The Wall Street Journal summed up today’s horrible economic numbers: “The U.S. economic contraction in the first quarter was far worse than the government previously estimated, the Commerce Department said Wednesday. Gross domestic product, the broadest measure of goods and services produced across the economy, contracted at a seasonally adjusted annual rate of 2.9% in the first three months of the year. That was a downward revision from the previous estimate of a 1% decline. The first-quarter stumble marks the fastest rate of decline since the first quarter of 2009, when output fell 5.4%, and is one of five deepest contractions in a single quarter in the past 30 years.” One suspects more than cold weather is at issue here.
Matt McDonald, a former George W. Bush official and now a business and communications consultant, observes via e-mail, “Whatever the exceptions and asterisks are that people apply to this [2.9 percent] number (weather, health care spending, inventories), we were out of excuses on the economy about two years ago. And the anti-business policies from DC are just getting worse.” Without policy changes it is hard, he says, to see why “this trend of mediocrity should reverse any time soon.”
Kevin Hassett of the American Enterprise Institute largely agrees. He tells Right Turn, “There are a number of one off factors, and current quarter is clearly well into the 3 [percent range], so the huge negative number should not set off recession fears. On the other hand, it is a really bad number, and way worse than one could explain with weather alone.”
One significant factor was lower health-care spending. Dems would like to think that is Obamacare kicking in, but the deadline for sign-ups passed at the end of the first quarter. More worrisome, Megan McArdle says, is the possibility that “health expenditures fell because, well, health expenditures fall when the economy is contracting.”
On a political level, it isn’t hard to see how this plays out. The Obama presidency’s foreign policy is unraveling in troubling ways. Obamacare remains deeply unpopular. And now the economy is facing (again? still?) headwinds. McArdle observes, “If the economy heads back into a recession this year, things start looking pretty grim for the Democrats — not just for this year, but for 2016.” And they look especially grim for Senate Democrats who have not bothered to take up House-passed job promotion and training bills and for presidential candidates who served with President Obama.
On the GOP side, the lackluster economy provides an opening for candidates who have been successful in creating jobs and/or have an attractive pro-growth agenda. Today, for example, Sen. Marco Rubio (R-Fla.) spoke at conservative Hillsdale College: “It doesn’t have to be this way. If we can put in place policies that will spur dynamic economic growth and make higher education more affordable, we can restore the American Dream for millions of young Americans. In order to achieve the economic growth that leads to millions of better paying jobs, we need policies that incentivize investment and innovation. I have proposed tax reforms that make America a more attractive place to invest and regulatory reforms that help this remain the best place in the world to innovate. This will create millions of jobs for our graduates.” He continued citing by name some Floridians:
Our outdated laws, taxes and education system, and the growing burden of ObamaCare are making life harder than it needs to be for working families . . . . In order to restore the American Dream, we need to change that.
My growth agenda will help them by elevating the entire economy. As they have found throughout their 17 years in business, when the economy is growing and thriving, more customers come by their shop.
Pro-growth tax reform will allow them to fully expense every investment they make in their company, making it easier for them to expand, earn more, and maybe even create a job or two.
Pro-family tax reform will help them with the cost of living. For their two younger sons, the Broyles receive a child tax credit of $1,000. But just like with Kristeen, the reforms I’m working on with Mike Lee would raise this to as much as $2,500 and would make it refundable.
Pro-education tax reform would help them with the cost of higher education for their kids. Joined by Representative Schock, I have proposed that we update and consolidate higher education tax incentives into one simple, easy-to-understand tax credit that applies universally to higher education and skills obtainment.
And healthcare reform will help them grow their business and receive quality care at an affordable price. ObamaCare is a disaster, but the answer is not to simply return to the way things were before it. The answer is to repeal and replace ObamaCare with modern market-centered reforms. Reforms that would give the Broyles control over their healthcare decisions by giving them the power to buy the kind of health insurance they want, from any company they choose, at a price they can afford.
Other candidates for 2014 and 2016 should follow Rubio’s example. The economy is rotten. The voters know it. Now what specifically are the candidates going to do about it?