Obama Says His Economic Policies Worked!

Here is a hot news item from U.S. Treasury Department Secretary Tim "Tax Cheat" Geithner as he was testifying to Congress on July 24, 2012: "The economy is not growing fast enough.  Unemployment is very high."  No kidding!  As if we Americans did not already know that!

Just for the record:

• The "official" U-3 unemployment rate is presently 8.2 percent, while the "unofficial but, some would say, more realistic" U-6 unemployment rate is 14.9 percent.
• According to the Bureau of Economic Analysis, the Gross Domestic Product (GDP) of the U.S. increased at an annual rate of 1.9 percent in the first quarter of 2012. That growth rate is quite slow.

Geithner continued: "... we will keep supporting anything practical, sensible, that will make growth stronger, help get more people back to work[.]"  Gosh, you have received plenty of practical, sensible suggestions, but they were contrary to your (and President Barack Hussein "kill list" Obama's) ideology, so they were rejected.  So my questions are, "After three years of failure (resulting in continued slow growth and high unemployment), why do you continue to cling to your demonstrably failed ideas?  Is your obviously failed ideology stronger than what you are actually seeing?"

With what Geithner said as background, let's all have a good laugh (otherwise we would cry) at Obama's recent remarks about the U.S. economy and what he has done.

While speaking at a fundraiser (spelled: friendly, gullible audience) about his economic policies on July 23, 2012, in Oakland, CA, Obama said, "We tried our plan -- and it worked."  Obama actually said that.  He continued, discussing Mitt Romney's proposed tax and spending cuts, "We tried that and it didn't work," describing Romney's proposals as being just like the Bush-style top down economic policy.

The unemployment rate in Oakland, CA in May 2012 was 13.7 percent.

Now the MSM is claiming that his quote was taken out of context.  This is the quote that the MSM says is taken out of context:

Just like we've tried their plan, we tried our plan - and it worked.  That's the difference.  That's the choice in this election.  That's why I'm running for a second term.

In support of the "out of context" claim, The MSM is offering his full quote:

I'll cut out government spending that's not working, that we can't afford, but I'm also going to ask anybody making over $250,000 a year to go back to the tax rates they were paying under Bill Clinton, back when our economy created 23 million new jobs, the biggest budget surplus in history and everybody did well.  Just like we've tried their plan, we tried our plan - and it worked.  That's the difference.  That's the choice in this election.  That's why I'm running for a second term.

Out of context or not, Obama said, "... we tried our plan - and it worked."  So let's examine that statement.

As "proof" that his economic policies have worked, Obama cited the automobile industry bailouts.  He said, "I refused to turn my back on a great industry and American workers.  Three years later, the American auto industry has come roaring back."  Let's examine just how much Obama's "roaring back" auto industry cost us taxpayers:

• Obama's violations of bankruptcy law made the bailout of General Motors (GM) and Chrysler $26.5 billion more expensive than necessary. Obama and his administration violated every fundamental principle of the U.S. bankruptcy code by:
• protecting some union pensioners while not protecting non-union workers. GM gave $1 billion to Delphi's union retirees but gave Delphi's non-union retirees nothing.
• paying off Chrysler's unsecured union benefit trust fund instead of Chrysler's secured creditors. One tenet of bankruptcy law is that similarly situated creditors should receive similar treatment.

Obama and his administration gave special treatment to the United Auto Workers (UAW) above and beyond what other creditors and unions received rather than requiring the UAW to accept standard bankruptcy concessions.  The auto industry bailout was actually a UAW bailout.

• We taxpayers are on the hook for Obama's "roaring back" auto industry. GM stock closed on Monday, July 23, 2012 at $19.02 per share. As of noon on Friday, July 27, 2012, it was $19.23, so the discussion that follows is not exactly correct, but it's close. The Monday close would leave us taxpayers with a loss of about $25 billion. How? Let's add it up.

At Monday's price, our 500 million shares, or 26.5 percent, of GM are worth $9.5 billion.  GM's share price was $33 when we taxpayers "bought" it.  So the per share price drop is about $7 billion.  But Obama let GM keep $45 billion worth in past losses to write off future earnings, losses that are normally not carried forward by bankruptcy.  The "book value" of those losses was $18 billion, which let GM avoid paying any income tax on its $7.6 billion "profit."

Eighteen-billion-dollar losses "book value" plus $7 billion stock price loss = $25 billion.  But when you add in the $10 billion required for us to just break even (at $53 per share stock price), you get the total amount that we taxpayers are "out."

For perspective, each 1¢ movement in GM stock price translates to $5 million in movement for us.

• Isn't it rather ironic that Obama should describe what Bush did and what Romney proposes as "top-down" economic policy? Obama thinks that he knows better than the markets, rather than letting markets decide which products and services deserve to survive. Does the green energy industry come to mind?

Anyway, here are two of the five principles of top-down planning:

• Decision-making: approach in which the desired results or objectives are decided upon first, and then methods to achieve them are selected.
• Management: approach in which a board decides what results are to be achieved and how, and passes the plan down the hierarchy or management levels.

That sure sounds quite a bit like what Obama is currently doing, while at the same time dismissing the Bush-style top-down economic policy.  Can anyone say "hypocrite"?  And where is the MSM on this?  No differences of outcomes will result from the fact that Obama is top-down central planning by way of taxes and regulations rather than by the heavy handed fiat of a Soviet premier.  This will come as a very big shock to Obama (and his Teleprompter speech writers), but issuing government mandates is the ultimate "top down" way to govern.

We get a view of Obama's "working" economic policies.  Sure, they work for him and his UAW buddies.  But what about all of us taxpayers who have to foot the bill for his policies?

Recall that Obama also said, "The private sector is doing fine" and "If you like your doctor or health care plan, you can keep it."  So here is one more Obama quote that cannot stand the scrutiny of, as Paul Harvey used to say, "the rest of the story."

And here is a quote from Rep. Henry Waxman (D-CA), a political hack if there ever was one, and one of Obama's strongest supporters: "The economy has not recovered.  Some people call it a recession; I think it's a depression."  Based on that statement, I would say that Obama's re-election chances are, at best, dim.

Dr. Beatty earned a Ph.D. in quantitative management and statistics from Florida State University.  He was a (very conservative) professor of quantitative management specializing in using statistics to assist/support decision-making. He has been a consultant to many small businesses and is now retired.  Dr. Beatty is a veteran who served in the U.S. Army for 22 years.  He blogs at rwno.limewebs.com.