Bob Schieffer:
"The fact is, unemployment is up. It is higher than
when [President Obama] came to office, the economy is still in the dump.
Some people say that is reason enough to make a change."
Bill Clinton:
"It is if you believe that we could have been fully
healed in four years. I don't know a single serious economist who
believes that as much damage as we had could have been healed."
CBS's "Face the Nation," September 23, 2012
Well, let's see. We can think of several serious people who said we
could heal the economy in four years. There's Joe Biden, Nancy Pelosi,
Harry Reid, Christina Romer, Jared Bernstein, Mark Zandi, and, most
importantly, President Obama himself.
In early 2009 soon-to-be White House
economists Ms. Romer and Mr. Bernstein promised Congress that the
stimulus would hold the unemployment rate below 7% and that by now it
would be 5.6%. Instead the rate is 8.1%. The latest Census Bureau report
says there are nearly seven million fewer full-time, year-round workers
today than in 2007. The labor participation rate is the lowest since
1981.
So it has gone with nearly every prediction the President has made
about where the economy would be today. Mr. Obama promised that the
deficit would be cut in half in four years, but the fiscal 2012 deficit
(estimated to be above $1 trillion) will be twice the 2008 deficit ($458
billion).
Mr. Obama said that his health-care
plan would "cut the cost of a typical family's premium by up to $2,500 a
year," but premiums for employer-sponsored family coverage have gone up
$2,370 since 2009, according to the Kaiser Family Foundation.
He said that the linchpin for a growing economy would be renewable
energy investment, and he promised to "create five million new jobs in
solar, wind, geothermal" energy. Mr. Obama did invest some $9 billion in
green energy, but his job estimate was off by at least a factor of 10
and today many solar and wind industry firms are fighting bankruptcy.
The growth in domestic U.S. energy production that he now takes credit
for has come almost entirely from the fossil fuels his Administration
has done so much to obstruct.
There's nothing unusual about
candidates making grandiose promises that don't come true. And it's a
White House tradition to blame one's predecessor when things don't get
better. (Usually these Presidents end up one-termers.)
The bad faith wasn't then. It's now.
Mr. Obama really believed that government spending would unleash a
robust recovery in employment and housing—an "economy built to last."
Now that this hasn't happened and with the Congressional Budget Office
predicting a possible recession for 2013, Team Obama claims these woeful
results were the best that could have been expected.
The problem with this line is that every
President who has inherited a recession in modern times has done
better. (See nearby table.) Under Mr. Obama, measured on the basis of
jobs, GDP growth and incomes, this has been by far the meekest recovery
from the past 10 recessions.
When George W. Bush was elected, he inherited a mild recession from
Mr. Clinton amid the bursting of the dot-com bubble, some $7 trillion of
wealth eviscerated. Nine months later came the 9/11 terrorist attacks.
Yet by 2003 the economy was growing by more than 3% and eight million
jobs were created over the next four years.
The Administration and its acolytes
claim that the nature of the 2008 financial collapse was different from
past recessions, and that it can take up to a decade to restore growth
after such a financial crisis. Economist Michael Bordo rebuts that claim with historical economic evidence nearby.
In reality, the biggest difference between this recovery and others
hasn't been the nature of the crisis, but the nature of the policy
prescriptions. Mr. Obama's chief anti-recession idea was a near
trillion-dollar leap of faith in the Keynesian "multiplier" effect of
government spending. It was the same approach that didn't work in the
1930s, didn't work in the 1970s, didn't work in 2008, and didn't work in
such other nations as Japan. It didn't work again in 2009.
Ronald Reagan also inherited an economy loaded with problems. The
stock market had been flat for 12 years, inflation rates neared 14%, and
mortgage rates almost 20%. The recession he endured in 1981-82 to cure
inflation sent unemployment to 10.8%, higher than Mr. Obama's peak of
10%. But the business and jobs recovery by early 1983 was rapid and
lasted seven years.
Reagan used tax-rate cuts, disinflationary monetary policy and
deregulation to reignite growth—more or less the opposite of the Obama
policy mix. Liberals tried to explain the Reagan boom that they said
would never happen by arguing that there was nothing unusual about the
growth spurt after such a deep recession. So why didn't that happen this
time?
When campaigning to be President in
1960, John F. Kennedy denounced slow growth under Eisenhower and Nixon
and said "We can do bettah." Growth was 7.2% in 1959 and 2.5% in 1960.
Since the recession ended under Mr. Obama, growth has been 2.4% in 2010,
1.8% in 2011 and, after Thursday's downward revision for the second
quarter, 1.7% in 2012.
Mr. Obama is running for re-election
trying to convince Americans that an economy limping at less than 2%
growth, 8% unemployment, real incomes down 5.7% since the recovery
began, and deficits of more than $1 trillion is the best we could
achieve. We liked it better when he stood for hope and change.
A version of this article appeared September
28, 2012, on page A16 in the U.S. edition of The Wall Street Journal,
with the headline: As Good As It Gets?.
