2012 Tuesday: Why the Obama economy will sink Obama

At lunchtime today, I’ll be among a few hundred people listening to economic forecasters from the University of Georgia tell us what to expect next year in the state and nationwide. It’s tempting to think there’s no point in going, since pretty much every forecast I’ve seen lately suggests we’re in for more of the same sluggishness.

And if that turns out to be true, the most pointless question in the GOP presidential primary may be the one about which candidate is the most “electable.” For, at that point, it would be rather difficult for most of the candidates to lose to President Obama.

To name one example: The prognosticators at the OECD (the Paris-based club of industrialized nations) proffer that the U.S. economy will be stuck at 2 percent growth next year. That’s the same rate, thanks to yet another downward revision to our economic estimates, we experienced between July and September. It was during that time that Obama’s public-approval rating for his handling of the economy reached the lowest point of his presidency in Gallup’s tracking poll: 26 percent, with 71 percent disapproval.

It has since “recovered” to 30/67, which is a recovery only in the sense of the word the Obama administration used last year in touting the “Recovery Summer.”

This, even though the economy has achieved what Obama’s economic advisers said was necessary when selling his “stimulus” bill in 2009. Quietly, Americans have returned to our pre-recession spending habits, with consumer spending now surpassing its previous peak, as Reason’s Tim Cavanaugh reports. Government spending is higher, too. Aggregate demand, that keystone of Keynesian theory, is back to normal. The economy, as you may have noticed, is not.

Yet, Obama’s economic proposals reflect the belief that more demand is what’s really needed. Aside from the purely political point that this ensures a continued contrast between him and the eventual Republican nominee, it also means Washington is unlikely to adopt any policies that spark a sudden uptick in growth.

Sluggish growth is one of the biggest differences between this year and 1996, to which some liberals point hopefully as a time when an incumbent Democrat overcame a rough first term thanks in large part to a middling GOP field. Inflation-adjusted GDP growth during the past four quarters is almost one percentage point lower than over the comparable period of time in Bill Clinton’s first term. The unemployment rate, which hasn’t been below 8 percent since Obama’s first full month in office, is more than three percentage points higher.

If that remains the case, it means Obama may plumb new, Carter-esque depths in the public’s approval of his economic policies. And it most likely means the number of Republican candidates who can’t beat Obama will be smaller than the ranks of those who can.

– By Kyle Wingfield

140 comments Add your comment

Class of '98

November 29th, 2011
11:05 am

Who cares who is first?

GO DAWGS. BEAT LSU.

Sherlock

November 29th, 2011
11:07 am

I’d suspect Kyle himself for that first post.

Kyle Wingfield

November 29th, 2011
11:14 am

It wasn’t me, Sherlock, but I do second the notion!

Jimmy62

November 29th, 2011
11:18 am

Good point. Before when I would complain that spending and bailouts and pushing capital towards already failed enterprises was keeping the economy form getting going, I would be told the real problem is demand and that businesses won’t hire till there is demand. Well now there is demand and they still aren’t hiring. Why? Because the government is overspending, over regulating, bailing out, and picking winners and losers and overall making it a very hostile environment to start or run a business… Unless your business is either a soon to fail “green” industry or is run by someone who has lots of money, liberal politics, and is pals with Obama.

getalife

November 29th, 2011
11:35 am

I think you cons should demand the gop follow Frank’s lead and retire.

Forget this race and lets focus on changing our corrupt system before all hell breaks loose.

getalife

November 29th, 2011
11:36 am

“GO DAWGS. BEAT LSU.”

Geaux Tigers.

LSU by 21.

DebbieDoRight

November 29th, 2011
11:50 am

My how quickly the GOP forget their part in the “Obama economy”. It’s like they, the GOP, are not practising all of that “personal responsibility” they keep preaching to others. Could that be the reason for their “perceived” Alzheimer’s moments? Nahhhhhhhh…. Why the GOP is just as pure as Newt’s ummmmmmmm newton.

LSU#1!!!!

