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…..it won’t be Bush.
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