“Under President Obama, is America moving forward or backward?”
“It’s getting more expensive for healthcare, more expensive for gas, more expensive overall.
“Four years of Obama moving America ... backward.”
— Narration from American Crossroads ad
This ad, titled “Backward,” came from the conservative political advocacy group American Crossroads. It appears to be the organization’s answer to the “Forward” video released by President Obama’s campaign.
The ad flashes numbers to back up its claims about rising costs under the current administration: medical costs up 11.2 percent, gas prices have doubled, consumer prices up 8.6 percent.
Let’s take a look at the numbers to see whether American Crossroads proved anything negative about Obama’s tenure.
Health care costs have indeed risen 11.2 percent under Obama, but that’s not an extraordinary number in terms of the historic trend. Medical costs have skyrocketed for decades, threatening to reach unsustainable levels as they take up an increasingly larger percentage of GDP.
The important question is: How does the increase under Obama compare with previous administrations? Let’s take a look at every president since Jimmy Carter, measuring the first 39 months for each term, since that’s how much time is on record for Obama with the Bureau of Labor Statistics.
Obama: +11.2 percent
George W. Bush’s second term: +14.6 percent
George W. Bush’s first term: +15.4 percent
Bill Clinton’s second term: +11.5 percent
Bill Clinton’s first term: +15.8 percent
George H.W. Bush: +30.9 percent
Ronald Reagan’s second term: +23.7 percent
Ronald Reagan’s first term: +35.2 percent
Carter: +34.7 percent
As you can see, the current president beats everyone on that list. Furthermore the rate of growth slowed under Obama and Clinton, whereas it increased under Reagan and both Bush presidencies. In context, the 11.2 percent figure only hurts the American Crossroads argument. It shows an improvement over previous administrations.
In terms of pain at the pump, American Crossroads brought up a commonly used but misleading statistic that shows the cost of gas doubling since Obama entered the White House. We explained in a previous column that gas prices were artificially low when the president took office because demand for energy plunged during the economic crisis.
The cost of gas has certainly increased since then, with the average price rising from $1.93 to about $3.86 per gallon as of March, according a graph from the Energy Information Administration. But it still hasn’t reached the inflation-adjusted high of $4.29 per gallon that occurred in June 2008 under George W. Bush.
As for the rise in “consumer prices,” that phrase refers to the consumer price index. American Crossroads found its 8.6 percent figure by looking at BLS data for all items, non-seasonally adjusted. Economists generally use seasonally adjusted numbers, and they look at “all items less food and energy” to exclude two types of products with highly volatile prices.
We’ll examine Obama’s numbers by both measures, keeping in mind that the president has had little control over the price of gas so far, since his drilling policies have barely taken effect.
According to the American Crossroads metric, the consumer price index did indeed increase by 8.6 percent during Obama’s first 39 months in office. By contrast, the number rose by just 5.5 percent during the last 39 months under the younger Bush, suggesting a backward trend for the current administration.
This marks the first time since the Carter era that overall consumer prices have risen more under a new president — at least by this measure. It’s worth mentioning that Obama’s first 39 months showed less inflation compared to the same period for Clinton (9.2 percent), the elder Bush (15 percent), Reagan (17.9 percent) and Carter (36.9 percent).
Now let’s look at the seasonally adjusted consumer price index for all items less food and energy. By this metric, Obama has shown an improvement over his predecessors:
Obama’s first 39 months: 5.1 percent
George W. Bush’s last 39 months: 7.3 percent
George W. Bush’s first 39 months: 6.3 percent
Clinton’s first 39 months: 9.5 percent
Reagan’s first 39 months: 20.8 percent
Carter’s first 39 months: 32.5 percent
It’s important to note that inflation in and of itself is not a bad thing. Economists say an annual rate of about 2 percent is healthy, as opposed to deflation, which means the economy is experiencing trouble.
Here are the average annual inflation numbers for each president, looking at the seasonally adjusted consumer price index, less food and energy:
Obama’s first 39 months: 1.6 percent
George W. Bush’s last 39 months: 2.2 percent
George W. Bush’s first 39 months: 1.9 percent
Clinton’s first 39 months: 2.9 percent
Reagan’s first 39 months: 6.4 percent
Carter’s first 39 months: 10 percent
We should point out that Obama’s average annual inflation number under the American Crossroads metric is only 2.6 percent, which is roughly on target for what economists refer to as “normal inflation.”
The Pinocchio Test
American Crossroads burned itself by suggesting that health care costs have risen too fast under Obama. The rate of growth is slower than during any administration since at least Carter. In this regard, the ad’s premise is factually incorrect, because the president has moved the nation forward, not backward.
As for gas prices, they have indeed doubled since Obama took office, and the economy sat in a deep recession. But they still haven’t reached the high that the nation experienced under the younger Bush.
In terms of inflation, the president’s numbers are unexceptional no matter which way you look at them. The situation has improved in terms of the seasonally adjusted consumer price index less food and energy. And it’s roughly on target for normal inflation when it comes to the American Crossroads measurement.
Overall, American Crossroads earns Three Pinocchios for its misleading claims about price increases under Obama.
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