USMC

November 29th, 2011
11:58 am

“Geaux Tigers. LSU by 21.”–Getalife

Georgia 34… LSU 14… as history will repeat itself. :-)

USMC

November 29th, 2011
12:00 pm

“2012 Tuesday: Why the Obama economy will sink Obama”–Kyle

Great article, Kyle. But I am calling you out for being Lazy and writing this article with both hands tied behind your back. :-)

Obama Loses in 2012!

hsn

November 29th, 2011
12:01 pm

He didn’t cause it. The Republickans did. Their expensive endless wars, support for sinking companies and corpocrats, rogue nations, prescription drug benefits, corrupt wall street hoodlums and their endless financial swindles that took down our beautiful country… Now they are singing a different song and blaming Dodd and Frank. You ain’t fooling no one.

.. And it doesn’t end there. They have OPPOSED EVERY SINGLE effort the president has made to put us back on track. Even proposals they themselves supported before, as soon as Obama supports them, the THEY MUST OPPOSE. The kons were willing to see the credit rating of our beautiful country SINK for THE FIRST TIME in history, rather than raise the debt limit WHICH THEY WERE GLAD TO DO OVER 17 TIMES under GW Bush and others.

The electorate sees through your fakery, your hatred and determination to destroy our beautiful country because you dislike one man, and come 2012, the likes of Boehner, Ryan, McConnell, et al who are up for relection will be thrown out.

And oh by the way, if you thought this blog would deflect from your pathetic candidates who are saddled with sexual allegations, it is a big failure! America has risen again, and we will be even better than ever before!!!

carlosgvv

November 29th, 2011
12:13 pm

Kyle, I wonder if you could look at any of us with a straight face and say Romney or Ginrich could do any better with our economy?

Lil' Barry Bailout (Revised Downward)

November 29th, 2011
12:13 pm

When Obozo loses, Americans win.

Lil' Barry Bailout (Revised Downward)

November 29th, 2011
12:16 pm

Romney or Gingrich could (and would) do better with our economy.

Obozo is actively working to destroy it, so it really won’t be much of a challenge, actually.

dd

November 29th, 2011
12:35 pm

I am doing a shot everytime Barry says something silly…..bet I am drunk by 12 45

Now with Ten Percent More Flavor

November 29th, 2011
12:37 pm

How’s that congressional approval rating going. And that do-nothing House, how’s it looking these days. How low will the GOP go in it’s quest to oust Obama. There’s clearly nothing else more important to them except perhaps another tax cut for the Koch boys.

Ivan Cohen

November 29th, 2011
12:45 pm

It still takes two to tango and the Republicans can hunker down until the cows come home but they have a hand in this economy. Everybody is affected by the economy. The moniker of “Obama economy” even those with a grade school education can see behind the ploy. Economic forecasters are just like weather forecasters…..they get it wrong more often than they get it right.

Mary Elizabeth

November 29th, 2011
12:47 pm

We must never fail to remember that we were on the brink of a Depression when President Obama was elected to office. Since he was inaugurated, we have slowly, but surely, been recovering from that financial abyss.

I do not believe that President Obama will be defeated by any Republican candidate because the ideological agenda which all of the Republican candidates support – of governmental austerity and severe tax cuts – culminated in a financial disaster for our nation. I realize that other factors were involved in the 2008 financial crisis, and most of those factors involved greed, as was demonstrated in the bubble housing market that finally burst. That greed had been building for decades in the collective consciousness of Americans.

We have all heard the adage, “By their fruits you shall know them.” I would say that that truism is applicable to ideologies, as well as to individuals. The ideology that believes that severe tax cuts are always advantageous to the economy has been demonstrated to have failed during the decade of the 2000s. Even Alan Greenspan recommended that America return to the Clinton tax rates, slowly, for our financial viability.

I recommend this article by Paul Krugman, posted 11/21/11 in the NY Times (Those who have bias against Krugman should, especially, read this article, entitled, “Boring, Cruel Euro Romantics.”):

http://www.nytimes.com/2011/11/21/opinion/boring-cruel-euro-romantics.html?_r=1&partner=rssnyt&emc=rss

Excerpts from Krugman’s article:
————————————-

“And the things they demand on behalf of their romantic visions are often cruel, involving huge sacrifices from ordinary workers and families. But the fact remains that those visions are driven by dreams about the way things should be rather than by a cool assessment of the way things really are.

“And to save the world economy we must topple these dangerous romantics from their pedestals.”
——————————————————–

It is time to point out the fallacy, and the destructiveness, in the thinking of the uncompromising agenda of Grover Norquist and those who support his “no tax pledge,” as well as that vision for America. I believe that President Obama will do that during his re-election process.

sodome

November 29th, 2011
12:59 pm

Because reduce medicare and increase number of Doctors. Also, need to increase drugs, so everyone can be doctors and don’t need prescription.

