, Obama and his advisors are members of the political class. They've never had to meet a payroll, never had to grow a business (except, of course, growing the government programs and entitlements at frightening rates), never had to worry about profit and loss (why should they? the government simply prints money when things get tight).

I suspect that Barack Obama views private sector business as a necessary evil, profit as something that is somehow dirty, the inherent meritocracy that allows some businesses to fail and others to succeed as inherently unfair. He wants to pick the winners and the losers—and does so with government programs, crony capitalism, and excessive regulation.

The result? Just take a long look at the above graph. If that's "economic growth" one can only wonder what will happen when the inevitable economic downturn occurs.