10 Jun

Obama Economy – Why Are We Here and What Do His Policies Portend for 2012? [Reader Post]

                                       

There are quite a lot of opinions about Obama’s reelectability in the face of bad economic news. The national debt is up, economic growth is slow, jobs are not being produced as promised, house prices continue to fall, and employers are complaining about policy uncertainty.1 So it will be very interesting to see just where we are, how we got here, and how the economy will effect Obama’s reelection.

Obama’s Economy

There is little doubt that today’s economy belongs to Presient Barack Obama, regardless of his blaming George W. Bush for all of his problems. “Now, my administration has a job to do as well, and that job is to get this economy back on its feet,” President Obama declared on July 14, 2009, in Warren, Mich. “That’s my job, and it’s a job I gladly accept. I love these folks who helped get us in this mess and then suddenly say, well, this is Obama’s economy. That’s fine. Give it to me.”2 This month’s unemployment rate is 9.1%. When Obama gave the above mentioned speech, it was 9.5%. This month’s unemployment rate is still well above the 8% rate we were promised if the stimulus was enacted. What is really sad is that his advisors said the unemployment rate would top out at 8.8% if the stimulus was not enacted. Since Obama gave that speech in 2009, the country has spent $2.8 trilion, run up $3.7 trillion in debt, and lost 2.8 million jobs.

But the main point is that Obama and the administration act like and say that they know what they are doing.

Here is another newsflash from The New York Times: the stimulus did not work.3 The stimulus of $787 billion was supposed to create or save 3.5 million jobs by 2011. When Republicans proposed reducing taxes and regulations and promoting free trade, the left attacked them, claiming they offered no new ideas. Then the left said that government must help by coming to the rescue. The left proposed new taxes to pay for the help. Despite all the stimulus “help,” the country is still stuck in the economic doldrums.

Keyensian Economics – the Source of the Stimulus Idea

Keyensian economics4, named after John Maynard Keynes (1883 – 1946), a British economist, with its focus upon macroeconomics, proposed that a government’s intervention in the economy through public policies that aim to achieve full employment through measures, such as deficit spending, that stimulate aggregate demand. Keynes’ solution to this poor economic state was to prime the pump.5 By prime the pump, Keynes argued that the government should step in to increase spending, either by increasing the money supply or by actually buying things on the market itself.

Obama’s Economic “Dream Team”

In November, 2008, President-elect Obama named members of his administration’s economic team, including Timothy Geithner as his Treasury Secretary nominee, and Lawrence Summers as the director of the National Economic Council.6 “I’ve sought leaders who could offer both sound judgment and fresh thinking, both a depth of experience and a wealth of bold, new ideas, and most of all who share my fundamental belief that we cannot have a thriving Wall Street without a thriving Main Street,” Obama said at a press conference Monday in Chicago. He also announced economist Christina Romer as the director of his Council of Economic Advisors, and he named Melody Barnes to be the director of his Domestic Policy Council (DPC). He appointed his longtime adviser Austan Goolsbee to chairman of the Council of Economic Advisers in September, 2010.7 He replaced Christina Romer, and was a professor at the University of Chicago.8

What Has Happened To Obama’s Dream Team?

We know what the “dream team” produced during the first two years of Obama’s presidency. The question now is: Where are they now? Here is the answer.9

  • Tim Geithner – the only senior official remaining from the economic team when President Barack Obama took office in 2008.
  • Larry Summers – Chairman of the National Economic Council, left the administration at the beginning of the year. He returned to teaching at Harvard University.
  • Christina Romer – head of the Council of Economic Advisers, the coordinator of economic policy across the administration, resigned in September 2010 to return to the University of California at Berkeley.
  • Austan Goolsbee – chairman of the White House Council of Economic Advisers, plans to return to teaching economics at the University of Chicago this fall.
  • Jared Bernstein – actual architect of the stimulus, and the man who was behind Vice President Biden’s “Summer of Recovery.”

Peter Orszag

Another name that has often surfaced is Peter Orszag, President Obama’s first budget director.10 He was instrumental in shaping the 2009 stimulus package and the health care legislation passed in early 2010. Mr. Orszag pushed for and won a controversial provision to create something called the Independent Payment Advisory Board (IPAB). House Democrats blame Mr. Orszag for having led the incursion onto their territory, and they seem hopeful for a better reception from his successor, Jacob Lew. Mr. Orszag was a protègè of Robert E. Rubin, the former treasury secretary. He served as an economic adviser to President Bill Clinton, and before that to Mr. Clinton’s Council of Economic Advisers. After leaving the White House, he formed an economic consulting company, then became a senior fellow for economic studies at the Brookings Institution, a center-left research organization in Washington. He resigned in July, 2010.11

