Obama's Stimulus Creates High Unemployment

Tuesday, 07 Sep 2010 07:49 AM

By Dick Morris & Eileen McGann

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In our book "2010: Take Back America — A Battle Plan," we write: "The prospect we now face is not the intermittent up-and-down fluctuations of unemployment we have had since the Great Depression.

"Thanks to Obama's policies, we're confronting the possibility of an unemployment rate that never comes down, just as they have in Europe. If we stay on Obama's course, lower joblessness in the United States will be a thing of the past."

The recent rise in unemployment back up to 9.6 percent and the loss of 54,000 jobs in August, suggests that our prediction is, dismally, coming true.

The Obama stimulus plan has finally kicked in: The higher spending he brought to our nation and the debt levels that are accompanying it are the result.

Why is unemployment remaining so high? Because the totality of Obama's policies are dragging us into a depression:
  • The prospect of dramatically higher taxes next year is freezing consumer spending, particularly for those in the upper income ranges,  who spend a third of America's consumption.
  • The huge changes that are looming in medical care brought about by Obama's healthcare legislation are freezing new employment and expansion in the medical sector which accounts for 16 percent of GDP.
  • The financial reform legislation has so raised the prospect of a federal takeover of any bank that makes "imprudent" loans that financial institutions are afraid to lend, freezing new job creation.
  • The looming possibility of cap-and-tax legislation in the name of halting climate change is freezing any expansion in the manufacturing and energy sectors since these policies will force jobs to move overseas to locations that do not impose such a tax (such as India and China).
  • The massive expansion in the deficit and in the resulting debt has so eroded confidence in our nation's future that Americans are now saving 6 percent of their income, up from 1 percent in the past, sapping consumer spending.
  • The threat of new rules for union elections that will spread private sector unionization is freezing business expansion plans.

Obama's rush to spend, regulate, re-engineer, redistribute, and tax have stopped any recovery and are sending us back into recession.

In her wonderful book "The Forgotten Man," Amity Shlaes notes how FDR's policies in the late 1930s did the same thing. She notes how the imposition of the Social Security tax in 1937 (benefits did not start until 1941) and the rapid wage hikes that accompanied the passage of the Wagner Act (steel worker wages rose 40 percent in 1937) sent a recovering nation back into a new depression that lasted until the war started in 1939.

In his haste to remake America and to bring us the "fundamental change" he promised as he campaigned for president in 2008, Obama has torpedoed the recovery and sent us back into a double dip recession.

The answer is to cut spending back to pre-Obama levels, reduce taxes and eliminate the threat of tax increases, zero fund the changes Obama has legislated in health care (and repeal them in 2013), eliminate the threat of cap-and-tax, and lay the basis for solid economic growth.

We have left the recession that started in 2007 and entered a new recession caused by Obama's policies.

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