When is enough failed Keynesian economics, enough?
There's an old saying that when all you have is a hammer, every problem you encounter looks like a nail. Thus, it should come as no surprise that, despite a slew of economic indicators which suggest that our so-called economic recovery is virtually non-existent, the Obama administration continues to pursue its progressively-inspired infatuation with government-driven "solutions" to the crisis. To use a word that is becoming an indispensable part of the mainstream media's efforts to mitigate the obvious failures of this administration, one can only wonder how many more "unexpected" economic developments Americans can tolerate.
The statistics paint a bleak picture. Last week, the employment rate increased to 9.1 percent, as only 54,000 jobs were created in May, the fewest number in eight months. Half of those jobs were created by one company, hamburger giant McDonalds. Home prices have dropped back to 2002 levels, "down 33 per cent from a 2006 peak, compared to the 31 per cent decline in the [Great] Depression." This means that ten years of equity one might have built up in one's home has essentially disappeared. Gas and food prices have been soaring, which in turn blunts the consumer spending necessary to buoy the economy. And the Institute of Supply Managing Index (ISM) which tracks manufacturing activity, and the American Data Processing Index (ADP), which tracks hiring trends, along with the housing data, point to a 2 percent or less growth rate, well below the 5 percent or higher rate that normally accompanies an economic recovery.
Yet even those employment totals may be a mirage. As the NY Post's John Crudele points out, job creation numbers produced by the Bureau of Labor Statistics are comprised of "nonsensical, worthless guesstimates that are meant to be corrected many times before the number is truly to be believed." Crudele then noted that the "consensus on Wall Street is that the government will announce that 200,000 new jobs were created in May," adding that "if [last]Friday's number isn't better than expected, then watch out. It means that job growth is so slow that even the BLS's magic stats can't make it look good." Nearly four-fifths less job creation than what the "experts" predicted, and even that number may be an upside mirage? At what point does "not good" become "catastrophic"?
Apparently never, if one assumes that a glaring failure of current economic policies might lead the Obama administration to reconsider its approach. Despite an $800 billion-plus stimulus package accompanied by a promise that it would keep unemployment under 8 percent and two rounds of Quantitative Easing (QE1 and QE2) designed to stimulate demand, instead, the dollar has devalued, leading to the inflation demonstrated in food and fuel. Yet this administration appears grimly determined to inflict even more Keynesian economic, government pump-priming "solutions" on the country.
In fact, QE3 is actually being contemplated. Once again, despite the reality that injecting liquidity into the system over the past two-and-a-half years has done little more than prop up the stock market, economic anemia caused by ideological rigidity remains the order of the day.
Why does the economy remain largely un-stimulated? Because lending by banks remains tight. Why does lending remain tight? Economist Larry Kudlow explains that "most of [QE2] has served merely to depreciate the dollar. And most of those cheaper dollars are on deposit at the Federal Reserve, where banks are earning 25 basis points for safety and risk aversion. In other words, the majority of that new money is not circulating throughout the economy." Thus, just as the $700 billion dollars spent by Congress during the banking crisis of 2008 was directed at institutions "too big to fail," even as Main Street America was getting hammered, large financial institutions are once again prospering, even as the public remains mired in a jobless "recovery."
This is nothing more than crony capitalism on steroids. And when one couples it with the uncertain costs and stifling regulations of the new finanical regulation bill (FinReg) and ObamaCare, all of which have to be factored into hiring decisions, businesses who might consider putting on new workers remain hesitant. The Wall Street Journal's Daniel Henninger explains, "[A] 'smart' economy would at least have the virtue of clarity for the purposes of planning and capital investment. The Obama economy does not. Economic decision-makers--from 401(k) investors to Fortune 500 CFOs--are flying instrument-less through the clouds because that is where the policy choices made by this White House have left them." Even more to the point, he notes the reality that both FinReg and ObamaCare "rose from the table as 2,000-page laws," meaning that businesses across the nation will have to wait "while the bureaucracies struggle to interpret 4,000 pages of 'smart' legislating."
That businesses are already constrained by 4000 pages of unknowable regulation is troubling enough. That they might be penalized further by the capricious decisions and interpretations of a bureaucrat in one of the most anti-business administrations in the history of the nation is a back-breaker.
This is to say nothing of the capricious application of laws already on the books that has come to define the Obama administration. As the primary creditors of General Motors and Chrysler learned in 2009, knowable law can just as easily be tossed aside by this administration, which kicked those primary creditors to the curb and awarded control of GM and Chrysler to the United Autoworkers Union (UAW), despite their secondary credit status. This egregious abuse of power is a testament to the progressives' conviction that the heavy hand of government is the only remedy for our current economic condition. Yet as the Heritage Foundations' Andrew Grossman explained in testimony before the House Judiciary Committee on May 22, 2009, such abusiveness has long-term consequences:
[I]n rescuing Chrysler and General Motors, the federal government has trampled the rule of law in ways that will prolong our current recession unless Congress acts to rein in the excesses of the Administration's interventionist policies.
Two years later, those "interventionist policies" remain in place. Not because they're working, but because progressives remain ideologically wedded to their convictions in spite of all evidence to the contrary. As the Weekly Standard's Fred Barnes points out, the president "appears to have learned nothing about what stirs the economy and produces jobs and growth," that his "economic panacea is government spending" and that "Obama is the greatest proponent of crony capitalism since FDR proposed cartels under the National Recovery Act. He does big favors for corporate supplicants and recipients of government subsidies while largely ignoring small business" -- even as small businesses have produced 60 to 80 percent of net new jobs annually over the last decade. And while progressives point out the "success" of FDR's government pump-priming programs, they ignore the assessment of his own loyal Treasury Secretary, Henry Morganthau, who had this to say to the House Ways and Means Committee on May 9, 1939 after several years of New Deal policies:
We have tried spending money. We are spending more than we have ever spent before and it does not work...after eight years of this Administration we have just as much unemployment as when we started...And an enormous debt to boot!
What does the Obama administration say? After two-and-a-half years, coupled with four-and-a-half years of a Democratically-controlled Congress, their fallback position remains unchanged: it's all the Bush administration's fault.
Even if one takes that preposterous assumption as truth, perhaps someone would ask the president to explain how Ronald Reagan, who pursued supply-side economic policies in stark contrast to this administration's demand-side machinations, managed to pull America out a recession as stubborn, if more more so, than the current one.
Those undazzled by the president's charisma already know the answer. From the very beginning, President Obama has been intent on changing the fundamental character of the country. America is a fundamentally broken nation which needs a complete makeover, commanded and controlled by our progressive overseers in Washington, D.C.
That is the progressive hammer. The American economy is the nail.
Arnold Ahlert is a contributing columnist to the conservative website JewishWorldReview.