No one can accuse the Democrats of being the party of personal responsibility. Confronted with an economy that contracted in the fourth quarter, Minority Leader Nancy Pelosi blamed Congressional Republicans for obstructing the president’s agenda and creating uncertainty.
In the wake of the financial collapse, the Democrats took full control of both the Congress and the presidency in 2009 and were presented with an historic opportunity to put their ideas into practice. Unfortunately, the newly elected President Obama and then-Speaker Pelosi treated the situation as a political opportunity to build a Democratic majority rather than an obligation to fix what’s broken in the economy.
Shrewdly, President Obama cobbled together a broader Democratic coalition by delivering to women free health care services, to Hispanics amnesty for young adults, to younger folks overly generous student loans, to teachers and civil servants subsidies to protect their jobs, to labor unions a rebuke of Simpson-Bowles recommendation that the retirement age be raised, and to his political friends generous subsidies for solar panels, windmills and other whimsical projects. Meanwhile, he cut defense, raised taxes on small businesses, and imposed unproductive regulations on manufacturing.
No surprise, the revolution of the takers has instigated a strike among the makers. Rather than be slaves -- yoked under burdensome taxes, regulations and endless hectoring from the Left -- small banks aren’t lending but instead are looking to sell out to the Wall Street barons who financed the President’s rise to power. Small businesses are not expanding, and multinational corporations are taking factories and jobs to China and other Asian venues where genuine enterprise and capitalism, paradoxically, is supported.
Now, Mr. Obama’s tepid recovery is failing.
When the President campaigned in 2008, he promised to address the huge trade deficits with China and oil, which together sap demand and slow growth and jobs creation, and address skyrocketing health care costs.
Early in his presidency, Mr. Obama blamed China’s undervalued currency for slow U.S. growth and warned Chinese leaders if they did not cooperate to redress the situation, he could act unilaterally. Liberal economists like Paul Krugman, conservative economists like this author and moderates like the Peterson Institute’s Fred Bergsten all recommended viable courses of action.
Sadly, the President talks tough in front of friendly audiences and to Republicans when he enjoys the high ground, but brings his kneeling pad when negotiating with Chinese leaders. He has simply done little to reverse the flow of money and jobs to the Middle Kingdom and other venues in Asia.
In the wake of the Deepwater Horizon disaster, the President punished the entire oil industry to gain political points and appease environmentalists. So much for substantially reducing the oil deficit!
His most significant accomplishment -- ObamaCare has turned into a massive subsidy for the health care industry and welfare program for working class voters he hopes to secure for the next generation. Health care costs 50 percent more than in Germany -- where outcomes are better -- and health insurance premiums and co-pays borne by business and the middle class keep rocketing.
Government spending is up over a trillion dollars, the federal deficit is spinning out of control and the country faces a credit downgrade by Moody’s. Former Speaker Pelosi vilifies Republicans for not embracing the President’s “balanced” approach, but he shows no interest in cutting spending and only passion for raising taxes on success.
America hardly lacks the technology, capital and enterprise necessary to succeed, but unfortunately, it is led by a man hell bent on building a political majority, and with little interest in fixing what’s broke in the economy.
Peter Morici is an economist and professor at the Smith School of Business, University of Maryland, and widely published columnist.
Peter Morici is an economist and professor at the Smith School of Business, University of Maryland, and widely published columnist. He is the five time winner of the MarketWatch best forecaster award. Follow him on Twitter @PMorici1.