Recovery Slumber

Back in June 2010, President Obama proclaimed the beginning of what he called "recovery summer."  As HUD deputy secretary Ron Sims boasted on the White House blog, that was the summer we would see "the most active season yet" of economic activity. 

As evidence of this recovery, Sims pointed to the construction of Baltimore's Wayland Village, a development providing 89 affordable "green and sustainable" apartments for needy seniors at taxpayer expense.  Funded by the $878 billion American Recovery and Reinvestment Act, Wayland Village is apparently the kind of recovery and reinvestment that the President has in mind for the economy as a whole -- a costly welfare project made possible by massive increases in stimulus spending. Even with a second stimulus bill, however, there was no recovery summer.

As it turned out, there was not much recovery in winter, spring, or fall, either.  For 2010 as a whole, the economy grew at just 2.8%, the slowest rate of growth ever recorded following a major recession. 

Now the World Bank is forecasting 2.6% growth for 2011 and continued sluggishness through 2012 if not beyond.  Whatever happened to the "green shoots," "recovery summer," and "temporary bump in the road" (after he gets us "out of the ditch") that Obama has promised?  If the economic slumber continues much longer, the administration is going to run out of metaphors.

According to the Federal Reserve's Beige Book released on June 8, only one region of the country -- Texas and surrounding states -- is experiencing significant economic growth.  The free-market reforms carried out by Texas's Gov. Rick Perry, including tort reforms that protect businesses and physicians against frivolous litigation and excessive claims, have resulted in strong growth.  Among major corporations that have relocated to Texas is Comerica, which moved its headquarters from Detroit to Dallas in 2007.  As for the rest of the country, jobs are scarce, home prices continue to fall, retail sales are down, and industrial plants sit idle. 

This is especially the case in the Northeast and Midwest, regions that for decades have burdened their businesses with increased taxes and regulations, including the imposition of prevailing wage laws and collective bargaining rights for public employees.  Obama's home town of Chicago is routinely ranked among the least business-friendly cities in America.  It's no surprise that businesses are leaving Chicago and taking their jobs with them.

What the Beige Book is telling us is that Obama's economic policies have failed, and that Obama's promises of "millions of green jobs" are nothing but a lie.  Perhaps at one time the President actually believed his own promise of creating "five million green jobs" during his first year in office.  If so, this only reveals his lack of foresight.  The fact is that only a handful of green jobs, or jobs of any kind, have been created during the past two and a half years.  As of September 2010, according the Energy Department's own figures, only 82,000 green jobs had been created, and many of these have since disappeared as alternative energy firms funded by subsidies have gone belly up.  

There is now a consensus among economists that the way out of the Obama malaise is lower taxes, reduced regulation, and the promotion of free and open markets.  This view was outlined by Edward P. Lazear, former chairman of the Council of Economic Advisors, in a Wall Street Journal op-ed of May 16, "Why the Job Market Feels So Dismal."  It has been echoed by dozens of other leading economists.  Lazear's plan is a simple and straightforward prescription for growth that would encourage business spending, lower costs, increase exports, and create far more than five million jobs.

So why has the President done nothing but call for higher taxes, increased regulation, and continued trade restrictions? 

To be honest, I don't know.  I suspect, however, that it is because the President has made a political calculation that has nothing to do with economic reality.  Obama cannot win reelection without strong support from unions, environmentalists, and the welfare class, none of which have an interest in economic growth.  Having hitched his wagon to the star of a slow-growth, regulated economy, the President cannot get off.  He will have to accept continued high levels of unemployment and keep lecturing the public to "be patient" while he hauls the economy out of the ditch.  But with this President, it's going to be a long, bumpy ride.  More like driving in the Grand Canyon than in a ditch.

If the Obama administration wished to spur growth and promote job creation, there are many concrete steps he could take to do so.  He could speed up drilling in the Gulf.  He could ratify stalled free-trade agreements with South Korea, Panama, and Columbia.  He could repeal ObamaCare and rescind the thousands of new regulations enacted under the Dodd-Frank Financial Reform legislation.  He could enact comprehensive tort reform.  He could declare a moratorium on further job-killing regulation by the Environmental Protection Agency.  He could direct the National Labor Relations Board to back off efforts to block Boeing's 787 Dreamliner plant in South Carolina.  He could support national Right to Work legislation. 

Each of these actions would help grow the economy and create tens of thousands, if not hundreds of thousands, of new jobs.  But none of these pro-growth policies will come about as long as Obama is President.  The economy will continue to slumber from one season to the next and with nothing to show for the trillions wasted on stimulus.

Obama is too cowardly to stand up to his political base even if that base is dragging the country down.  In the end the American people will repudiate Obama and his fantasies of total regulation, union supremacy, and unlimited government spending.  In time, under the leader of a conservative president, the nation will awaken from its economic slumber.  The only question is how much damage Obama will do before he is sent back to Chicago.

Jeffrey Folks is the author of many books and articles on American culture.

