In a recent interview with Rolling Stone magazine, the president was asked about the tone and tenor of the debate that’s going to take place during the campaign. Obama answered, in part, this way:
[The GOP’s] vision is that if there’s a sliver of folks doing well at the top who are unencumbered by any regulatory restraints whatsoever, that the nation will grow and prosperity will trickle down. The challenge that they’re going to have is: We tried it. From 2000 to 2008, that was the agenda. It wasn’t like we have to engage in some theoretical debate – we’ve got evidence of how it worked out. It did not work out well, and I think the American people understand that. Now, the burden on me is going to be to describe for the American people how the progress we’ve made over the past three years, if sustained, will actually lead to the kind of economic security that they’re looking for. There’s understandable skepticism, because things are still tough out there… The fact of the matter is that times are still tough for too many people, and the recovery is still not as robust as we’d like, and that’s what will make it a close election. It’s not because the other side has a particularly persuasive theory in terms of how they’re going to move this country forward.
So Obama wants a debate based not on theoretical claims but on empirical achievements.
Wonderful. Why don’t we accommodate the president?
Annual economic growth was three times higher under President Bush than under President Obama. Under Bush, the unemployment rate averaged 5.3 percent; under Obama, it has never been under 8 percent. In the wake of a recession that began roughly seven weeks after President Bush took office, America experienced six years of uninterrupted economic growth and a record 52 straight months of job creation that produced more than 8 million new jobs. We saw labor-productivity gains that averaged 2.5 percent annually — a rate that exceeds the averages of the 1970s, 1980s, and 1990s. Real after-tax income per capita increased by more than 11 percent. And from 2000 to 2007, real GDP grew by more than 17 percent, a gain of nearly $2.1 trillion. As for the deficit, it fell to 1 percent of GDP ($162 billion) by 2007. Indeed, before the financial crisis of 2008 – which I’ll return to in a moment — Bush’s budget deficits were 0.6 percentage points below the historical average.
As for the Obama record, as I point out in this essay in the current issue of COMMENTARY, President Obama has overseen the weakest recovery on record. He is on track to have the worst jobs record of any president in the modern era. The standard of living for Americans has fallen more dramatically during his presidency than during any since the government began recording it five decades ago. Unemployment has been above 8 percent for 40 consecutive months, the longest such stretch since the Great Depression. Home values are nearly 35 percent lower than they were five years ago. The United States has amassed more than $5 trillion in debt since January 2009, with the president having submitted four budgets with trillion-dollar-plus deficits. Prior to Obama, no president had submitted even a single budget with deficits in excess of a trillion dollars. In addition, government dependency, defined as the percentage of persons receiving one or more federal benefit payments, is the highest in American history. And a record 46 million Americans are now living in poverty.
On Obama’s record, then, it’s not like we have to engage in some theoretical debate. We’ve got evidence of how it worked out. It did not work out well, and I think the American people understand that.
Now unlike Obama, some of us are willing to concede that things need to be placed within a proper context. Obama took the oath of office in the wake of a financial collapse that made every economic indicator much worse; it’s only fair to take that into account. But even here, in characterizing what happened, Obama insists on presenting a distorted picture of reality, pretending that it was wholly the fault of his predecessor and the GOP. In fact, it was a complex set of factors that involved everything from credit default swaps to the Federal Reserve to policies in which both parties were complicit. But this much we know: Democrats bear the majority of the blame for blocking reforms that could have mitigated the effects of the housing crisis, which in turn led to the broader financial crisis.
As Stuart Taylor put it in 2008:
The pretense of many Democrats that this crisis is altogether a Republican creation is simplistic and dangerous. It is simplistic because Democrats have been a big part of the problem, in part by supporting governmental distortions of the marketplace through mortgage giants Fannie Mae and Freddie Mac, whose reckless lending practices necessitated a $200 billion government rescue [in September 2008]. … Fannie and Freddie appear to have played a major role in causing the current crisis, in part because their quasi-governmental status violated basic principles of a healthy free enterprise system by allowing them to privatize profit while socializing risk.
The Bush administration warned as early as April 2001 that Fannie and Freddie were too large and overleveraged and that their failure “could cause strong repercussions in financial markets, affecting federally insured entities and economic activity” well beyond housing. Bush’s plan would have subjected Fannie and Freddie to the kinds of federal regulation that banks, credit unions, and savings and loans have to comply with. In addition, Republican Richard Shelby, then chairman of the Senate Banking Committee, pushed for comprehensive GSE (government-sponsored enterprises) reform in 2005. And who blocked these efforts at reforming Fannie and Freddie? Democrats such as Christopher Dodd and Representative Barney Frank, along with the then-junior senator from Illinois, Barack Obama, who backed Dodd’s threat of a filibuster (Obama was the third-largest recipient of campaign gifts from Fannie and Freddie employees in 2004).
So Obama and his party bear a substantial (though not exclusive) responsibility in creating the economic crisis that Obama himself inherited. And even if you set all this aside, Obama entered office knowing what he faced, including a deficit and debt that was exploding. And rather than promote policies that accelerated economic growth and began to address our fiscal entitlement crisis, Obama went in exactly the opposite direction.
One other observation: historically, the worse the recession, the stronger the recovery (it’s referred to as the “rubber band effect.”) What is noteworthy about Obama’s economic record is how, in an environment in which one would expect the recovery to be unusually strong, it has been historically anemic. It seems to me, then, that “the other side” has quite a persuasive theory when it comes to moving the nation forward, at least compared to the theory being advanced by the current occupant in the White House.
Sometimes it seems as if Barack Obama is making it too easy on his critics.