Hillbilly D

November 29th, 2011
1:15 pm

Why aren’t businesses hiring? Because they don’t have to. They know that given the high unemployment rate, they can put more and more work on the average American worker bee, who still has a job. They have the upper hand and they are using it. Simple as that.

As to the election, if things stay as they are now and there is no big surprise event that happens between now and then, most people will vote their pocketbooks, as they always have. Some will choose their candidate for other reasons and that may be the difference in who wins and who loses.

I hear an interesting analogy the other day, forget who it was, that compared it to field position at a football game. The far left is in the red zone at one end of the field and the far right is in the red zone at the other end. Most of the American people, though, reside between the 40 yard lines. They really don’t have a good place to take their vote.

JV

November 29th, 2011
1:25 pm

One of the biggest problems with the U.S. economy is the housing market. Here’s a little history lesson for the progressive/liberals:

1977: Jimmy Carter (D) signs the Community Reinvestment Act, guaranteeing homes loans to low-income families.
1999: Bill Clinton (D) puts the CRA on steroids by pushing Fannie Mae & Freddie Mac (F&F) to increase the number of sub-prime loans (owning a home is now a ‘right’.).
1999 (September): New York Times publishes an article, ‘Fannie Mae Eases Credit To Aid Mortgage Lending’, which warned of the coming crisis due to lax lending policies of the Clinton (D) administration.
2003: White House calls Fannie and Freddie a “systemic risk”. The Bush (R) administration pushes Congress to enact new regulations.
2003: Barney Frank (D) says F&F are “not in a crisis” and bashes Republicans for crying wolf and calls F&F “Financially Sound” Democrats block Republican sponsored regulation legislation.
2005: Fed Reserve Chairman Alan Greenspan voices warning over F&F accounting “We are placing the total financial system of the future at a substantial risk”
2005: Sen Charles Schumer (D) says “I think F & F over the years have done an incredibly good job and are an intrinsic part of making America the best-housed people in the world.”.
2006 Sen. John McCain (R) again calls for reform of the regulatory structure that governs F&F.
2006: Democrats again block reform legislation.
2008: Housing market collapses: Democrats blame the Republicans.

Obviously the Republicans aren’t free of guilt concerning the cause of this crisis because they didn’t try hard enough to prevent it and in some cases allowed it to happen (one of the reasons conservatives and independents disliked Bush by the way and one of the reasons that many of those votes went to Obama as a ‘protest’ against Bush’s liberal tendencies). But as can plainly be seen the Democrats hold the lion’s share of blame for the housing market melt down we’re currently enjoying.

sailfish

November 29th, 2011
1:26 pm

hillbilly d

Wise words, very rare these days. I’ll go with that old cliche, “the devil you know is better than the devil you don’t know.” The republican candidate will lose because there is no substance to what they are selling, their buyers will stay home and wait it out…

Jefferson

November 29th, 2011
1:27 pm

What if it does not ?

sailfish

November 29th, 2011
1:37 pm

wingfield

You make the minor league assumption that the president is supposed to be the job creator in chief. What do you think pray tell, that a mccain economy would have looked like? How many more wars do you think we might have added to the docket if he had won and how would we pay for them since we never payed for the last big two? (off the books, remember?)

Chuck Doberman

November 29th, 2011
1:46 pm

OK… but what exactly are any of the current GOP candidates offering as solution? Is there anyone in the field tjhat offers anything besides more tax cuts, further enrichment and more corporate welfare for the only (and relatively tiny) group of Americans that have weathered this recession fairly well? Anything? Oh yes, spending cuts… but not across the board cuts… only in those programs that do not benefit that tiny group of wealthy people who have already reaped incongruent reward from the past decade’s decline of the middle class. OK, so beyond reenacting and ampilfying George W Bush’s failed financial policies and practices what if anything do these candidates offer?

Spending cuts NEED to happen, and they need to happen in all areas of the budget, but that’ll never happen in today’s partisan political environment. The plain truth is we need both parties to work out some kind of balanced approach, but that’ll never happen in today’s partisan political environment. We need our legislator’s to stand the hell up and do what’s best for the country instead of assuring reelection by pandering to one’s base, but that’s not gonna happen until we voters stop allowing them to simply point across the aisle and blame the other team. Until we stop buying the rhetoric and enabling our elected officials to operate without accountability we’ll simply continue on the slippery slope downward financially, spiritually, physically and mentally regardless of who gets elected in 2012

Ayn Rant

November 29th, 2011
1:59 pm

The Obama economy? We haven’t seen it yet; we’re still stuck in the Bush economy!

