July 25 2014
Viewing the Economy through Rose-Colored Glasses
Patrice J. Lee
The President is patting himself on the back again. In a CNBC interview recently he claimed that the economy is back according to every economic indicator – thanks to his efforts.
Speaking about the White House’s economic policies and what the federal government expects going forward, the President noted, “If you think about where we were, Steve, when I came into office and where we are now — it’s pretty hard to find an economic measure where we’re not significantly better off.”
According to the Daily Caller, the President dismissed notions of lackluster growth and pointed to the robust stock market and corporate profits, the decline of workers seeking unemployment benefits, and a recovering auto industry on his watch. He also took credit for a moderate rollback of the federal deficit.
Has the economy rebounded? Yes, according economic indicators that demonstrate we are out of the recession, and the White House predicts the deficit will fall below $600 billion for the first time under President Obama. However, when we take a closer look at the numbers, we don’t see a whole lot to celebrate.
The White House economic policy rests on a credit card philosophy of buy now and pay later. We are spending more on entitlement programs and delaying the higher costs. Younger generations are footing the bill while we currently struggle to build our lives and progress in our careers.
The nonpartisan Congressional Budget Office reported recently that the federal government’s budget deficits and the public’s share of the debt as percentage of GDP are projected to grow to levels not seen since the World War II era. This conflicts with the White House predictions noted above.
The impact will be shocking as excessive deficits will slow investment in the economy and boost uncertainty both for the private sector and public services.
A Forbes piece sheds some light:
The budget deficit every single year under President Obama has been larger than any other year in history before he took office. Obama’s $1.5 trillion deficit in 2009 was well over double the worst budget year in history before his Administration – and was subsequently followed by three more years of deficits in excess of a trillion dollars.
The CBO projected deficits will climb steadily until 2039, at which point the federal debt held by the public as a percentage of GDP will reach 106 percent – a level not seen since the aftermath of World War II.
The CBO attributes the rising deficits to increases in mandatory spending on entitlement programs – specifically, Social Security, Medicare, Medicaid, and Obamacare. Economists and politicians on both sides acknowledge that these programs are the primary drivers of the national debt, which is quickly approaching $18 trillion. Total mandatory spending is well over $2.5 trillion a year, representing two-thirds of all federal spending. The major entitlement programs are about 45 percent of federal spending.
President Obama is not the first president to play the generational theft game. For generations politicians have used big government spending to secure votes and popular support for (re)election but purposefully delayed payment for these debts until the future. The expectation is that future generations will be able to absorb the costs.
Our generation is now reeling from the impacts of these policies at the same time we face an economy that is not delivering jobs and opportunity that make possible our ability to pay for the promises made to previous generations.
And speaking of unemployment, the situation is worse than the President wants to admit. While the unemployment rate dropped to 6.1 percent, 10 million Americans are still looking for work, 3.3 million have dropped out of the job market. And then there are those who are working part time because that is the only work available to them.
Young Americans especially have it bad. The effective unemployment rate for us is 15.2 percent and some 1.9 million 18-29 year olds have dropped out of the job market because they simply cannot find work.
If you ask Americans if the economy is improving they will probably say yes. But being “significantly better off” is a standard that the President and this economy just can’t meet.