Obama's Economic Burden
Can the president win a second term?
Candidates for president generally blare recorded rock or country hits before their campaign rallies. At President Obama's appearances, expect a different form of music: whistling in the dark.
Amid grim economic news, Democrats contemplating his re-election bid find two reasons for hope. One is the multitude of weaknesses among the Republican presidential candidates, who might not be able to sell beer on a troop ship.
The other is that bad economic conditions need not be fatal—as demonstrated by Ronald Reagan, who presided over a serious recession in his first term only to win 49 out of 50 states in 1984. With more than a year to go, the economy has plenty of time to rebound, lifting Obama to victory.
There are only two flaws in this logic. The first is that Obama's economy makes Reagan's look like the end of the rainbow. The second is that it shows no signs of getting appreciably better.
At first glance, Obama's plight may not look so terrible. The unemployment rate in September was 9.1 percent, compared to 9.2 percent in September 1983. But those figures are snapshots that conceal the overall direction of the economy. At this point, Reagan's economy was roaring back to life. Obama's is curled up in the fetal position, whimpering.
In the first quarter of 1983, real gross domestic product grew at a pace of 5.1 percent, rising to 9.3 percent in the second quarter. In the first quarter of 2011, by contrast, the growth rate was 0.4 percent, and in the second, it was 1.3 percent.
The economy has been stuck in neutral not just this year but for a long time. Under Reagan, total output soon regained its pre-recession level. But as of the second quarter of this year, the U.S. economy was still producing less than it was before this latest recession hit in 2007.
That's why it feels as though the recession never ended. In a sense, it is still going on.
This bleak reality shows up in a dearth of jobs that the official unemployment rate doesn't fully capture because it omits people who have given up looking for work. The number of people employed in the United States dropped by 2 million in the Reagan recession. In the Bush-Obama downturn, the number plunged by 8.6 million. Today, it's 7 million below the previous peak.
A lot of Americans no longer show up in the jobless statistics because they have lost all hope. In normal recessions, the proportion of people in the labor force falls a bit and then bounces back. In this one, it went down and stayed down.
Before the contraction hit, 66.4 percent of all adults had jobs or were looking for them. Today, the figure is 64.2 percent. That may not sound like a big change, but there has been no comparable decline anytime in the past 60 years. It's a symptom of endless stagnation and profound despair.
Nor can we expect an early turnaround. Last month, the International Monetary Fund cut its forecast for GDP growth in the United States. This year, it expects the economy to expand by a puny 1.5 percent, and next year by 1.8 percent. In 1984, it grew by 7.2 percent.
Another big difference is that the Reagan recession was seen as painful but necessary—the price of halting the double-digit inflation that ripped through the economy under President Jimmy Carter. And it succeeded. But under this president, inflation has gone up. Under Obama, it's been all pain and no gain.
All these gloomy indicators are only partly the fault of Obama, who inherited an economic train wreck engineered by George W. Bush. But after four years in office, he will have to answer for them.
Solutions, as it happens, are either out of reach or nonexistent. Liberal economists think the economy needs a big stimulus program, which can't pass Congress. Conservative economists think it needs less regulation and lower taxes, which will not happen under Obama.
Other economists say weak, slow recoveries are an inevitable consequence of financial crises like the one the U.S. suffered in 2008. No matter what your school of economic thought, you will need to keep taking Prozac for some time to come.
It's always possible that Republican hubris or ineptitude will come to Obama's rescue. But if he wins the race, it appears, he will have to do it carrying a piano on his back.
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First. And please let’s not have this comment thread devolve into the pile of insults that the other ones have recently. I know the left is morally and intellectually bankrupt, but do collectivists really need to demonstrate that internal emptiness here?
LOL! Let’s keep this cordial you assholes.
I thought Obama was our economic burden?
Tony?
You’d better get in here.
“A lot of Americans no longer show up in the jobless statistics because they have lost all hope”
WTF does this even mean? I didn’t realize the stats measured hopefulness…
It means that people who have given up looking for a job no longer show up in jobless statistics.
“. . . an economic train wreck engineered by George W. Bush . . .”
I wish people would stop saying this. The economic train wreck was engineered far in advance of GWB–it’s roots in this country go back to Teddy Roosevelt and perhaps farther, into the Reconstruction era, perhaps.
It is certainly true that GWB, instead of hitting the brake poured on more coal (and that Obama cranked up the speed towards the abyss even further). But it is as inaccurate to say that it was caused by Obama as it is that it was caused by GWB. Neither did/have done anything to stop it, both in their own way made it worse, but neither one caused the problem–they’re just the latest participants in the long game of making it worse.
“Solutions are out of reach” as long as we allow people in this country to continue to pretend that “one side” or “the other side” are to blame. Pretty much everybody, through greed, sloth, or well-meaning stupidity, have had a hand in getting us to where we are right now.
“I wish people would stop saying this. The economic train wreck was engineered far in advance of GWB–it’s roots in this country go back to Teddy Roosevelt and perhaps farther, into the Reconstruction era, perhaps.”
YES!
“Pretty much everybody, through greed, sloth, or well-meaning stupidity, have had a hand in getting us to where we are right now.”
And this will not change.
“Pretty much everybody, through greed, sloth, or well-meaning stupidity, have had a hand in getting us to where we are right now.” ….filbert|10.10 @9:04AM
???? Huh? What hand did I have in all this? The people I vote for don’t get elected. I voted for George McGovern in ’70. He lost big time to Nixon. I’ve been voting third-party since then and they all get clobbered. I’m pretty much still a Democrat but unfortunately the D’s & R’s are all far, far too much pro-government for my vote.
“Can the president win a second term?” Of course, when everyone can vote everyone loses.
Can Obama win a second term? I’d say his chances are still better than 50/50. He’s going to get a lot of cover from the media. But, more in his favor, you can’t beat something with nothing. And, right now, Team Red has nothing. That may change over the coming months, but who knows?
If Ron Paul gets the nomination, he will mop the floor with Obama in the debates. If Obama proposes ten debates, Paul should immediately agree. The MSM will continue to ignore Paul, but if he’s nominated, the debates will be where the Obama myth is demolished.
Agreed. And Paul was in the back of mind when I wrote the original comment. I still have a hard time believing the Repub establishment will let Paul get anywhere near the nomination.
Paul tells The Truth, especially regarding The Fed, and there’s no room in either party for a truth teller.
The Republicans will not let Paul win the nomination.
A second Obama term?
There’s a movie about that.
“A lot of Americans no longer show up in the jobless statistics because they have lost all hope.”
And if you’re “self employed” – a contractor, you *never* show up on the jobless statistics.
There is one element that people forget and that is the fact that banks aren’t lending their freshly created cash. Normally there is an inflation boost to the economy (in my opinion) but now there in no new cash being injected so that takes away the normal boost that that new cash may provide.