Austan Goolsbee Gone – “Dream Team” Evaporates

Three days ago (6 Jun 2011) we learned that Austan Goolsbee is leaving his post as the chairman of the Council of Economic Advisers.12 Obama called him “one of America’s great economic thinkers.” While the country was gripped by the latest depravity committed by the elites who profess they know how to improve our country, it was easy to miss the announcement and its ramifications.13 The announcement that the president’s remaining academic economist, Austan Goolsbee, was heading for the exits was a strong indication of our national economic crisis and the turmoil at the top: he resigned after only nine months at the helm. Goolsbee headed the President’s Council of Economic Advisers, Obama’s assembled “wise men.” Two and a half years ago, Goolsbee was part of President Obama’s so-called economic “dream team.” With Goolsbee’s departure, the collapse of the president’s economic team is nearly complete. When Goolsbee joined Team Obama, the unemployment rate was at around 6 percent. When he announced his resignation on Monday, the jobless rate stood at 9.1 percent.14

Obama’s Reelection Chances

Today (9 Jun 2011), with the eonomy in ruin and unemployment high, what are President Obama’s reelection chances? Well, let’s see. The president truly looks vulnerable, bereft of ideas for economic recovery.13 The president’s ratings on the economy and federal budget deficit did not contribute to the increase in overall job approval. Instead, his approval in those areas remained flat – and weak – at just 37 and 32 percent, respectively.15 This could spell trouble in the 2012 elections. Four more years of President Obama means home prices continue on their downward spiral and bankruptcies.16 The private sector responds to increased taxes, regulations and healthcare costs by refusing to hire more workers. Layoffs continue and real unemployment approaches 20%. The Federal Reserve continues to print dollars and buy debt. The third year of Barack Obama’s presidency is running into the same troubles he faced in his first two, undermining his prospects for a second term.17 No issue looms larger than the economy’s continued weakness, despite $1 trillion in stimulus money Obama and his party threw in. Obama and his adisors bet that their costly public-works spending plan would create tens of millions of jobs and boost the nation’s economic growth rate. But two years and five months later, the once robust American economy is crawling along. As the economy slows, so does job creation. Another Obama policy that adds to the economy’s weakness is the government’s excessive spending levels and its growing $14.3 trillion debt. In Reckless Engagement,18 the latest book about the financial crisis, co-authors Gretchen Morgenson and Josh Rosner do what many of their high-profile counterparts failed to do: Name names for those responsible for the crisis. And here is an article19 that outlines Obama’s cronyism.

Bottom Line: Obama is VERY vulnerable. He and his “dream team” made some bad decisions for which we taxpayers are paying. Perhaps if enough voters see upon whom he relied, he will not be reelected in 2012.

But that’s just my opinion.

  1. Bad Economic News Bodes Ill for Obama’s Re-Election
  2. It’s Obama’s Economy, Stupid
  3. Morning Bell: The Unstimulated Obama Economy
  4. Keynesian economics
  5. What Is Keynesian Economics?
  6. Obama names his economic team
  7. Obama promotes adviser Goolsbee to top economic post
  8. Obama economic team shifts from left with Goolsbee appointment
  9. Quick Facts: What happened to Obama’s economic team?
  10. Peter R. Orszag
  11. For Budget Chief, Not All Farewells Are Fond
  12. Top Obama Economic Adviser Goolsbee to Quit to Return to Professor Position
  13. Goolsbee Gone: Obama’s Economic ‘Dream Team’ Evaporates
  14. Obama’s Egghead Economic Saboteurs
  15. Majority of Americans Disapprove of Obama’s Handling of the Economy, Budget Deficit
  16. Defeating Denial to Avert Disaster
  17. As the Economy Goes, So Go Obama’s Re-Election Prospects
  18. ‘Reckless Endangerment’: Morgenson, Rosner Name Names — Point Finger at Fannie Mae
  19. Obama Offers Prime Posts to Top Campaign Contributors (Update1)
This entry was posted in Barack Obama, Baracks Broken Promises, Economy, Obamanomics, Politics. Bookmark the permalink. Friday, June 10th, 2011 at 6:00 am
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17 Responses to Obama Economy – Why Are We Here and What Do His Policies Portend for 2012? [Reader Post]

  1. BrokedownPalace says: 1

    Looking at Goolsbee leaving after on 9 months is a stunning “canary in a coal mine” moment. He didn’t take the position until well into the term, no one would even think of not working through the rest of the term on a Presidential Council.