Jefferson

November 29th, 2011
2:20 pm

Are you hoping for a bad shopping season or something ?

Don't Tread

November 29th, 2011
2:34 pm

“Sluggish growth is one of the biggest differences between this year and 1996″

Another one of the differences between this year and 1996 is that we hadn’t “offshored” our manufacturing base to China at that time…so be prepared for a lot more sluggish growth (best case scenario) in the foreseeable future. (Unless everyone decides to collectively stop buying Chinese made trinkets, which won’t happen.)

I Report (-: You Whine )-: Thee Magnificent!!! mmm, mmmm, mmmmm! Just sayin...

November 29th, 2011
2:42 pm

Congratulations, obozo! You’re number one!

President Obama’s slow ride down Gallup’s daily presidential job approval index has finally passed below Jimmy Carter, earning Obama the worst job approval rating of any president at this stage of his term in modern political history.

allah akbar!

mmm, mmmm, mmmmm!

sailfish

November 29th, 2011
2:46 pm

If you think obama’s poll numbers are bad, see republicans in congress. Afterall, they make the laws.

JDW

November 29th, 2011
2:53 pm

You guys better wake up and smell the coffee. There are now only two Republican candidates, and I use the term loosely, left. Aside from being unelectable Newt will shoot his feet and mouth off sooner or later and be done. Then we will be inundated with ads of Romney debating himself. By the time that is over John Kerry would be able to beat him. Though unfortunate, Obama will be reelected in large part because the Republicans declined to field a serious candidate.

gm

November 29th, 2011
3:03 pm

Obama and morals and family values win by a land slide , stop dreaming kyle,”’

Kyle Wingfield

November 29th, 2011
3:07 pm

carlosgvv @ 12:13: Well, I don’t think Obama’s plans will work, and I don’t think Romney and Gingrich would try to propose anything similar, so that’s a start.

Kyle Wingfield

November 29th, 2011
3:12 pm

sailfish @ 1:37: If you think the condition of the economy won’t be reflected in the incumbent’s tally at the ballot box, you’re playing in the bush leagues.

Welcome to the Occupation

November 29th, 2011
3:24 pm

Aggregate demand, that keystone of Keynesian theory, is back to normal

Ridiculous statement. For Keynes, “normal” is when full employment is achieved.

Kyle Wingfield

November 29th, 2011
3:38 pm

Welcome @ 3:24: And Keynes considered “full employment” to be virtually zero unemployment. So, who’s being ridiculous here?

Hillbilly D

November 29th, 2011
3:45 pm

KW

Correct me if I’m wrong but I was thinking back in the day, “full employment” was really considered to be 4-5% unemployment.

Welcome to the Occupation

November 29th, 2011
3:46 pm

And Keynes considered “full employment” to be virtually zero unemployment. So, who’s being ridiculous here?

Who’s being ridiculous?

Certainly not Keynes. To my mind his claims are vindicated more with each passing day.

JF McNamara

November 29th, 2011
3:48 pm

The reason the economy is not growing as fast as before the crash is because it shouldn’t have been growing that fast then. The only time we have explosive growth is in bubbles. We clearly had a bubble before the crash as well as the dot com bubble in the nineties.

The only people whining about the economy these days are the poor and middle class Republicans. Big Business is having record profits. People are comfortable and spending accordingly. Unemployment has finally started to come down. Things are fine here, and its because of Obama.

Europe is going to be the issue, and its because they did the conservative thing and shoved austerity down the populaces throat. Another example of failed Republican policies…

Welcome to the Occupation

November 29th, 2011
3:53 pm

KW, Hillbilly:

The point being, there is no such thing as a “natural” (”normal”) rate of demand. We take our bearings from the rate of unemployment — which should be zero.

Keynes: The Conservative belief that there is some law of nature which prevents men from being employed, that it is ‘rash’ to employ men, and that it is financially ’sound’ to maintain a tenth of the population in idleness for an indefinite period, is crazily improbable – the sort of thing which no man could believe who had not had his head fuddled with nonsense for years and years.

