The political class this week has focused on immigration reform, climate change and gay marriage. Meanwhile, the economy continues to tank.
The economy grew more sluggishly in the first three months of the year than the government first reported, as higher taxes on payrolls dampened consumer spending and held overall growth down to just a 1.8 percent annual rate.
Make no mistake about it: this is really grim. And to make matters worse, it’s something we did to ourselves. . . . The biggest source of the downward revision came from consumer spending. Government economists had estimated that consumer services consumption (excluding housing and utilities) would grow by 2.5 percent, instead it grew at just 0.7 percent.
That’s stall speed for consumers. Far worse, in fact, than the 2.4 percent growth seen in the fourth quarter.
The president’s response to this is to raise energy prices and to plunge ahead with Obamacare that has already driven individual health-care insurance premium costs through the roof. I’d be curious to know why the administration doesn’t think that these policies will further aggravate the economy and depress consumer spending.
The issues that have been the focus of debate this week — in particular, gay marriage and immigration — are not unimportant. But a president is supposed to be able to walk and chew gum. He continues to ignore the economy at the peril of Democrats and the American people. The economy remains the top concern of voters.
Meanwhile, Republicans in the House and Senate would be wise to put together a growth package, maybe including restoration of the Social Security tax break. If they don’t want to be complicit in the president’s rotten economic policies they need to spell out alternatives on health care, regulations, taxes and the rest. Saying no again and again to Obamacare, for example, is all well and good, but what the country needs is an alternative that will not burden employers and nevertheless preserve the few popular items in the law (e.g. coverage for pre-existing conditions).
As for Democrats, it is a grave error to remain silent or cheer the president’s anti-consumer, anti-growth message. Unlike President Obama, many of them will be on the ballot in 2014 and/or 2016 and will have to explain why they did nothing as the economy sagged once again.