Obama really might have made it worse

July 6, 2011

The Republican charge is a body shot aimed right at the belly of President Barack Obama’s re-election effort: He made it worse.

No, not that White House efforts at boosting the American economy and creating jobs and “winning the future” were merely inefficient or wasteful, which they certainly were. Even Obama finally seems to understand that. “Shovel-ready was not as shovel-ready as we expected,” he joked lamely at a meeting of his jobs council.

Rather, that the product of all the administration’s stimulating and regulating is an economy that’s in significantly worse competitive and productive shape than when Obama took the oath in January 2009. He was dealt a bad hand, to be sure – and then proceeded to play it badly. At least, that is what Republicans have been saying. “He didn’t cause the recession as we know,” presidential candidate Mitt Romney said in New Hampshire yesterday. “He didn’t make it better, he made things worse.”

Team Obama offers a different narrative, of course. As the president said in his State of the Union address earlier this year, “Two years after the worst recession most of us have ever known, the stock market has come roaring back. Corporate profits are up. The economy is growing again. … These steps we’ve taken over the last two years may have broken the back of this recession.” He somehow failed to insert his usual boilerplate about the economy losing 700,000 jobs a month when he took office.

But Obama is correct, to a degree. The economy is growing (slowly) now and adding jobs (modestly) whereas neither was happening back in early 2009. Of course, economies in recession will eventually recover even without government action. So the question is whether Obamanomics helped, hurt or was inconsequential.

The centerpiece of Obama’s plan to “push the car out of the ditch” was the trillion-dollar (including interest expense on the borrowed money) American Recovery and Reinvestment Act. A recent article in The Weekly Standard determined that it may have cost as much as $278,000 for each job created. But that’s generous. Respected Stanford economist John Taylor, perhaps the next chairman of the Federal Reserve, has analyzed the actual results of the ARRA. Not what the White House’s garbage-in, garbage-out models say happened, but what actually happened as gleaned from government statistics. Taylor, simply put, looked at whether consumers actually consumed and whether government actually spent in a way that produced real growth and jobs. His devastating conclusion:

Individuals and families largely saved the transfers and tax rebates. The federal government increased purchases, but by only an immaterial amount. State and local governments used the stimulus grants to reduce their net borrowing (largely by acquiring more financial assets) rather than to increase expenditures, and they shifted expenditures away from purchases toward transfers. Some argue that the economy would have been worse off without these stimulus packages, but the results do not support that view.

Indeed, the results are horrifying. The two-year-old recovery’s terrible tale of the tape: A 9.1 percent unemployment rate that’s probably closer to 16 percent counting the discouraged and underemployed, the worst income growth and weakest GDP growth of any upturn since World War II, a still-weakening housing market. Oh, and a trillion bucks down the tube. Oh, and two-and-a-half years … and counting … wasted during which time the skills of unemployed workers continue to erode and the careers of younger Americans suffer long-term income damage. Losing the future.

Next, add in healthcare reform that Medicare’s chief actuary says will not slow the overall growth of healthcare spending. (Even its Obama administration godfather, Peter Orszag, warns that “more drastic measures may ultimately be needed.”) And toss in a financial reform plan that the outspoken and independent president of the Kansas City Fed says he “can’t imagine” working. “I don’t have faith in it all.” Indeed, markets continue to treat the biggest banks as if they are still too big to fail.

But wait there’s more. Obama created a debt commission that produced a reasonable though imperfect plan to deal with America’s long-term fiscal woes. But he stiffed it and then failed to supply a plan of his own, sowing the seeds for an impending debt ceiling crisis and making an eventual fiscal fix that much harder. One more step along the path not taken, along with pro-growth tax and regulatory policies that would have reduced policy and economic uncertainty and unleashed the private sector to invest, expand and create.

Elections have results. So do bad policies. Obama’s choices on taxing and spending and regulating, sorry to say, seem to have made things worse.

 

 

20 comments

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[...] government jobs increases dramatically under Socialism while jobs in the private sector are …Obama really may have made it worseReuters Blogs (blog)White House Economists: The jobs saved or created by the stimulus now fading [...]

