(Daily Caller) – In spite of the claims by
President Obama’s Council of Economic Advisors regarding his administration’s
economic accomplishments, the U.S. economy has grown very slowly in the years
since the Great Recession of 2008-09. After four years of slow growth, the
latest data reveals that the U.S. economy shrank at a 2.9 percent annual rate during the first
quarter of 2014.
That figure has been widely reported, but here
are some figures that have not been reported, and they are quite eye-opening:
Over the first five years of Obama’s
presidency, the U.S. economy grew more slowly than during any five-year period
since just after the end of World War II, averaging less than 1.3 percent per
year. If we leave out the sharp recession of 1945-46 following World War II,
Obama looks even worse, ranking dead last among all presidents since 1932. No
other president since the Great Depression has presided over such a steadily
poor rate of economic growth during his first five years in office. This slow
growth should not be a surprise in light of the policies this administration
has pursued.
An economy usually grows rapidly in the years
immediately following a recession. As Peter Ferrera points out in Forbes, the
U.S. economy has not even reached its long run average rate of growth of 3.3
percent; the highest annual growth rate since Obama took office was 2.8
percent. Total growth in real GDP over the 19 quarters of economic recovery
since the second quarter of 2009 has been 10.2 percent. Growth over the same
length of time during previous post-World War II recoveries has ranged from
15.1 percent during George W. Bush’s presidency to 30 percent during the
recovery that began when John F. Kennedy was elected.
Economic growth is usually faster than normal
following a recession as entrepreneurs find more productive ways to employ the
resources that were idle during the recession. How rapidly the economy grows
and recovers depends partly on whether market forces are allowed to allocate
resources, including labor, to their most productive uses. Unfortunately, the
Obama administration has pursued several policies that make it harder for
market forces to work. These include: bailouts, expansion of entitlement
programs, regulation of the economy, tax increases, and huge government
deficits.
Bailouts have resulted in capital being stuck
in businesses that are either inefficiently run or have failed to produce goods
and services that consumers’ value highly. In the absence of bailouts, some
firms would have gone bankrupt and the capital reallocated to successful firms
that are producing what consumers demand in a cost-effective way.
Expansion of government entitlement programs,
such as food stamps and unemployment compensation, has reduced the incentive to
be employed. The average benefit per recipient of food stamps jumped by
approximately 25 percent between 2007 and 2010 due to rule changes. It also
became easier to qualify for food stamps. As Richard Vedder points out in
a Wall Street Journal editorial,
the number of food stamp recipients rose by over 7 million between 2010 and
2012, a period of falling unemployment.
A number of changes associated with the
American Reinvestment and Recovery Act (the economic stimulus package passed
after Obama was elected) resulted in greater after-tax benefits to being
unemployed. These include exempting part of unemployment insurance benefits
from federal income taxes and subsidizing health insurance costs for laid off
workers. Unemployment benefits also were extended for up to 99 weeks. In
addition, the federal government developed mortgage modification formulas for
banks to use, which resulted in a bigger reduction in interest payments for
those with lower incomes.
The combined effect of a more generous food
stamp program, more generous benefits for unemployed workers and mortgage
modification formulas is to offset a considerable percentage of the reduction
in income from being unemployed. This results in less incentive to work. If
fewer people work, less is produced and real GDP grows more slowly.
http://dailycaller.com/2014/08/11/the-obama-economic-record-the-worst-five-years-since-world-war-ii/
http://www.teaparty.org/obama-owns-worst-economic-numbers-80-years-since-1932-110685/
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