President Barack Obama delivered to America the worst economic performance of any president in modern times, and in return, America delivered to him a second term.
I could rant endlessly in this column about how in 2007 Obama promised health-care reform that will contain middle-class insurance costs, but instead raised their insurance costs in order to create universal health care, a massive wealth-redistribution scheme.
Or, how Obama promised a giant stimulus package that would focus on “shovel ready projects” that would rebuild our physical infrastructure for the next 50 years, but instead delivered the largest pork–laden spending spree in history. As a stimulus package, it was terribly ineffective. However, as candy for traditional Democratic constituencies, it was sweet indeed.
But such rants would only rehash old debates. Instead, I will focus on macroeconomic facts, many from the White House’s Office Of Management and Budget (OMB).
All four of Obama’s annual budgets produced historic deficits as a percentage of gross domestic product, according to the OMB table 1.2: 2009 – 10.1%; 2010 – 9.1%, 2011 – 8.7%; and in 2012 – 8.5% (estimated). Excluding the World War II years, these are the four highest deficits in modern American history.
President Obama likes to compare the situation he inherited to the Great Depression. However, during the Great Depression, the comparatively low 5.9% budget deficit in 1934 was the worst, as a percentage of GDP. The average deficit during the 1930s was only 3.1% of GDP. And yet Roosevelt was able to deliver massive amounts of New Deal Era shovel-ready projects. Many, like the Hoover Dam, are still key parts of America’s infrastructure. Roosevelt gave Americans the New Deal; Obama gave them a pork meal.
It should be noted that like Obama, President Bush also inherited a recession from his predecessor, Bill Clinton. The Clinton recession was a very nasty one that included bursting of the tech bubble and the NASDAQ stock market crash. To Bush’s credit, he did not whine to the American people for four years about the Clinton recession.
Obama also likes to blame his predecessor’s tax cuts for our current budget-deficit disaster. However, by comparison, the Bush-era deficit trend line is positively impressive: 2004 – 3.5%; 2005 – 2.6%; 2007 – 1.9%. In Bush’s last year, 2008, it jumped to 3.2%, which is reasonable deficit spending at the depth of recession.
The cause of the Obama budget deficit is not a lack of revenue. The OMB estimates 2012 government receipts of $2.468 trillion. That is the 3rd highest amount in U.S. history, exceeded only in Bush’s last two years.
In fact the government revenue trend line also makes a strong argument in support of the Bush era tax cuts, as shown in OMB table 1.3. Each year during Bush’s entire second term (2005-08) government receipts were greater than 2000, Clinton’s best year. Even in Bush’s last year, the recession- and crisis-wracked 2008, government receipts of $2.524 trillion were 24.6% higher than Clinton’s last year.
Yes, increased revenue followed the Bush tax cuts, just as Republicans predicted.
Indisputably, OMB historical tables make clear that the causes of Obama’s runaway deficits are entirely on the spending side. Obama’s $3.795 trillion record outlay in 2012 is 30.2% greater than in Bush’s last year, 2008.
Nevertheless, President Obama spent the whole reelection cycle arguing that the key to deficit reduction is raising taxes. Raising taxes on those earning more than $250,000 is the cornerstone of every speech he makes on deficit-reduction solutions.
USA Today’s recent front page article exposes this naked class warfare demagoguery for what it is. If the 2001 and 2003 Bush era tax cuts are entirely eliminated for this group, at best it would raise $40 billion annually. That is less that 3.6% of the 2012 budget deficit. It is astounding that Obama spends so little time explaining how he will reduce the remaining 96.4% of the budget deficit.
Sadly, America has nothing to show for Obama’s spending orgy. We did not build any great multi-generational infrastructure projects akin to the FDR and Eisenhower eras. Not only does Obama own the four worst annual deficits in modern history, excluding WW II years, but he also owns the four worst years of unemployment since the early Reagan era, according to the Bureau of Labor Statistics. In fairness to President Reagan, he and Federal Reserve Chairman Paul Volcker broke the Carter-era double-digit inflation crisis by inducing the 1982 recession. That strategy led to one of the greatest and longest bull markets in history.
Actually, Obama’s pork-laden spending orgy did produce one clear tangible result; he bought himself a second term.