ObamaCare’s Negative Effect on the Economy

The White House just announced a second one year delay in the ObamaCare employer mandate.

The chart below displays economic data that likely influenced last year’s decision to delay the employer mandate from 2014 to 2015, and the latest decision to further delay it until 2016 for a critical segment of the economy, medium sized businesses.

GDP-through-2013-2

The chart above compares the performance of the current post-recession recovery that began in July, 2009 with every previous post-recession recovery since the government began issuing quarterly GDP reports in 1947.  The current recovery, struggling under ObamaCare’s cloud of increased regulation, soaring insurance costs and uncertainty is the weakest of all.

Back in September President Obama made a speech to assure an anxious nation that his massive government intrusion into the health care sector was not a threat to the overall economy.  His remarks included:

There’s no serious evidence that the law [Affordable Care Act or ObamaCare], which has kept down the rise of health-care costs to their lowest level in 50 years, is holding back economic growth.

But the President ignores the evidence in the chart above.  Even though the latest quarterly GDP report was published the day before his State of the Union he said nothing about it in his speech.

Two lines in the chart, 1954-59 and 1970-75, show recoveries that stumbled, dipping down temporarily before before resuming.  But even those two were stronger than our current, anemic, post-recession economy.

When asked about the dismal economy the President’s supporters invariably fall back on the excuse that he responded to an inherited crisis with his record shattering spending increase aggressive new regulations.  The the result was, in the words of Juan Williams: “he lifted us out of recession.”  There are two problems with this argument:

  • Every recession ends, with or without government intervention.  Economic Historians have identified 34 recessions since 1854.  The first 33 ended, most without any government intervention at all.  Yet Obama’s supporters hope we’ll believe the recession of 2008-09 would be the first to go on forever, without end unless Washington intervened with a tsunami of news spending and regulation.
  • There is no historical evidence to validate the theory that a spike in government spending during the first two years of a recession will bring on a stronger post-recession recovery. 

The chart below compares the 2008-09, Bush-Obama spending surge with spending increases or decreases in the first two years of each previous recession since World War II.  It turns out the biggest increase bought the weakest recovery.spending-vs-growth

The second largest spending increase, 1947-49 was for the Korean War.  It was not the kind of domestic spending Obama undertook to “fight the recession.” 

The third largest, 2000 – 02 was also a mostly-military increase after the terrorist attacks of 9-11-01.  The fourth largest, 1989-91 was mostly for the Gulf War of 1990-91. 

The Bush-Obama spending increase of 2008-09 was sold as a job creator.   The economic theory behind it was presented by the media as a proven, reliable strategy to “jumpstart the economy.”  But actual experience invalidates that theory. 

Not only was the spending increase ineffective, the data in the chart at the top leads inexorably to the conclusion that ObamaCare interventions in the private economy are at least partly to blame for an economic recovery that has been so weak, with so much continuing misery, that most Americans think we’re still in recession.

The Administration’s second delay of a key regulation in the law that directly impact’s jobs would seem to indicate that the President agrees with Liberty Works, that ObamaCare restrains economic growth and job creation.

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