ObamaNomics: Year 3 In Review

President Obama’s reelection campaign, begun almost a year ago, is based on blaming the previous administration for America’s economic misery.  But 2011 has been his third full year and it’s time for his Administration to stand on it’s own.  It’s time for an accounting

First the debt. [continued below the chart]

In 2011 Government debt grew just over $1 trillion.  The President has just notified Congress that once again, he has hit the debt ceiling and must have authorization to borrow another $1.2 Trillion.  By the end of March President Obama will have increased the debt as much in three years and two months as President Bush did in eight years.

The government’s Soaring debt is driven by an unprecedented surge in spending.  Obama and the Democratic Congress increased 2009 spending 18% over 2008, the biggest one year jump since the military build up for the Korean War in 1952.  The biggest component of the increase was the so-called “stimulus” that Obama promised would create millions of jobs and hold unemployment below 8%.  It was supposed to be temporary.  But as of 2011 this new, higher level of spending is now the “baseline” or the spending floor, upon which perpetual future spending increases will be built.  [continued below chart]As long as the existing budgeting process continues spending will grow every year from now on, mostly on auto-pilot, until we reach a Greece-style crisis and nobody in the world is willing to loan the government any more money.

Gas prices increased again in 2011, the intended effect of the Obama Administration’s various restrictions on the production of crude oil.

The long term goal is to raise the price of petroleum fuels so high that Obama’s “green” energy sources become cost competitive.  Just a month ago the President used his regulatory authority to block a the Keystone XL pipeline that would have brought Canadian crude oil to American refineries in Texas. creating tens of thousands of jobs along the way.  This month gasoline is 102% higher than it was when Obama was sworn in, January, 2009.

Recently the President told CBS News that he has been more successful than any previous President with the possible exceptions of Abraham Lincoln, Franklin Roosevelt and Lyndon Johnson.  His claim calls for  a comparison of his third year with the third year of to a truly successful President, Ronald Reagan, who like Obama inherited a deep – by most measures even worse – recession.

First, jobs.  Obama has claimed 2011 as a success in creating private sector jobs. [continued below chart]

But, as the chart shows the Reagan era produced much more robust job growth.

Economic growth took off in Reagan’s third year as his policies liberated the private sector from high taxes, inflation, record high interest rates and oppressive regulations.  The Obama strategies of attempting to diminish liberty and rule over the private sector with taxes, subsidies and bailouts for politically connected unions and companies, and a tsunami of new regulations have dragged down the economy, depressing growth.  [Continued below chart]

The GDP report for the fourth quarter of 2011 will be published on January 27 and we’ll complete the chart then.  For now, government and Wall Street economists are predicting about 3%, well below the fourth quarter of Reagan’s third year.

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