The fiscal measures implemented by President Barack Obama have exacerbated the underlying economic pathology of the past several decades.
In January 2009, weeks before Obama was inaugurated as the 44th president of the United States, Christina Romer, the incoming Chairman of the Council of Economic Advisers to President Obama, and Jared Bernstein, the incoming Chief Economist and Economic Adviser to Vice President Biden and the Obama administration, issued a projection for the economic stimulus plan being proposed by then President-elect Obama.
Based on this study, the unemployment rate would fall to 5.75 percent by this time if the stimulus program was adopted. According to the U.S. Bureau of Labor Statistics, this figure has reached 8.2 percent today. If we include those individuals who voluntarily removed themselves from participating in the labor market, the rate of unemployment would be greater than 10 percent.
More striking, this study anticipated an unemployment rate of 6.5 percent by now if the stimulus program was NOT adopted, much lower than the actual unemployment rate today.
The main reason for this stark divergence is the misappropriation of resources inherent in the stimulus plan. This fiscal policy did not focus on viable long-term investments, which provide the greatest GDP growth per unit of expenditure.
These debilitating dynamics were exacerbated by the healthcare and financial reform policies implemented by the president, since they added significant market uncertainty and did not address the underlying economic pathology. Healthcare purchase mandates without choice and fair competition and financial reform that is not proactive in maintaining adequate capital requirements will not serve our society well.
These policies also explain why the president has not come close to halving the annual federal deficit during his first term, as he promised during the 2008 presidential campaign. Including the $700 billion TARP plan passed in October 2008, this figure was approximately $1.2 trillion when he took the oath of office. By the end of 2011, the federal deficit was $1.3 trillion, 115 percent more than Obama’s projection of $600 billion. Total government debt during the Obama administration has ballooned by more than $4 trillion, from 70 percent of GDP to 100 percent of GDP.
Even more striking, in a recent proclamation, he suggests our economic ills will be ameliorated by increasing government employment.
While the president inherited an economic morass that developed over decades, his policies have exacerbated the dysfunctional elements of our economy and severely delayed our return to long-term growth and prosperity.
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