Liddick: Whose fault our anemic recovery?
April 30, 2012
When he was president, Herbert Hoover used the family china in the White House because he didn’t think US taxpayers owed him a set of dishes. In 2009, Michelle Obama flew herself and the girls to London on a taxpayer-owned 757 for a short sightseeing trip two days after the president had returned from England. Separate flights have happened several times since, the last one to Hawaii. That family convenience set the taxpayer back about $100,000.
Readers’ reactions to the above are informative. Those believing the president is the savior of an America caught in the clutches of evil plutocrats will rave that such minor expenses are necessary because the First Family is inconceivably hard-working and plagued by tribulations beyond the comprehension of mere mortals. Those on the other end of the spectrum will see another example of the president’s hell-spawned focus on wrecking the country and everyone in it. Most of us will be somewhere in the middle, noting that while Hoover could have been a bit more energetic in late 1929, the current president should probably stop acting as though public money were his own.
Now that we’ve separated the sheep, goats and normal folks respectively, some facts follow that might help in understanding our current economic muddle.
In 2009, shortly after he was inaugurated, President Obama began a full-court press for his “American Recovery and Reinvestment Act,” a.k.a. the “spendulus” bill. As a result of that $859 billon burst of borrowed money, he predicted economic growth would be 3.2 percent for 2010, 4 percent for 2011 and 4.6 percent for 2012.
At the time, some economists worried these projections were too optimistic, but their objections were brushed aside in the general Obamamania. But in 2010, GDP growth was negative. In 2011, it was 1.7 percent. So far this year, 2.2 percent. Maybe.
Even in mid- 2010, the White House said GDP growth would be 2.0 percent for the year, and that it would accelerate in 2011 to 3.8 percent, rise to 5.8 percent this year and be over 4 percent through 2014. Rapid economic expansion would lower the unemployment rate to below 6 percent.
Private economists worried these projections were also too optimistic, but their concerns were pooh-poohed by the White House and Congressional Democrats. The real figures were much lower, as noted above.
By September 2011, the OMB admitted that growth rate would be 1.9 percent for that year, a figure later revised to 1.7 percent. Unemployment would remain above 9 percent. But a 2.6 percent growth rate was predicted for 2012 and 3.6 percent for the following year. Most economists said these figures were unrealistic. Rejections of their criticisms were vehement.
First-quarter GDP growth rate for 2012 has hovered around 2.2 percent – assuming that it won’t be “adjusted” downward later, when no one is looking – a pattern we’ve seen many times in the past several years. The unemployment rate is dropping as well, although we should wait until that figure is “adjusted,” as it has been in 59 of the past 60 weeks. But it’s not dropping for the reasons the president cited when pushing “spendulus,” or at any later intervention. It is dropping because people are leaving the workforce in very large numbers, worn out by the fruitless search for employment. In 2011, according to the Bureau of Labor Statistics, 1.2 million American workers vanished. The White House doesn’t deal with this uncomfortable fact much – save for press secretary Jay Carney, who said in February that the flight from the workforce was “good for the economy.”
So when one examines raw data in BLS statistics there is not much reason for celebration. January figures, for example, noted that 234,000 jobs had “been created” – and there was great rejoicing. But the report also revealed the total number of employed persons fell by 737,000. This apparent contradiction is possible because the former figure considers all employment, even to fill positions previously existing, as the creation of a “new” job. The latter is absolute. In calculating national economic health, one probably ought to take both into account, as did Fed Chairman Ben Bernanke, who said in March, “… increase in employment since the end of 2009 has been due to a significant decline in layoffs but only a moderate improvement in hiring.”
If you are annoyed by the above – whether at the president for inflated claims and disappointing reality, or at the author for drawing attention to the persistent gap between promises and performance – ask yourself a simple question. In choosing an object of odium, who poses the greater risk for the country, and for us all: the leader who masks failure in rosy predictions and populist smoke, or he who draws attention to these “inconvenient truths?”
The decision will tell you which you value more: politics, or fact.
Summit County resident Morgan Liddick pens a Tuesday column. E-mail him at email@example.com.