Obama's Hope and Lies
One thing about the Obama White House: you can't fault them for a lack of optimism. Obama has been operating on little more than "hope" for three years now, with rosy predictions of economic improvement just around the corner. Back in June 2010, the president kicked off "recovery summer" with "groundbreakings and events across the country." When that recovery failed to materialize, he insisted that we were just going through a "soft patch." We're still in that soft patch, which is starting seem more like an endless swamp.
No problem. When rosy predictions fail, one can always resort to lies.
The monthly jobs report issued by the Department of Labor has not provided much cause for hope lately. Following weak reports in June and July, the August report showed an increase of precisely zero. That report, the first time a jobs report had shown zero improvement since 1945, grabbed the media coverage. But at the same time it was issued, the June and July numbers were revised downward by 58,000. Month after month, it seems, Obama's Labor Department has come up with rosy numbers that have to be adjusted downward. If that trend continues, we'll be up to full employment in no time, but no one will actually be working.
Maybe they've been playing too much fantasy football, or basketball, at the White House these days to know the difference. Obama is particularly fond of the kind of large numbers that impress small minds, "millionaires and billionaires" being a prime example. Aside from the fact that millionaires and billionaires are two very different classes of individuals -- there are plenty of millionaire retirees who are getting by on municipal bonds that currently yield 2.40% a year -- the president seems to have no conception of how capital creation is related to jobs. Every dollar that government confiscates from millionaires and billionaires is one fewer dollar invested in businesses that create jobs. Obama shows no more understanding of how this works than does his buddy, James Hoffa, Jr., head of the Teamsters Union.
Appearing with Hoffa at a Labor Day rally in Detroit, Obama appeared to second Hoffa's "declaration of war" against the Tea Party. In a CNN appearance the same weekend, Hoffa questioned the patriotism of businesses that have held back on investing their capital in the face of new regulation and taxation.
It is a charge that Obama's supporters have been kicking around for months. If only businesses would put all their reserve capital to work, millions of new jobs would be created. Of course, part of the reason they do not is prudence in the face of a deteriorating economy. Another is that excessive regulation has foreclosed business opportunities. Drilling has been all but banned in the Gulf of Mexico, in Alaska, and on federal lands elsewhere. Construction of the Boeing 787 Dreamliner in South Carolina has been threatened by Obama's National Labor Relations Board. Businesses face uncertainty over increased taxes associated with ObamaCare and possible expiration of the Bush tax cuts.
Meanwhile, Dodd-Frank has forced financial firms to maintain higher capital ratios even as it has reduced their profitability by sharply limiting fees and charges. But if only they would forget about taxes and regulation and shovel some of that money out to union workers, the economic numbers would look a lot better. It's almost as if businesses were withholding that money until they have some assurance of making a profit. How unpatriotic can you get?
When it comes to rosy predictions, Obama's promise of 5 million green jobs was about as far-fetched as Al Gore's claim to have invented the internet. According to Energy Department figures, the administration has spent $17.2 billion in loan guarantees to create 3,545 jobs, a cost of nearly $5 million per job. And as the bankruptcy of Solyndra, Evergreen Solar, and other green energy firms demonstrates, many of those jobs are likely to be short-lived.
Still, DOE sees the glass as a lot more than half-full. After news of the Solyndra bankruptcy broke, an Energy Department spokesman insisted that the loan guarantee program was "helping America win the clean energy race." Attempting to excuse its apparent loss of $500 million in loan guarantees to Solyndra, DOE's Deputy Secretary Poneman claimed that Solyndra was the victim of a "perfect storm." Despite repeated warning signs, including warnings from inside the department, DOE pressed ahead with loan guarantees to the failed solar panel maker. Half a billion dollars of taxpayer money has been squandered, and still Obama's Energy Department insists that "now is not the time to stop investing" in companies like Solyndra.
That combination of hope and lies is endemic within the Obama White House. At the beginning of the year, following his thrashing in the 2010 elections, Obama claimed to have seen the light on government regulation -- going so far as to issue an executive order to departments requiring them to eliminate needless regulation. Yet not a single regulation of any significance was reversed. In fact, hundreds of new regulations continue to be published each week in regard to health care, financial services, energy, and other areas.
When business leaders pressured the president to reverse costly greenhouse-gas standards for industrial boilers, the EPA resisted and finally agreed only to delay regulation for one year. But the fact that implementation has been postponed from 2014 to 2015 does nothing to lessen the job-killing effects of the ruling. Businesses large and small will immediately factor in the burden of this regulation and reduce their spending on jobs accordingly.
Desperate to show that regulation has been reduced, the White House Office of Management and Budget issued a report showing that Americans were having to spend less time filling out government forms. That might sound like a step forward, but most of the "improvement" resulted from reduced estimates of how long it takes to fill out those forms. In other words, if you want to reduce the burden of regulation, why not just reduce your estimates of how burdensome government regulations are?
Incredible as it may seem, Labor Department forms that took 183 million hours to complete in 2009 take only 141 million hours today, a 23% reduction in compliance time. The best part of it was that for the most part there was no actual reduction in the amount of time it took to complete the paperwork. All it took was a new estimate of the time it needed to do it and that burdensome regulation disappeared. Next thing you know, the IRS will issue a report showing that the top bracket of 35% has shrunk to just over a third of income.
If this all sounds a lot like Alice in Wonderland, it's because we have the mad hatter in charge. Alice in Wonderland is, after all, a tale in which a number things appear larger (or smaller) than they really are, so perhaps the Obama administration is simply exercising creative license as it issues economic reports. The last few years have been a mad tea party, just like the one in Lewis Carroll's book. Hopefully, a real tea party will put an end to that next year.
Jeffrey Folks is author of many books and articles on American culture, most recently Heartland of the Imagination (2011).