“Welcome to Japan: More on The Q1 GDP Report,” from Steve Hayward at Power Line:
John and I both took note of the disastrous first quarter GDP report yesterday. Today it is worth bringing to your attention the observations of economist John Makin of the American Enterprise Institute, who is an unassuming and soft-spoken fellow (we were billeted in the same office suite) who has a very impressive track record of calling the shifts and directions in the economy. His bottom line: forget about 3 percent economic growth. Even more bracing: “That’s a ‘Japan-Lost-Decade’ style number.”
Steve links to Megan McArdle at Bloomberg “Unexpectedly!” View, who spots the “Big Losers in GDP Report: Democrats:”
I’m not exactly ready to call recession yet — consumption was still basically healthy, and the weather was awfully bad. But I’ll be crossing my fingers until the next report comes out.
And so, presumably, will Democrats: partly because they are patriotic Americans who want to see their country do well, but also because recessions are bad for incumbents and, one imagines, particularly bad for the party that claimed the other guys had driven the economy into the ditch and that they were just the folks to drive it out. If the economy heads back into a recession this year, things start looking pretty grim for the Democrats — not just for this year, but for 2016.
As far as the “Weather Ate My Economy” excuse, this tweet rebuts that notion rather nicely:
— BattleSwarm (@BattleSwarmBlog) June 25, 2014
As does this tweet from economist Stephen Moore: “Winter 1985 was colder than winter 2014; #GDP expanded at 4% rate in Q1 1985- plunged 2.9% in Q1 2014.”
Two reasons why we risk heading into the same Sisyphean territory mined by America in the 1930s, England in the 1970s, and Japan from the 1990s until the present are over-regulation and regulatory uncertainty, both of which can be summed up with one word: Obamacare. And as Ed Morrissey writes at The Week, “Obamacare Will Suck the Life Out of the Economy:”
The Obama administration has already postponed the employer mandate once to delay the inevitable economic damage of these options. They could do so again to try to get this past the midterm elections, but that would generate even more economic impact.
The ACA needs the employer mandate in place to raise around $150 billion a year to pay for the premium subsidies that mask 76 percent of the average premium cost to the individual, according to the same report above. Nearly 9 in 10 exchange enrollees are receiving those subsidies, and without that revenue, Obamacare’s red ink will soon turn into a tsunami that cannot possibly be hidden.
The expected revenue is another part of the same problem, too. The $150 billion a year that will get sucked out of operating revenue and capital would otherwise have gone into expansion and job creation, which means that Obamacare has the White House between an economic rock and a fiscal hard place.
In the next few months, all businesses employing 200 or more people will have to make the decision whether to cough up that cash, or to cut hours and save some for growth. Don’t be surprised when businesses choose the latter, and don’t be surprised to see more “unexpectedly” bad economic news when the mandate becomes fully active.
Bill Whittle has one solution — tune out the idiocracy from Washington politicians and their media defenders at the other end of the Northeast Corridor and get to work:
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However great the Cadillac ad that forms the core of Bill’s new video is, as we mentioned back in February, it’s a byproduct of Government Motors, an Armani suit on a corporatist pig, the equally feckless 21st century equivalent of a Gerry Ford “Whip Inflation Now” button or the sort of rah-rah material that came out of Britain while their economy was stalled in the socialist doldrums. But Bill still proffers good advice for the rest of us.
As to the Obama economy turning America into Japan, who could have predicted it in early 2009? Well, pretty much everybody who didn’t drink the Kool-Aid back then:
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