Sunday, March 23, 2014
Investors Business Daily:
President Obama gave a speech recently in which he, as he almost always does, patted himself on the back for what he described as a solid record on the economy."We've now seen over four years of economic growth," he said. "We've seen 8.5 million new jobs created. We've seen the housing market bounce back. We've seen an auto industry that has come roaring back. We've seen manufacturing return for the first time since the 1990s."Obamaphiles in the press typically repeat these claims, arguing that, given the mess he inherited, no one could have done any better.But is that true? And how do you fairly measure Obama's record?Perhaps the best metric is Obama's own promises about what his economic plan would produce. Those are contained in his first budget, which was issued in early 2009.Above are charts comparing that budget's forecasts for key economic indicators with what actually happened.The results are startling. The economy did far worse than Obama thought it would on every important measure.But, his backers say, the recession was deeper than Obama expected at that point. Except that nominal gross domestic product in 2010 turned out to be exactly where Obama said it would be. It was only after then that growth fell short.Others will say that Obama just did in his first budget what every president does: Paint a rosy picture of future economic growth. This doesn't hold water either, since Obama's projections were in line with the nonpartisan Congressional Budget Office and other economic forecasters, all of whom expected a normal recovery.Then again, the economy might have suffered from what Obama likes to call "self-inflicted wounds" imposed by Republicans — the threat of default, the sequestration, the turn to "austerity" policies, etc.The problem here is that federal spending from 2010 to 2013 was almost exactly where Obama pegged it in his first budget, and it's much higher as a share of GDP. Deficits were also far higher than Obama expected.From a standard Keynesian perspective, these should have provided additional stimulus to the economy — above what Obama initially forecast.So the GOP's efforts to rein in spending can't be blamed for Obama's failure to meet his economic targets.What can? Perhaps it's the combined effect of the massive Dodd-Frank financial regulations, ObamaCare, the hugely expensive new EPA regulations and two enormous tax hikes on investment income.None of these policies are pro-growth.They do help explain the abject failure of Obama's economy to perform anywhere near as well as he promised.