Human Cost of ObamaNomics in One Chart

There is a real cost to concentrating economic power in the central government.  That cost is born by millions of men and women whose economic opportunity has been restricted for no reason, in exchange for no benefit.

The Commerce Department just released it’s “advance estimate” of economic growth during the third quarter, ended September 30.  It confirms once again that even though the recession ended 64 months ago the US economy has not yet begun an acceptable recovery.  Polls show more than half of Americans believe we’re still in recession.

Gross Domestic Product (GDP) grew at an annualized rate of 3.5% in the third quarter. (This estimate will be revised twice and the final number, due in about sixty days, could be significantly different.)Obama's GDP VS previous Administrations

While 3.5% is a bit of an improvement over the average for the past five years, it’s not nearly enough to restore pre-recession employment levels and prosperity.  As the chart shows we’re still suffering through the weakest post-recession recovery since the government began issuing quarterly GDP reports in 1947.

The American economy, while the most resilient in human history, struggles under the weight of decades of accumulated government intervention in the form of excessive regulation, taxation, and bureaucratic mandates, the most recent being Obamacare and the massive, Dodd-Frank financial regulation law.  These government intrusions into the private sector and the generally anti-business, anti-investment inclination of the Obama Administration discourages and deters entrepreneurs and investors, resulting in fewer of the business start-ups and expansions that create jobs and expand the economy.

America’s corporate tax code, the most confiscatory in the world, drives investment capital, the source of jobs and economic growth overseas.   Indeed, some American companies have had to “invert” or turn themselves into foreign corporations in order to facilitate investment in America!

Defenders of big government economic intervention say the current recovery is the weakest on record because the 2008-09 recession was deepest/worst on record.  But that isn’t consistent with the historical data.  The last time we suffered an exceptionally severe recession was 1981. Depending on which statistics one considers most important 1981 was either the worst or second worst recession on record.

Like President Obama, President Reagan inherited a an economy in crisis due primarily to huge losses and retrenchment in the financial sector.  Unlike Obama, Reagan faced historically high interest rates.  In 1982 Mortgage interest hit 15% compared to about 4.5% today. The prime rate, paid by the largest, most credit worthy corporations was also in the teens, compared to 3.25% today.  The unemployment rate spiked up to an even higher level in 1981 than in 2009.

Reagan’s approach was directly opposite Obama’s.  Instead of raising taxes and intensifying government interference in the private sector, Reagan deregulated and cut taxes.

Perhaps a Republican victory next week will mark a turning point.  Perhaps the Republicans will enact a solid tax reform package and send it to President Obama, who claims to support tax reform.  President Obama could emulate President Clinton.  He could, like Clinton, cooperate with a new Republican majority in Congress to diminish government’s foot print and then take credit for the resulting economic growth.

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