“Of course, economies in recession will eventually recover even without government action”

they will? every economy of every country in history has always recovered from a recession no matter what? oh, and they always will apparently. try hedging that absolutism just a bit.

Posted by slurmz | Report as abusive

The Republicans — for example, Amity Schlaes, who writes for the Financial Times — also claim that Roosevelt extended the depression of the 1930s. She blames World War II for getting us out of it. It’s like Louis Armstrong said, “some people don’ know, ya jes’ cain’t tell ‘em.” But, hey! if it keeps duping the dupes, keep sayin’ it. And they do. And they will.

Posted by morphex01 | Report as abusive

My own dad was in a CC camp before the war. Without the CC camp, he might have starved before the war, and then he couldn’t have fought in it, so Amity Schlaes could not have even had the war to get us out of the depression. How old is Amity Sclaes, and has she ever been a great depression?

Posted by frankkarlburn | Report as abusive

[...] Per JobFox NewsRight's latest talking point: Stimulus cost 8000 per jobWashington Post (blog)Obama really might have made it worseReuters Blogs (blog)LubbockOnline.com (blog) -ABC News (blog) -TPMDCall 41 news [...]

WOW!!! The blessed “Saint O” got criticized for his handling of; or lack of handling, of the economy and look what happens. The first 3 postings, my dad participated in this, my dad participated in that, the dupes, try hedging the absolutism. GET OVER IT! He has made things worse. The numbers don’t lie. Unemployment up, foreclosures up, debt/deficit (not just up, but) exploding, shovel-ready not so shovel-ready, no budget going on 3 years (but according him to that is leadership), and the list goes on and on. But hey, there is bright spot. His talking heads did say over the weekend that if you want to be a homeowner, now is the best time in generations to buy. Oops, they forgot to talk about the mortgages that are underwater or the ever increasing list of foreclosures. This is solely his economy. He is the Prez and after of being given everything he has wanted to turn this economy around he needs to step up and take responsibility. He needs to quit passing the blame. It’s been everybody else’s fault but his. Let’s run down the list in the blame game – Congress, talk radio, the banks, WE the citizens have even been blamed because we are just too stupid to understand what he is trying to do and are fighting him every step of the way, the Europeans for passing austerity packages to try to save their economies, just to name a few. Talk about dupes. I raise a glass of Kool-Aid to you and when I am done, maybe things will look a little better. Oh yea, it is George Bush’s fault.

Posted by Dereksboysam | Report as abusive

[...] $278000 per jobWashington Post (blog)$278K per Stimulus Job? White House Says No.ABC News (blog)Reuters Blogs (blog) -LubbockOnline.com (blog) -TPMDCall 41 news [...]

[...] job created by the 2009 stimulus bill. An article in the The Weekly Standard, tweeted out by …Obama really might have made it worseReuters Blogs [...]

Mr. Obama is a fraud, a charlatan, a mountebank, you name it. At last, the realization of this appears to be spreading. ‘Hope and change’ indeed.

Posted by Elektrobahn | Report as abusive

Obama’s own forecasts were that unemployment would peak at 9% if NOTHING was done. We spent a trillion dollars in Obama’s fake stimulus and have still been bouncing around above that level since.
We’re well above the 8% Obama promised as peak, and still have the massive debt to service now. We’re undeniably worse off.

http://blogs.reuters.com/james-pethokouk is/2011/06/07/romer-bernstein-unemployme nt-chart-updated/

Posted by nickless | Report as abusive

[...] team saysUSA TodayWhite House Disputes Study Saying Stimulus Cost Taxpayers 8000 Per JobFox NewsObama really might have made it worseReuters Blogs (blog)LubbockOnline.com (blog) -ABC News (blog) -TPMDCall 45 news [...]

[...] job created by the 2009 stimulus bill. An article in the The Weekly Standard, tweeted out by …Obama really might have made it worseReuters Blogs (blog)White House Disputes Study Saying Stimulus Cost Taxpayers $ 278000 Per JobFox [...]