    Why walk away? I have to think it’s because he has seen the White House from the inside and knows that they have no plan to stop whats happening. The decisions they make are counter-productive to solving it, and he wants to be as far away as possible when it all finally hits the fan.

    Make no mistake, his leaving imply’s very bad things coming for the economy.

    ReplyReply
  2. Nan G says: 2

    To prove, even to the most total Obama fan, that pumping stimulus money into the economy through the government does not work at all – all one needs to do is force them to look at a few graphs that put all of those billions of dollars into perspective.

    So, for instance, the billions of dollars Obama WASTED hiring thousands of US Census workers (some hired and fired again and again to pump up the numbers) is a mere blip on this graph.

    And look at Obama’s Home Mortgage bailout.
    All that has happened is that a larger proportion of people in default are longer in default, but not foreclosed on.
    Well, that and we wasted billions on the program.

    But that’s not all the money Obama wasted on housing.
    He also had a ”First time home buyers credit” of $8,000 which he later extended to non-first time buyers and even dead people.
    Here’s the graph with the two blips.
    Note the economy of buying a home did not ”turn around.”
    All that happened was people moved forward their plans to buy the house they wanted to buy later.

    You can look at this chart and see that Obama’s ”Cash for Clunkers” program, while costing taxpayers $24,000 per car bought, was only a little pair of blips in auto sales.
    Nice chunk of change we paid paper pushers though, huh?

    _______________________
    Obama has also emboldened unions to thuggery.
    We saw it in Wisconsin.
    Well, it has spread.

    I watch local news several times a day.
    Our unionized supermarket workers are going to go on strike because they don’t want to have to pay a little less than $100/month for their entire family’s medical coverage.
    Our local firemen and policemen have made public statements of solidarity.
    In fact, during one TV interview, a unionized rescue worker said that they would stand in solidarity with their striking ”brothers” at the supermarkets ….. so if any heartless person were to try to cross their picket line, and got hurt, they should not expect paramedic care.
    Firefighters also said it would be too bad if some of these supermarkets caught fire and they, the firefighters, could not cross the picket lines to put out the fires.

    Sounds like threats to me.
    Thanks Obama!
    NOT!

    ReplyReply
  3. s7vn says: 3

    Are you hungry? Out of work? Eat your CHANGE!

    ReplyReply
  4. Nan G says: 4

    China says the U.S. is already defaulting on debt

    Now, China might be playing a game to try to help Obama get the debt ceiling raised without promise of cost-cutting.
    There is no proof of China’s statement anywhere I can find.
    It is merely an unsubstantiated headline.
    Oddly (or not) the Chinese send a threat to Republicans along with their headline grabber:
    A Chinese official, Li Daokui, an adviser to the People’s Bank of China, warned that congressional Republicans are “playing with fire” in opposing efforts to increase the debt ceiling. (Strong shows all such positions are held by gov’t operatives in China.)

    ReplyReply
  5. oil guy from Alberta says: 5

    Where in your constitution and bill of rights say that the feds are obligated to transform anything?

    On a positive note, the long form certificate of birth of the Pretender in Chief, has been presented to the FBI as a court brief. The last I read was 22 counts of fraud.

    ReplyReply
  6. cubiclecommando says: 6

    Let’s tweak the title just a touch: “The Economy: Why Is It Getting So Warm And How Did We Get In This Handbasket?”

    ReplyReply
  7. @cubiclecommando: Yes, I agree, yours is a MUCH better title. :)

    ReplyReply
  8. James Raider says: 8

    @ Warren Beatty,
    “What Has Happened To Obama’s Dream Team?”

    Right on, . . . when guys like Goolsbee, capable or not, brain dead or not, jump ship well before they should and in the middle of a recession sliding into a full blown depression, it is a very telling sign that there are serious problems inside the Administration. The problems and confusion are probably more dire than have ever echoed within the walls of the Oval Office since it was built.

    We can look forward to some hair raising stories once some of these people get the guts to write about what they found once inside the circle of incompetence.

    This “ship jumping” is also a very obvious tell tale of a defective leader, . . . ask any CEO – or any thinking human with a modicum of common sense.

    ReplyReply
  9. oil guy from Alberta says: 9

    Foolsbee and Kenyan economics

    ReplyReply
  10. Nan G says: 10

    I just came back from an organic market.
    There was a large group of black ladies, some with children, all talking about Obama.
    I stopped to test the produce by them and hear their opinions of Obama.
    It was 100% dissatisfaction with him as our black president.
    Boiled down they felt he had done nothing that helped any of them.
    And they weren’t going to bother voting if he ran again.
    AND they paid with Food Stamps, so at least they are eating healthy while poor.

    ReplyReply
  11. @BrokedownPalace: #1,
    . . . . Well said.

