08.31.2010 0

A “Recovery In Name Only”

  • On: 09/01/2010 20:42:08
  • In: Economy
  • By Howard Rich

    To the eight million Americans who have lost their jobs during the “Great Recession,” the so-called recovery our nation is currently experiencing hasn’t been very “stimulating.”

    In fact it’s been downright depressing — and conditions are not likely to improve anytime soon.

    With virtually all economic indicators retreating and a barrage of job-killing tax hikes scheduled to take effect in 2011, a dreaded “double-dip” recession is imminent — despite repeated assurances to the contrary from the administration of President Barack Obama. Also with trillions of taxpayer dollars still being spent, lent, pledged and printed in the name of supporting this phantom “recovery,” government continues to amass a debt so large that its interest payments alone will consume more than a third of federal income tax revenue by 2015.

    Far from preventing an economic collapse, the costly federal interventionist policies of Obama and former President George W. Bush have sown the seeds for a larger, longer economic downturn — mirroring the failed “government-first” approach of the 1930s that managed to turn a recession into full-blown depression.

    Just as government cannot tax and spend its way out of bad economic times (then or now), the Obama administration is discovering that it can’t talk its way out of them either — although that hasn’t stopped the authors of “Obamanomics” from attempting to do so.

    A year ago U.S. Federal Reserve Chairman Ben Bernanke declared that the U.S. recession was over — a sentiment that was echoed by Obama’s top economic advisor in December of 2009. In April of this year, Obama’s other top economist said that there would be no “double-dip” recession, comments which prompted a flurry of rosy rhetoric from the White House.

    “We can say beyond a shadow of a doubt today we are headed in the right direction,” Obama said during a speech back in May. “All those tough steps we took, they’re working, despite all the naysayers who were predicting failure a year ago.”

    Around this time, U.S. Vice President Joe Biden also predicted a “Summer of Recovery” in which the U.S. economy would create “between 250,000 jobs a month and 500,000 jobs a month.”

    Clearly, that hasn’t happened — nor is it going to happen.

    The official U.S. unemployment rate remains stuck at just under 10 percent, while the broader “underemployment rate” is stuck at 16.5 percent. Neither rate has moved for months, although both are about to start moving again — albeit in the wrong direction.

    Last month, the U.S. economic growth rate for the second quarter was revised downward from 2.4 percent to 1.6 percent — with roughly the same anemic rate of growth predicted for the third quarter. Meanwhile existing home sales plunged by 27.2 percent — the largest one-month decline ever — and new home sales fell by 12.4 percent to their lowest level ever.

    Just as it did in 1929, the U.S. government is on the verge of turning a recession into a depression by virtue of its costly excess interventionism. In 1930, a year after the stock market collapsed, the U.S. unemployment rate stood at 8.7 percent. In 1932 — after an ill-conceived government tariff, massive public works program and the largest tax hike in American history — the unemployment rate had nearly tripled to 23.6 percent. Six years later — after the implementation of Franklin Roosevelt’s “New Deal” — it was still at 19 percent.

    Also, let’s not forget government’s starring role in the years leading up to this crisis — a decade of overspending and politically-correct lending practices that pumped trillions of dollars into mortgages for people who simply couldn’t afford them.

    Amazingly Obama and his allies still cannot read the handwriting on the wall, as just a few weeks ago Vice-President Biden reiterated that there was “no doubt we’re moving in the right direction” economically.

    Despite the rhetoric of “recovery,” America’s economic hole is clearly getting deeper — and the only way out is a return to the free market, limited government principles on which our nation was founded.

    Let’s hope our elected officials realize that before it is too late.

    The author is chairman of Americans for Limited Government.

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