President Obama's Economy Continues To Fizzle
By Ed Pozzuoli
The Commerce Department rendered its verdict on the final quarter of President Obama’s first term last week and the results—like most of Obama’s economic policies thus far—were disappointing. While most economists were anticipating anemic 1% growth, gross domestic product actually dropped 0.1%, sliding back yet again into recessionary territory. It was the first such economic contraction in almost four years. Not good. Also, not good was the fact that unemployment ticked up again to 7.9%. These are not the kinds of reports that Obama and his economic team were hoping for just after Inauguration Day—especially not after the trillions spent on fiscal and monetary stimulus.
As Clinton campaign strategist James Carville famously (and accurately) noted over twenty years ago, “It’s the economy, stupid.” History of course proved Carville right. His finger was planted firmly on the pulse of American voters’ economic anxiety, and he seized the recessionary environment to help elect Bill Clinton. Of course, Obama won reelection over Mitt Romney this past November despite the sour state of the economy, for a host of reasons which included running a far more organized and coordinated ground game. But the real point here is that the American voters were terribly worried about the economy, and regardless of Obama’s win, the U.S. economy is still operating well below where it ought to be with no real economic growth or job growth.
Despite occasional promising rays of light America remains mired in an economic funk. People are still hurting. The new year has left businesses of all sizes having to deal with the consequences of Obamacare, higher taxes on small business owners, and a debt hangover casting a bigger and bigger shadow. To make matters worse, we are still spending and printing money like drunken sailors, adding to consecutive trillion dollar deficits whose cancerous growth threatens the foundation of our nation.
We literally cannot afford this approach much longer.
While it’s clear to most observers that President Obama inherited a difficult set of cards four years ago, what is equally clear is that he continues to play the hand he was dealt poorly. History books will surely record that instead of articulating and spearheading a bold economic plan in his first term, Obama went ahead and jammed a new government entitlement leviathan down the country’s throat.
The truth of the matter is that Obama has been at the helm for four years. This economy is his now. No more excuses. He owns it.
So what can Obama do to help turn things around? While I’m an optimist, I’m also a realist. Likewise, I harbor no illusions thatBarack Obama is going to suddenly see the pro-growth, free market light and introduce policies that will unleash the entrepreneurial spirit vital to U.S. growth. Nor do I think he will pull a Bill Clinton and move to the center during his second term. If President Obama proved one thing during his first term it’s that he is about as dogmatic and unwavering as they come. Nor am I confident that the blame game that consumesWashington is going to change anytime soon. But perhaps—perhaps—Obama and the Republican-led House might consider the following items in order to reignite the economy:
- Start negotiating in good faith. Quit the demonization of your opponents. Put down Saul Alinsky and take a page out of Ronald Reagan’s playbook instead. Republicans have asked what would Reagan do, well, Reagan found a way to work with Tip O’Neill. The President and Congress need to stop the blame game and find common ground. In other words, show some grace.
- Get serious on debt. Back in 2006, before he became president, Obama had this to say about America’s staggering debt burden: “America’s debt weakens us domestically and internationally. Leadership means that ‘the buck stops here.’ Instead, Washington is shifting the burden of bad choices today onto the backs of our children and grandchildren. America has a debt problem and a failure of leadership. Americans deserve better.” I couldn’t have said it better myself, Mr. President. On the other hand, as hard as the Democrats fight to prevent reasonable reforms to entitlements, Republicans need to bring reason to the debate regarding the defense budget. Economic integrity is the real national security issue now. The debt needs to be tamed—now is the time to get serious about it.
- Ease up on regulation. The heavy hand of onerous government regulation is still suffocating businesses owners large and small across the nation. As I wrote in aprevious Forbes column, the “hidden cost” of regulation has ballooned to almost $2 trillion on an annual basis. This is economically ruinous.
- Let the energy markets work free of intervention. It’s always difficult to predict what’s ahead, but fossil fuel has the potential to drive a lot of economic growth for decades to come. Conversely, market signals suggest that green energy is, at least for now, the proverbial wet blanket. What’s important is to let Adam Smith’s invisible hand render judgment on what’s before us free of subsidy. If this includes the building of Keystone XL, let it happen now.
As for Republican leaders, now is the time to have a disciplined message. The economy, the debt and anything that will help our economy grow must be the sole message. While the nation is facing true economic peril, Republicans need not be drawn into a cultural debate.
In the final analysis, virtually nothing matters more than a nation’s economic health and well-being. It is of the highest order. Everything, good or bad, ultimately flows from the economic health or sickness of a country. Healthy economies lead to peace and prosperity, sick economies lead to chaos and disaster. Remember the Soviet Union? Right now, America is standing precariously on the fiscal precipice, languishing, barely growing, spending way beyond our means. This is a critical time in our nation’s history. The tough decisions we make, or fail to make, will have lasting repercussions for generations to come.
Let’s hope Obama and the Republican leadership can work together just enough to make progress on these critical issues. Most importantly, let’s hope that the President can be a true statesman and provide real leadership. Unfortunately, I won’t hold my breath.