Republicans are openly mocking the president for what the press has been told will be a pivot back to jobs in his State of the Union address. Aside from the zillionth time we have heard this, it confirms that the inaugural address (which we and most conservatives panned as too partisan and ideologically extreme) was a bust. So much for gay marriage, gun bans and global warming, I suppose. Which, then, is the “real agenda” — the leftist platform from the inauguration or the State of the Union address, certain to be another laundry list of “investments” (green energy, education) and vague promises of fiscal discipline?
In fact, something always replaces jobs and fiscal reform as Obama’s top priority. In the first term it was Obamacare. Now it is immigration reform and anti-gun legislation. But lack of attention (or divided focus) on the economy is only part of the problem. The nub of the problem is that the president has no earthly idea what to do about the economy. The true blue Keynesian obviously believed that government spending was the way to prosperity; now that this has failed he’s stumped.
President Obama refuses to pursue the measures that would promote growth, such as tax reform (not simply another tax hike) or entitlement reform, which would curtail long-term debt. But the problem is worse than simply neglecting pro-growth policies.
It is not simply policy sins of omission but Obama’s own wish list that is the barrier to more growth and job creation. His top-heavy welfare state is toppling over while the private-sector economy suffers from regulatory overload, a corporate tax code that puts us at a disadvantage internationally and the burgeoning debt (with a no-interest-rate Fed policy). Under such circumstances, consumer confidence remains iffy, and businesses are keeping their cash on the sidelines. (In a lonely dissent from the Fed’s currency asset -purchasing frenzy, Federal Reserve Bank of Kansas City President Esther George recently explained that, “I am concerned about the high rate of unemployment, but I recognize that monetary policy, by contributing to financial imbalances and instability, can just as easily aggravate unemployment as heal it.”)
The Obama “recovery” is actually five years of the worst economy since the Great Depression. As Forbes columnist Peter Ferrara points out: “The National Bureau of Economic Research officially scored the recession as ending in June, 2009, still the longest recession since the Great Depression at 18 months.” He adds that “61 months after the recession began, unemployment was still rising, even while record numbers continued to drop out of the work force. . . . Over the last 5 years, the economy has grown at an average annual rate of 0.6%, less than one fifth the long term American growth rate.”
No wonder that we see reports that “executives are less optimistic about the global economy and their own prospects, and many are lowering financial forecasts. . . .In a sign of executive caution, a Wall Street Journal survey of 50 S&P companies found they plan to increase investment this year by 2%, signaling a dearth of big growth opportunities.”
In sum, as disorganized and ineffectual as the president’s foreign policy may be, his domestic agenda is even more muddled and unsuccessful. The president is fond of formulating false choices for his opponents. But he should be honest about some real choices, the most essential of which is whether he wants a European-style welfare state that consumes a greater and greater share of the economy or, alternatively, a revived American economy. The former makes the latter nearly impossible; the latter is essential to pay for the government he wants.
Obama, Valerie Jarrett and the other yes-people in the administration no doubt have a clear preference for the larger government and the increased taxation, borrowing and spending that goes with it, but, lo and behold, that sounds too leftist for most Americans. So expect a State of the Union address riddled with inconsistencies — ambitious spending and taxing plans, but promises to get the economy going and be fiscally responsible. Unfortunately, that mish-mash not only makes for a bad speech, but also for rotten economic policy and confused markets.