Back in June 2010, President Obama proclaimed the beginning of what he called "recovery summer."  As HUD deputy secretary Ron Sims boasted on the White House blog, that was the summer we would see "the most active season yet" of economic activity. 

As evidence of this recovery, Sims pointed to the construction of Baltimore's Wayland Village, a development providing 89 affordable "green and sustainable" apartments for needy seniors at taxpayer expense.  Funded by the $878 billion American Recovery and Reinvestment Act, Wayland Village is apparently the kind of recovery and reinvestment that the President has in mind for the economy as a whole -- a costly welfare project made possible by massive increases in stimulus spending. Even with a second stimulus bill, however, there was no recovery summer.

As it turned out, there was not much recovery in winter, spring, or fall, either.  For 2010 as a whole, the economy grew at just 2.8%, the slowest rate of growth ever recorded following a major recession. 

Now the World Bank is forecasting 2.6% growth for 2011 and continued sluggishness through 2012 if not beyond.  Whatever happened to the "green shoots," "recovery summer," and "temporary bump in the road" (after he gets us "out of the ditch") that Obama has promised?  If the economic slumber continues much longer, the administration is going to run out of metaphors.

According to the Federal Reserve's Beige Book released on June 8, only one region of the country -- Texas and surrounding states -- is experiencing significant economic growth.  The free-market reforms carried out by Texas's Gov. Rick Perry, including tort reforms that protect businesses and physicians against frivolous litigation and excessive claims, have resulted in strong growth.  Among major corporations that have relocated to Texas is Comerica, which moved its headquarters from Detroit to Dallas in 2007.  As for the rest of the country, jobs are scarce, home prices continue to fall, retail sales are down, and industrial plants sit idle. 

This is especially the case in the Northeast and Midwest, regions that for decades have burdened their businesses with increased taxes and regulations, including the imposition of prevailing wage laws and collective bargaining rights for public employees.  Obama's home town of Chicago is routinely ranked among the least business-friendly cities in America.  It's no surprise that businesses are leaving Chicago and taking their jobs with them.

What the Beige Book is telling us is that Obama's economic policies have failed, and that Obama's promises of "millions of green jobs" are nothing but a lie.  Perhaps at one time the President actually believed his own promise of creating "five million green jobs" during his first year in office.  If so, this only reveals his lack of foresight.  The fact is that only a handful of green jobs, or jobs of any kind, have been created during the past two and a half years.  As of September 2010, according the Energy Department's own figures, only 82,000 green jobs had been created, and many of these have since disappeared as alternative energy firms funded by subsidies have gone belly up.  

There is now a consensus among economists that the way out of the Obama malaise is lower taxes, reduced regulation, and the promotion of free and open markets.  This view was outlined by Edward P. Lazear, former chairman of the Council of Economic Advisors, in a Wall Street Journal op-ed of May 16, "Why the Job Market Feels So Dismal."  It has been echoed by dozens of other leading economists.  Lazear's plan is a simple and straightforward prescription for growth that would encourage business spending, lower costs, increase exports, and create far more than five million jobs.

So why has the President done nothing but call for higher taxes, increased regulation, and continued trade restrictions? 

To be honest, I don't know.  I suspect, however, that it is because the President has made a political calculation that has nothing to do with economic reality.  Obama cannot win reelection without strong support from unions, environmentalists, and the welfare class, none of which have an interest in economic growth.  Having hitched his wagon to the star of a slow-growth, regulated economy, the President cannot get off.  He will have to accept continued high levels of unemployment and keep lecturing the public to "be patient" while he hauls the economy out of the ditch.  But with this President, it's going to be a long, bumpy ride.  More like driving in the Grand Canyon than in a ditch.

If the Obama administration wished to spur growth and promote job creation, there are many concrete steps he could take to do so.  He could speed up drilling in the Gulf.  He could ratify stalled free-trade agreements with South Korea, Panama, and Columbia.  He could repeal ObamaCare and rescind the thousands of new regulations enacted under the Dodd-Frank Financial Reform legislation.  He could enact comprehensive tort reform.  He could declare a moratorium on further job-killing regulation by the Environmental Protection Agency.  He could direct the National Labor Relations Board to back off efforts to block Boeing's 787 Dreamliner plant in South Carolina.  He could support national Right to Work legislation. 

Each of these actions would help grow the economy and create tens of thousands, if not hundreds of thousands, of new jobs.  But none of these pro-growth policies will come about as long as Obama is President.  The economy will continue to slumber from one season to the next and with nothing to show for the trillions wasted on stimulus.

Obama is too cowardly to stand up to his political base even if that base is dragging the country down.  In the end the American people will repudiate Obama and his fantasies of total regulation, union supremacy, and unlimited government spending.  In time, under the leader of a conservative president, the nation will awaken from its economic slumber.  The only question is how much damage Obama will do before he is sent back to Chicago.

Jeffrey Folks is the author of many books and articles on American culture.

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