[...] Pethokoukis at Reuters connects the dots: Indeed, the results are horrifying. The two-year-old recovery’s terrible tale of the tape: A 9.1 [...]

please remember that all government jobs create a drag on the economy … all of them … even the military … but at least the military is a Constitutional mandate …
When you take a dollar out of the economy to give it to the government you limit the number of jobs that economy can support … So spending 800 billion in the Stimulus first starts out reducing the number of potential private sector jobs … no matter how many “jobs” the government spending creates it will never exceed the jobs lost in the private sector … never … and it reduces opportunities for grow in the private sector since that money cannot be used for private sector investment …
Only if the money was “free” could it have created actual real new jobs and added to the economy … but of couse it isn’t free, it must be taken away from the private sector …
Its one thing for the government to take tax dollars and spent them but also the “extra” deficit spending takes money out of the private sector as well … if investors buy government debt they aren’t investing in the private economy …

Posted by dorsaighost | Report as abusive

The 1919-1921 recession, more severe than this one and possibly as bad as 1929-32, ended within 6 months of Harding and Coolidge taking office. Why ? They ended the Wilson Administration policies, cut government spending and taxes and Harding said we were going to have “a return to normalcy.” That phrase has been ridiculed by the ignorant but now we know what harm interference does. Instead, Obama has followed the Hoover path of spending and progressive manipulation of the economy, like bailing out GM and Chrysler. Books will be written showing how harmful his policies have been.

Posted by Mtkennedy | Report as abusive

[...] that he has made things worse. He didn’t even manage to keep the status quo. The big part of this is his mushy-headed [...]

[...] House Disputes Study Saying Stimulus Cost Taxpayers $278000 Per JobFox NewsABC News (blog) -Reuters Blogs (blog) -LubbockOnline.com (blog)all 48 news [...]

[...] Summer of Recovery: Obama really might have made it worse  [...]

I am curious why Obama gets a pass on the economy “he inherited”? Wasn’t he part of the branch of the US government, the majority party of the US Senate and Congress as a whole, which actually passes the US budget and has more constitutional responsibility in allocating spending then the President. Or did he try to filibuster those policies? Did he never advocate for housing policies that brought down the Fannies and our economy.

“inherited” indeed.

Posted by rosegardener | Report as abusive

[...] Really Might Have Made It Worse”–headline, Reuters, [...]

[...] really might have made it worse Jul.06, 2011 in Rss America can do better — and must. James Pethokoukis Tags: 'might, Made, Obama, really, [...]

If you think you understand Macroeconomics, then I wish you would publish a textbook.

Money is a state creation. Money is the balance between Production, Consumption, Capital, and Political Power.

All value flows through markets.

Concentrated power can swing a lot a weight and exercise a lot of control.

However.

It is, ( as we scientists like to say ) complicated!

Posted by petersigma | Report as abusive

Barack Obama is achieving everything he set out to do; expand government, choke off the private sector, turn America into a centrally planned economy. He is taking control through various means, from nationalization of companies like GM to new corporatist structures (“public-private partnerships”) to the Dodd-Frank financial regulation that will insert government into “investment decisions”.

Companies and individuals that toe the party line will win; they get government contracts, grants, subsidies, exemptions. Those who don’t lose; they will be regulated to death, hounded by the IRS and EPA, etc. That is not a bug, it’s a feature. Companies and individuals are already starting to change their behavior to accommodate to the new regime.

The end goal is literally a centrally planned economy. That is what Obama would call “a smart economy”; an economy not run by the “evil profit motive”, but by selfless wise bureaucrats working in service to “the folks”. The Obamacrats are taking very deliberate, well thought out steps to get there and so far they are succeeding beyond their wildest dreams. It’s the final stage of their “long march through the institutions”.

The collapse of the private sector itself is not a bug, it’s a feature. But the Obamacrats are making sure that the Republicans will get the blame. Specifically the debt ceiling issue is set up to explain the double dip into full-blown depression.

And it will work. Millions of unemployed will believe Republican spending cuts cost them their jobs. Clueless conservatives will play into the Obamacrats hands at every turn. Obama will get his second term and it will be full steam ahead into totalitarian socialism. Nothing will be able to stop the Obama Revolution after 2013.

