Democrats Will Own This Economy Mess


James Pethokoukis has an excellent op-ed about the economy that Obama will own. He is doing his best to ensure that people will believe this is Bush’s economy, not his…but history has shown in two years, and again in four years it won’t be the previous administration that will be blamed especially when he has the next four years to try and fix it.

For eight decades, Democrats have successfully blamed Republican Herbert Hoover for the decade-long Great Depression. That, even though Franklin Roosevelt’s New Deal failed to restore prosperity or dramatically lower unemployment, and his tax increases in 1937 snuffed out a nascent recovery.

Now today’s Obamacrats are apparently going to try and Hooverize President Bush in an effort to shield themselves from the potential political fallout of a prolonged recession. It will take years to fix the American economy, Obama says, and years of trillion-dollar budget deficits to do it. And everyday it seems that Team Obama tries to lower economic expectations, such as bearishly predicting that unemployment would hit double-digits.

The not-so-subtle message in the middle of all these pessimistic prognostications: When ya’ll go to vote in 2010 and 2012 and a) unemployment is still as high as it’s been in decades, b) income growth is sluggish at best, c) the budget deficit is running at a trillion bucks a year, and d) stock prices remain stubbornly low — hey, don’t blame us, you can’t rebuild Rome in a day or even in a first term. Remember, Bush really left us a mess.

James details the facts about our economy that is hard to miss. The Central Bank now believes the economy will decline as a whole for all of 2009 and jobless rates will increase significantly throughout 2010. The CBO has stated we are now in a recession that will be the longest and deepest felt since World War II. They say unemployment will rise above 9% and that our economy will shrink 2.2% this year alone.

…respected Harvard University economist Kenneth Rogoff just released a paper demonstrating that the aftermaths of financial crises are usually marked by “deep and lasting effects on asset prices, output and employment. Unemployment rises and housing price declines extend out for five and six years, respectively.” So the consensus is gloomy.

But can a repetitive “Blame Bush” mantra allow Democrats to hold their huge Congressional majorities in 2010 and get Obama reelected in 2012 if they economy is as bad they think it will be? The latest iteration of Obama’s stimulus — I mean “economic recovery” — package indicates that Team Obama has its doubts about voter patience and the economy. The larger-than-expected tax cuts, even if they are really just disguised government spending, are an effort to rejigger the plan to provide more economic oomph this year. Indeed, as the CBO said when Obama adviser Peter Orszag ran the joint, using infrastructure spending to juice the economy is “totally impractical.” There just aren’t enough “shovel-ready projects” to make effective use of the hundreds of billions Obama wants to throw at the recession.


…how can Obama avoid taking responsibility when he will be so actively meddling in the economy? It will be his decision to forego deep and permanent new tax cuts, his decision to not extend the Bush tax cuts, his decision on how to spend the remaining $350 billion in TARP money, his decision to quasi-nationalize healthcare, his decision to push a cap-and-trade carbon emission program and his decision to spend hundreds of billions on a “green” industrial policy. It might even be his decision to try and reunionize the American laborforce. Obama will “own” the battered economy, perhaps almost literally, given Uncle Sam’s bailout binge.

So what standard should voters hold Obama to? How about this one: The 1981-82 recession last lasted 16 months and was followed by an explosive recovery thanks largely to the Reagan tax cuts (even though they were slowly implemented).

Those kind of tax cuts we will not see under Obama. Exactly the opposite. His fix? Europeanize our economy. Tax more and spend more. But look at their economies, high unemployment everywhere. It didn’t work under FDR, and it won’t work now.

The current situation can be traced back to the Democrats forcing our lending institutions to loan money to people who could not afford it. To a interest rate that was reduced too low. And to Democrats refusing to impose oversight over these institutions.

And now a Socialist is in office.

Two years from now the American people will know who to blame… won’t be Bush.

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Curt, I sincerely hope you are right….but you are giving credit to the American people as these are the same ones that put this fool into the position he is in. Lately I have lost a lot of respect for the way Americans think. So many are one-issue voters that they forget about the rest of the issues and therefore cause the rest of the American people so much pain.
Like I said, I just hope you are right and that THEY know who to blame

And in 20 to 30 years, it won’t matter who was right, because none of these discussions are being recorded in spanish. Today’s events will be the history that is re-written in spanish.

Yeah, I agree. Pelosi Galore has figured out those are her budgets, her stimulus, her TARP, and now Obama’s overhang.

So when is the foirst two ’emergency stimulus packages” supposed to begin working. Fool me once, fool me twice, Hey wait a minute not three times in a row.

i have no faith in obama, he is more worried about what friggin school his kids go to than what the financial markets are doing. i really hope he falls on his face and then HAS to take credit for this mess. i would hate to see more families lose their homes and their jobs, but i dont want obama to gloat when things do thurn around.

The 1981-82 recession last lasted 16 months and was followed by an explosive recovery thanks largely to the Reagan tax cuts

Pethokoukis is a hack. The recession started AFTER Raygun’s tax cuts.

It didn’t work under FDR, and it won’t work now.

It DID work under FDR –

1932 Unemployment Rate: 23.6% (12.8 million total unemployed)
1940 Unemployment Rate: 14.6% (8.1 million total unemployed)
Unemployment Rate Change: -9.0
Total unemployment percentage change: -36.7%

Ummmm Steve, there was this little thing called WWII that had something to do with improved employment rates. We were ramping up production before Pearl Harbor was attacked.
So if not for WWII we would have seen the true failure of trying to spend our way out of a recession/depression.

It DID work under FDR –

1932 Unemployment Rate: 23.6% (12.8 million total unemployed)
1940 Unemployment Rate: 14.6% (8.1 million total unemployed)

If we ignore the part where every previous crash and banking panic in the US took less than eight years for a full recovery, this looks great. Kind of like a doctor who bleeds his patients as therapy taking credit when they recover in spite of it.

Everybody should watch this video to see how wrong Obama is on his stimulus package. O boy, will this guy screw the U.S. economy or what?. A MUST watch:

Peter Schiff vs Obama’s Stimulus Plan 12/08/2008

Curt, there is no doubt political posturing by the incoming administration, but do you not believe the economic conditions we are facing are not typical of recent recessions? Given the amount of wealth lost in capital markets, equities, commodities and real property, don’t you think the projections about the trillion dollar deficits and lower employment numbers are realistic given the prevailing conditions today?

In another thread I posed a question to another commenter; namely, President Bush inherited a slowdown to the economy and it was called the “Clinton Hangover” and now with Pres Bush leaving office, how long should we calculate the “Bush Hangover”. The economy turns like a supertanker, so when should we begin to blame Obama vs blame Bush?