Our Lowered Economic Expectations
The Dow Jones Industrial Average recently reached 10,000 again, rising 50% since March and reclaiming a major market milestone. September job losses were also less than expected, keeping unemployment under 10%. Moody’s, Google, and even the New York Times say the recession is over.
That means mission accomplished, right? Surely President Obama deserves the Nobel Prize in economics too, or at least a day off from the never-ending criticism spewing forth from far-right outfits like the Atlantic and U.S. News and World Report.
Unfortunately, as usual, reality has to intrude on this president and his cheerleaders. In fact, the DJIA closed over 9,000 on January 2. Then the president came into office, passed the so-called stimulus, and immediately attacked the finance, energy, tourism, health care, and automotive industries -- and where did the Dow go? It went to 6,500 by March.
In the 1980s and 2000s, it became part of the narrative to criticize both Reagan and Bush for the slow job growth (exaggerated into the “jobless recovery”) and an unequal distribution of wealth that helped those on Wall Street at the expense of Main Street. Reaganomics was a dirty word among liberals, even as Ronald Reagan’s policies were pulling the country out of Democratic malaise and stagflation.
Now we have Obamanomics, which has no jobs and no recovery. In May, unemployment among adult workers with a high school education was 10.0%. In September, it hit 10.8%. For African-Americans it is up from 14.9% to 15.4%. For Hispanics it is stuck at 12.7%. Nearly one million homes went into foreclosure in Q3, an all-time record.
Dow 10,000 also highlights the disconnect between Main Street and the connected firms on Wall Street. Goldman Sachs, which converted to a bank at the 11th hour to become eligible for bailout funds, is paying out $23 billion in bonuses. JP Morgan Chase, another corporate welfare queen, just had a blowout $3.6 billion quarter. Even the Obama cheerleaders at CBS and AP are raising eyebrows, noting that Treasury Secretary Tim Geithner talks to representatives of these and other Wall Street firms on a daily basis.
In early September, Vice President Biden was laughed at when he said the stimulus is working better than expected. Now we have to wonder if he was talking about his friends in the finance industry and their annual bonuses.
Although politics is covered by the media as a horse race, at its heart it is about the choices we make as a society and their consequences. None has stated this better than Charles Krauthammer, whose op-ed titled "Decline Is a Choice" perfectly describes the crossroads we face as a country. America certainly faces challenges, but nothing is inevitable and it is still within our power to arrest our decline or to accelerate it. To quote John McCain’s only good speech in 2008, Americans don’t hide from history; we make history.
Let’s turn the calendar back to January and travel to an America that might have been. President-elect Obama asks his best economic advisors what it will take to get our economy moving again. Then he keeps his campaign promise and listens.
First, he tells Congress that he will veto any tax increase on anyone anywhere, as a recession is the wrong time to raise taxes. From now on the Bush tax cuts are the American tax cuts and he stands behind them.
Next, he brings in T. Boone Pickens and the rest of the American energy industry and says in his best Texas accent, git-R-done. Offshore drilling, nuclear power plants, natural gas pipelines, whatever it takes. Cut oil imports and the trade deficit in half in five years.
Third, he signs mortgage relief into law. No, not that failed program that turned CNBC’s bond market analyst Rick Santelli into a million-hit YouTube star. Instead the administration slashes mortgage rates for responsible owners and purchasers -- those individuals with good credit and home equity. For once we use the faith and credit of the USA to reward financial responsibility.
That transformative 2009 economic agenda would have jump-started the recovery, and by now the Dow would be at least 2,000 points higher and unemployment at least two points lower. And because it wouldn’t cost a dime, tax revenues would recover and the American dollar would be a symbol of strength and optimism rather than another looming disaster.
By focusing like a laser on the economy in 2009, President Obama would have held the centrist ground he took during the campaign, triangulated an unpopular Congress, deflected most personal criticism, and ultimately taken full credit for the recovery. His approval rating would be in the 70s and his political capital limitless.
The road not taken. Where we are now is nowhere. Nine months have been spent pushing government health care, a 1993 Clinton policy failure that wasn’t on the top of anyone’s issue list. The proposal contains every policy mistake Washington has ever made, including higher taxes, price controls, “unspecified” future Medicare cuts, fines, employer mandates, and a higher deficit -- and it doesn’t even provide coverage for everyone.
Conservatives may be unhappy with the president’s policies, but they aren’t disappointed because they expected so little from Obama and never bought into his promises of post-partisanship. The moderates and independents that did believe are starting to realize that this recession has gone on far longer than it needed to and to understand just how badly they were betrayed.
We don’t know why President Obama got stuck on health care -- maybe getting advice from economic and political advisors who idolize Marx, Mao, and Chavez is a bad idea. If he can get unstuck, there are two other domestic issues that, if handled well, would not only help the economy but reboot his failing presidency.
The first is education, an issue championed by President Bush in his first year in office when he worked with Ted Kennedy to pass No Child Left Behind. Signed into law in 2002, public schools are subjected to annual testing. If schools fail to meet these standards and show progress, they are required to take corrective action, which, after six years, can include closing the school, firing the principal and administrators, and/or converting to a private or charter school.
NCLB has plenty of documented flaws, but the accumulation of poor test scores and failed public reform efforts are helping to drive a school choice movement that can harness the talents of America’s volunteer organizations and entrepreneurs to help transform not only American education but the American economy and even provide some relief for strapped school budgets.
We know where Obama stands on this issue: with the teachers' unions, which are as usual standing in the way of reforming our children’s education. His decision to terminate the D.C. Opportunity Scholarship program at the same time that he sent his children to an expensive private school speaks volumes. (The good news is that program may still survive.)
The second issue is illegal immigration. Again, we know where Obama’s loyalties lie: with the unions and Mexican flag-wavers that want to erase American borders and import and organize cheap labor. But with unemployment well into double digits for minority workers, the claim that immigrants do the jobs that Americans won’t is cruel.
Now that a minimum wage increase has gone into effect and employer health care mandates seem determined to follow, the incentive for American companies to employ illegal aliens is greater than ever before, especially if the competition is taking that route. Yet President Obama chose this year and this recession to eliminate the E-Verify requirement that helps ensure that companies only employ Americans with valid work authorizations.
Obama campaigned on “the fierce urgency of now,” a beautiful line from Martin Luther King Jr.’s most famous speech that invokes the virtues and values of the civil rights movement. But what he doesn’t seem to understand is that the urgency that Dr. King spoke of is a call for government to heed the will of the people, not for people to march to the drumbeat of their government.
Education and illegal immigration are two issues that share this fierce urgency in the minds of the American public, and both could be harnessed to help revitalize the economy and restore Obama’s political fortunes. But only if a centrist and sensible position is taken.
Nine months into his administration, Obama’s only remaining asset seems to be the lowered expectations that have spread across the electorate. Still, this is America, where lowered expectations can lay the groundwork for dramatic recoveries, especially if an individual is willing to learn from and atone for his or her mistakes and begin anew.
Maybe Dow 10,000 is an indicator that there is hope for Obama. Not hope for national health care, cap and tax, card check, or any of his other anti-business policies succeeding, but hope that he will finally repudiate the far left and join us in the American mainstream.
Or maybe Dow 10,000 is just faith in the American people descending on Washington with pitchforks next election season by the millions and finally sending the rest of these limousine liberals packing.