Posted by verkooijen | Report as abusive

slumz,

if you dispute the assertion that economies recover from recessions no matter what do you have any examples that does not involve a monetary collapse? Bear in mind the US has not suffered a monetary collapse and is probably far from it for now.

Posted by ojfl | Report as abusive

Barack Obama is achieving everything he set out to do; expand government, choke off the private sector, turn America into a centrally planned economy. He is taking control through various means, from nationalization of companies like GM to new corporatist structures (“public-private partnerships”) to the Dodd-Frank financial regulation that will insert government into “investment decisions”.

Companies and individuals that toe the party line win; they get government contracts, grants, subsidies, exemptions. Those who don’t lose; they will be regulated to death, hounded by the IRS and EPA, etc. That is not a bug, it’s a feature. Companies and individuals are already starting to change their behavior to accommodate to the new regime.

The end goal is literally a centrally planned economy. That is what Obama would call “a smart economy”; an economy not run by the “evil profit motive”, but by selfless wise bureaucrats working in service to “the folks”. The Obamacrats are taking very deliberate, well thought out steps to get there and so far they are succeeding beyond their wildest dreams. It’s the final stage of their “long march through the institutions”.

The collapse of the private sector itself is not a bug, it’s a feature. But the Obamacrats are making sure that the Republicans will get the blame. Specifically the debt ceiling issue is set up to explain the double dip into full-blown depression.

And it will work. Millions of unemployed will believe Republican spending cuts cost them their jobs. Clueless conservatives will play into the Obamacrats hands at every turn. Obama will get his second term and it will be full steam ahead into totalitarian socialism. Nothing will be able to stop the Obama Revolution after 2013.

Posted by verkooijen | Report as abusive

[...] not sure we’re still in “might have” territory any longer. Between the failed stimuli and Obama’s empowerment and expansion [...]

[...] models to show that things would have been worse. A good summary article can be found here: James Pethokoukis | Analysis & Opinion | Reuters.com There really is no more wiggle room left for anyone to defend Obama and the left's view that [...]

[...] James Pethoukoukis puts it all together: The centerpiece of Obama’s devise to “push a automobile out of a ditch” was a trillion-dollar (including seductiveness responsibility on a borrowed money) American Recovery and Reinvestment Act. A new essay in The Weekly Standard dynamic that it might have cost as most as $278,000 for any pursuit created. But that’s generous. Respected Stanford economist John Taylor, maybe a subsequent authority of a Federal Reserve, has analyzed a tangible formula of a ARRA. Not what a White House’s garbage-in, garbage-out models contend happened, though what indeed happened as gleaned from supervision statistics. Taylor, simply put, looked during either consumers indeed consumed and either supervision indeed spent in a approach that constructed genuine enlargement and jobs. His harmful conclusion: Individuals and families mostly saved a transfers and taxation rebates. The sovereign supervision increasing purchases, though by usually an vaporous amount. State and internal governments used a impulse grants to revoke their net borrowing (largely by appropriation some-more financial assets) rather than to boost expenditures, and they shifted expenditures divided from purchases toward transfers. Some disagree that a economy would have been worse off though these impulse packages, though a formula do not support that view. [...]

What we are seeing is the great experiment that seeks to rubbish Supply-side Economics, otherwise known as economics. The Conventional Wisdom on Reagan is that he really never put a foot right; no less domestically than overseas. Whatever “success” he might have experienced was from the cyclical nature of the economy. Clinton, otoh, set up a grand strategy for growth and stability with his tax hikes, which were then pushed back down by W in a stimulative effort. But that didn’t work, obviously. If Bush had just left the taxes where he found them post-Clinton, no debt, no deficit, no shortruns in entitlements, no borrowing problems. We are only beginning to see the true costs of boated government in taxes and lost freedoms. The good news is that the deprivations fall most severely on those stupid enough to buy Obama’s crapulent socialism. Of course McCain’s socialism was only marginally less complete or crapulent. NO ROMNEY!