    The inner group that controls the mess, is almost as ego centric as the illustrious leader whose narcissism could care less about the state of the economy, nor seems to care nor anyone/anything else outside the Oval Office.

    It Only cares about power and influence in the long term and how to achieve it from its current position.

    None of this bodes well for the next year.

    ReplyReply
  12. Nan G says: 12

    Obama doesn’t want to be SEEN working with Republicans….but apparently Obama IS working secretely with Republicans on at least one TAX BREAK.
    Obama is considering a temporary cut in payroll taxes that employers pay on wages.

    Obama did admit that working with the Republicans in Dec. 2010 resulted in policies that worked!
    OBAMA: “Some of the steps that we took during the lame duck session — the payroll tax, the tax breaks for business investment in plants and equipment — all those things have helped.” SOURCE

    ReplyReply
  13. FAITH7 says: 13

    What is stunning to me is Obama’s “Dream Team” many of the “academic” set….the people who are suppose to be so adept at “Economics”, but apparently aren’t worth much outside of the ‘class room’ since that is [where they ran back to], when things went sour….with of course, no problem getting gainful employment unlike many Americans….

    Look who Obumble’s surrounded himself with… ‘Academics’ with no ['real world experience'] in just about everything…. Not to mention a lot of people who are so incompetent, they made him look just as incompetent, not that he has any trouble doing that all by himself…

    As of now Mr Obumbles and what’s left of his ‘Nightmare’ team have no idea how to get us out of what is HIS “disaster” of an economy now… I repeat myself when I say if Obmumbles came into this administration with, as Obumbles puts it Bush’s “mess” why on earth would you perpetuate a already bad situation and go from bad to worse??

    I can guarantee if [when] Obumbles gets voted out and a Fiscally Responsible [Leader] replaces him, and I stress [Leader] not [Appeaser]… the Economic flood gates are going to open up… Companies are stagnant, they need to project, something they cannot do with an unstable future… Obumbles and his ‘nightmare’ team perpetuated a bad situation which has lead us to the edge of economic ruin… Frankly, I wish he could be impeached to prevent further economic disaster to our Country… Just who ‘is’ pulling Obumbles strings?????

    ReplyReply
  14. John Cooper says: 14

    NanG – Regarding the supermarkets: As near as I can tell, the union intends to strike rather than accept a contract where the employees have to pay $9 per week for their health insurance.

    ReplyReply
  15. Nan G says: 15

    Obama asks:
    Why pay $18 when you can pay $50?
    AND….
    Why take 3 hours and 50 minutes to get there when you could pay more and take 5 hours?

    Yup.
    Obama wants taxpayers to fund a ”high speed train.” (45 MPH)
    It would go from Iowa City to Chicago.
    $50 for a one-way 5 hour ride.

    BUT…..
    There is already a bus.
    It is a luxury bus service.
    You can use your laptops and other wireless devices.
    It costs $18 for a one-way 3 hour 50 minute ride.

    Iowa would have to cough up $20 million in taxpayers subsidies.
    The US Taxpayers would also have to pay $20 million.
    And it is predicted to have an 80% cost over-run.

    If this happens, who is the fool?
    Obama for asking?
    Or Iowa’s leaders for going along?

    Source

    ReplyReply
  16. Ditto says: 16

    @Warren

    But the main point is that Obama and the administration act like and say that they know what they are doing.

    Oh, I have no doubt they know what they are doing.

    While the country was gripped by the latest depravity committed by the elites who profess they know how to improve our country...

    Obama told us quite clearly that his goal is to Fundamentally change America. But he and the MSM will not admit what they want to change it to. Nearly all the people Obama was (and for many still is) associated with all support destroying capitalism and turning America into a Democratic-Socialist world government ruled state. And although he is losing some of his economic team, he has still installed far-left supporters of the same social-political mind-set in the leadership of most of the agencies (just as Clinton did with various agencies and even the White House staff.

    I think that that was one of the mistakes Bush made, was in keeping a large majority of the Clinton appointees and White House staff. Republican candidates to be seriously considered, must announce that they will clean house and remove all Obama’s political crony hirelings.

    ReplyReply
  17. Nan G says: 17

    Obama announced plans to create a new oversight board and fund it extensively.
    It is supposed to look at gov’t agencies.
    Then it will recommend cuts.
    There will be many new jobs, overseeing all gov’t agencies and programs.
    All they will do to get their pay is look over the shoulders of workers.
    Then- supposedly – red tape will be found and cut, waste will be ID’ed and cut.
    And Biden is in charge of it all.

    The non-tongue-in-cheek version is here.

    ReplyReply

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