It’s not at all a coincidence that June was the month in which it became crystal clear that despite sky-high oil prices, Pelosi, Obama, and Reid were hostile to the idea of drilling for more oil — offshore or anywhere else. Pelosi insisted that “we can’t drill our way out of our problems.” In the speaker’s world, this means that you don’t drill at all. Reid declared that we have to stop using oil and coal because “it’s making us sick.” Obama seemed pleased that gas prices were so high, saying only that “I think that I would have preferred a gradual adjustment” instead of the sharp spike. What a guy.
As would be expected, the country’s businesses, investors, and consumers, never having witnessed a political party dedicate itself so completely to starving its own national economy, reacted very negatively to all of this. I said at the time that “businesses and investors are responding to their total lack of seriousness by battening down the hatches and preparing for the worst.” Subsequent events have validated that observation.
Even as fuel prices have plummeted, the siege mentality in America remains. That’s because, until Sunday’s minor bow to deferring them, the POR economy’s architects seemed determined to ram massive Social Security and other tax hikes down the throats of the most productive 5% of Americans in the name of creating handouts — oh, I’m sorry, “refundable tax credits” — for millions of others. Americans know that you don’t increase taxes on anyone in a slowing economy, unless your goal is to slow it down even more. Until Sunday, that seemed to be what Pelosi, Obama, and Reid intended. But deferral is totally inadequate, both short-term and long-term. Instead of putting off tax hikes until the economy can supposedly “afford” them, what we need right here, right now, is another across-the-board tax cut. This would quickly free up money for capital investment and lead to stronger growth when recovery comes.
The cascade of bailouts finished the job of establishing recessionary conditions. These too can be laid at the feet of Pelosi, Obama, Reid, and Democrats in previous Congresses. The summer implosions at Fannie Mae and Freddie Mac — enterprises that were run into the ground by Democratic cronies who established irresponsibly lax lending rules that ultimately ruined the mortgage marketplace — exacerbated financial sector problems elsewhere and led to the SUCKUP (Seemingly Unlimited Cash Kitty Under Paulson) in late September.
Other POR economy agenda items loom ominously in the background: “windfall” profits taxes on energy producers, unionization of the unwilling through secret ballot-ending “card check” legislation, and a plethora of economy-choking environmental initiatives, to name just a few.
Collectively, these factors have weighed down the economy for nearly half a year. In recognition of when they began doing what they have done, Team Obama and the POR economy’s performance must therefore be benchmarked against where things stood on June 1, 2008, as follows:
- Inflation (June 2007 through May 2008) — 4.2%.
- Unemployment — 5.5% (as of the May report; currently 6.5%).
- Prime rate — 5.0%.
- DJIA — 12638 (down 36% as of the November 21 close).
- S&P 500 — 1400 (down 43% as of that same close).
- NASDAQ — 2523 (down 49%).
- Quarterly GDP growth before the June-related adjustment — 3.3%.