Posted by megapotamus | Report as abusive

I don’t think there is any doubt that the economy would be recovering now if the government had done absolutely nothing. And it seems everything Obama has done is just the opposite that a person with common sense would do. Passing a law that will end up causing more foreclosures? Banning drilling against the advice of his own scientists? Trying to purposely increase the cost of electricity and gasoline? Slamming businesses with mush higher health insurance costs? How do these things help the economy? They don’t. So you have to wonder, is he just not very smart, or does he truly want to make the economy worse?

Posted by MrReasonable | Report as abusive

[...] by Elizabeth Scalia GA_googleAddAttr("author", "ElizabethScalia"); ShareJAMES PETHOKOUKIS: Obama made it worse: Elections have results. So do bad policies. Obama’s choices on taxing and spending and [...]

[...] Really Might Have Made It Worse"–headline, Reuters, [...]

[...] James Pethokoukis | Analysis & Opinion | Reuters.com. [...]

The only point James is missing is the assumption that the trillion dollar stimulus (w/ interest) of 2009 ended in 2009, and that recovery costs can be measured against that spend.

But we’ve all seen the graphic showing 3 years of Obama deficits in the $1.3-$1.6t range (2009-11 forecast).

The stimulus stimulates by creating a budget deficit, Keynesianically. We’re carrying the same sized deficit today as the stimulus got us to in 2009. Although we did have an actual Federal budget that year. Good times.

The stimulus never ended, and the policy is not working.

Thanks, Obama!

Posted by MGCC | Report as abusive

And even after rereading it I didn’t make the point I wanted to make:

We’re not benefitting from the 2009 $1.0T stimulus, we’re enjoying the fruits of $4.0T in 2009-22 stimulus.

Posted by MGCC | Report as abusive

I mean 2009-11. dang.

Posted by MGCC | Report as abusive

[...] in the past couple of years we’ve been exposed to an array of examples that provide ways to judge the stimulus other than just “cost per job.” Carney was correct in saying we need to look beyond [...]

[...] in th' past couple o' years we’ve been exposed t' an array o' examples that provide ways t' judge th' stimulus other than just “cost per job.” Carney was correct in saying we need t' look beyond th' [...]

[...] an array of examples that provide ways to judge the stimulus other than just “cost per [...]

[...] problems should get prepared for useless public works projects and bridges that lead to nowhere (oops!), the same flawed Paper Tiger balm that cannot soothe China’s economic [...]

[...] have expressed my doubts about this before, as has economist John Taylor who, after examining data as opposed to models, concludes this about [...]

verkooijen that would be correct. It’s called Socialism, complete government control of all national businesses. Even, after huge government takeouts of all profits. The net result is a bunch of equal, poor citizens and a huge, rich and powerful government. And morons, like Wendy Taylor, my sister, actually advocate this system. In fact Wendy doesn’t believe she pays ENOUGH tax. She wishes the taxes were higher. She tells us that our taxes are at all time lows. What she doesn’t realize, as smart as she is (valedictorian at Pitt law school), is that there are over 300 new taxes on the books and all of them go up without any publication or fanfare, we pay taxes on our cell phone bills, electricity, gas, gas, and on and on and on and on, no need to try to list them. And Wendy, my dear sister, and I do lover her, is smarter than me she is a raving idiot. She has no idea or concept of economics, how printing money is a hidden tax, inflation in my area of economics, food service, is outrageous. I am paying 50% more for eggs, butter, corn, oil, on and on and on. Small bushiness creates about 2 of every three jobs. A 300 billion dollar interest free loan program to small businesses would have created 7.5 million 45,000 a year jobs AND would have been paid back. He didn’t create a thing and he knew he wasn’t creating a thing. He did it intentionally, you see my friends this president isn’t just a bad president, he is doing it intentionally, he is trying to enslave us by destroying our economy. And he’s not alone, big government is controlled by big business,

Posted by glennataylor | Report as abusive

Edited by the media again.

Posted by glennataylor | Report as abusive

[...] it would have without government intervention, just as Obama’s massive spending spree has lengthened the current recession.  As for promises made, the Obama administration promised that passing the stimulus bill would [...]