Obama’s Keynesian, Government Run Economy

The chart compares recent GDP growth with the first nine quarters of the decade of strong economic growth, prosperity and job creation that began after President Reagan’s 1982 tax cuts and deregulation initiatives. [Continued below the chart]

In the third quarter (July, August, September) of 2011 Gross Domestic Product, the value of all the goods and services the economy produced, rose 2.5%, the Commerce Department reported.  This was better than the previous three quarters, but compared to typical post recession recovery periods it was disappointing at best.  Even President Obama’s Press Secretary, briefing reporters at the White House, agreed that 2.5% was unacceptable.

Over the past 50 years quarterly growth has averaged 3.2% but has always been above average during the initial quarters of recovery from recession.  This is the first post-recession period in 66 years, since the end of World War II, with such anemic growth.  The most visible result is the continuing tragedy of high unemployment.

The economy will not replace the millions of lost jobs until much more robust growth begins.

From the first day of his Administration President Obama and his advisers promised that the biggest Keynesian “stimulus” ever attempted, in the form of Trillions in deficit spending and massive government intervention in the private sector economy would somehow bring prosperity and jobs.  They promised 3.7 million additional jobs by the end of 2010.  Instead, there were 2.8 million fewer jobs.

If Keynesian stimulus worked as Obama and the progressives promised it would, America would now be enjoying prosperity with full employment and rising wages.  Instead this recovery from recession has significantly underperformed compared to previous recoveries, especially the Reagan recovery of the 1980s.  President Reagan’s strategy was to lower taxes, deregulate and allow liberty to work.

Presidents Reagan and Obama each inherited recessions that were similar in their length and severity.  By objective measures, including the unemployment rate, Reagan inherited a worse crisis in the 1980s than Obama inherited in 2009.  The current recession has become worse and longer lasting than the 80s recession because of government’s massive deficits and destructive interventions into the private sector economy.

The President has spent a month on the campaign trail trying to sell The People on his so-called American Jobs Act, yet another package of Keynesian borrowing and spending.  Once again, the same “economist” and media personalities who predicted dazzling results from the 2009 stimulus insist that if only recalcatrant Republicans would vote yes, Stimulus 2.0 would create millions of jobs.

The Bottom Line

As the chart shows, quarterly GDP growth is has been intolerable under the Obama-Keynesian approach.  There is no reason to believe that continuing to run massive deficits, threaten tax increases, hyper-regulate the health insurance business,  subsidize blue-sky “green” energy schemes and restrict the production of conventional energy will ever result in prosperity.

The urgent message in this GDP report  is clear.  Congress must put an immediate end to Obama’s Keynesian experiment.

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