Describes our situation today to a T and almost sounds like he could have been talking about heads muddled after 3 decades of Reagan pseudo-economic ideas.

Kyle Wingfield

November 29th, 2011
3:53 pm

Hillbilly: Different economists have different ideas about what it means. Keynes’ idea of it was pretty much zero.

Kyle Wingfield

November 29th, 2011
3:57 pm

Welcome: And, given that unemployment has never actually reached or even nearly reached zero, we have no idea how much demand is necessary to satisfy Keynes. Conveniently for progressives, the only answer is: More!

Jefferson

November 29th, 2011
4:00 pm

Better hope for bad news, if you want a new president.

Lil' Barry Bailout (Revised Downward)

November 29th, 2011
4:01 pm

Ivan Cohen: It still takes two to tango and the Republicans can hunker down until the cows come home
——–

The Republican-led House has passed twenty jobs bills and the Democrat Senate refuses to take them up. I see what you mean about taking two to tango.

Democrats: America-hating do-nothings.

Dusty

November 29th, 2011
4:04 pm

My goodness,

Did someone unlock the gates and let all the liberals out for an afternoon rant? Seems they think everything is fine and dandy and we should continue in great fashion with Obama.

Republicans are having a good ol’ time playing King of the Hill. One of ‘em is going to make it because he can outsmart the current misfit by a mile. It would not take a genius to do that, just a smart homegrown sensible American. Republicans are noted for finding exceptional Americans.

So keep up the fireworks, dear liberals. Call us sensible folks “cons” and talk about Obama’s great economy, his great socialized medicine, his great attack on THE DEBT, and his dead as a doornail stimuuls plans. Go for it!! You can do it! You might even get Obama’s approval rating up to a frozen 32. How ’bout that??

MarkV

November 29th, 2011
4:04 pm

It would be nice to think that the electorate will realize the fact that Obama started with the country in Bush’s recession, that he has taken the country from the brink of the disaster, and that the Republicans’ main goal since his inauguration has been to prevent him from being more successful. But that might be wishful thinking. Obama’s best advantage is the sorry band of losers who want to replace him.

Hillbilly D

November 29th, 2011
4:09 pm

People are comfortable and spending accordingly. Unemployment has finally started to come down.

Not where I live.

Chuck Doberman

November 29th, 2011
4:13 pm

Kyle 3:07

Kyle, do you feel either of these candidates will have anything new to offer in the way of ideas or are we talking about the W years all over again, or the W years on crack. I know it’s conservative m.o. to completely and vehemently deny that their own policies and practices had even the slightest influence on our economy and that all the country’s ills are the fault of the Kenyan Marxist Mongrel Peacenik Warhawk Socialist in the White House right now, but I believe there is a very large segment of America’s population that disagree and a lot of them vote. I think Republican candidates are going to have a hard time convincing many except the far-right to believe that making rich folk richer is going to benefit anyone other than those rich folk (who may then provide benefit to those whom reenacted such policy). We’ve had a decade of the Bush tax cuts now, years of RECORD profit for big business while median income for the vast majority of Americans declines and the repeal of Glass-Steagal, yet the economy is in shambles and unemployment is at levels not seen since the Great Depression. (Yes, yes I know this is all supposed to be Obama’s fault but that’s a crock of shyt and I believe the majority of Americans know that despite what Rush and Hannity tell them) So what’s new that we should consider electing one of these candidates for? Sure, they won’t propose anything close to Obama’s policies, but they will virtually mirror conservative policy of the past… and many of we voters think that’ll just make things worse. Why should we believe otherwise?

Dusty

November 29th, 2011
4:15 pm

Not where I live either, HILLBILLY D.

Temporary employment is up and will go down after Christmas, just like the spending.

I[m sure liberals think Obama did it, but Santa Claus should be credited.

Hillbilly D

November 29th, 2011
4:18 pm

The repeal of Glass-Steagall came under Clinton. Personally, I think the shape we are in now is a result, in large part, of the Globalist policies of Bush I, Clinton, Bush II and the Congresses during that entire time frame.

Hillbilly D

November 29th, 2011
4:20 pm

Dusty

In my neck of the woods, people are still losing their houses, still getting laid off and every time I drive to town, seems like another business has closed. Only sector that seems to be doing well is construction of state and local government buildings. Got to have those Taj Mahals, no matter how bad things are, I guess.