August 26, 2010

Obama’s Big Fat Failed ‘Recovery Summer’

Worst economic slogan since Herbert Hoover — for what really is the worst economy since Herbert Hoover.

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Note: This column went up at Pajamas Media and was teased here at BizzyBlog on Tuesday.

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Summer won’t technically end for almost a month, we’re still a couple of weeks away from Labor Day, and many of the nation’s children haven’t yet returned to school. But no matter when one thinks summer ends, it’s already way past obvious that the Obama administration’s “Recovery Summer” has been and will end up being a big, fat, embarrassing failure.

How bad? The housing market’s worst-on-record June for new construction was followed by its worst-on-record July. In each case, the year-over-year decline from 2009, when what I have been calling the POR (Pelosi-Obama-Reid economy since the middle of 2008 supposedly hit its trough, was about 10%. In what are usually two of the best months of the year for builders, in a nation of almost 130 million housing units, construction began on barely over 100,000 new ones. That’s about 65% lower than the 1959-2007 average for the same two months.

An economist quoted by the Associated Press on August 19 described the construction situation for office buildings, malls and hotels in three words: “Dead, dead, dead.”

Seasonally adjusted unemployment claims have headed back upward. The talk about the unemployment rate is no longer about when it will finally get below 9%, but how much it will rise from its current 9.5%. Retail sales are not impressing anyone. Manufacturing, which appeared as if it might lead the way to recovery just a few months ago, seems to have gone into reverse, perhaps in a big way.

Looking at the bigger picture, second quarter economic growth, currently pegged at an annualized 2.4%, will almost certainly be revised significantly downward. The New York Times has admitted to “somewhere around 1.7%.” There are solid reasons to believe that it could even come in below 1%. That’s significant, because almost everyone thinks that the third quarter, which roughly tracks the beginning and end of what is really turning out to be our “Recovery Bummer,” will be worse. The journey to a double-dip recession is not at all far.

We thus find ourselves in the worst economy since the 1930s. Even the establishment press is finally acknowledging it.

It’s potentially even worse, because Barack Obama and his administration remains doggedly determined to pursue their rigid ideology, no matter how counterproductive its results. Let’s look at just three examples: the drilling moratorium, “clean energy,” and taxation.

The Gulf oil spill, which either has or hasn’t been mostly cleaned up, gave the administration a political opening to impose a blanket moratorium on offshore drilling. Interior Secretary Ken Salazar was so bent on ginning up a justification for this outrageous overreach that he added language supporting the ban to an already signed-off document prepared by experts who opposed it. Then, when a federal judge ordered the ban lifted, Salazar simply prepared a new moratorium document with a few word changes. This contemptible behavior would have brought instant cries for impeachment if the George W. Bush administration had done something similar.

Recent estimates of potential moratorium-related job losses range from 11,000 to 100,000. Meanwhile, the world drills on. An administration genuinely interested in an economic recovery would not be needlessly killing these jobs.

“Clean energy” was supposed to be a core element of Obama’s recovery plan. So how’s that “weatherization” program going? It has been an epic fail. Almost a year into the program, in three of the states involved with a total population of roughly 80 million, a whopping 292 units had been weatherized. Now they’re actually bragging that 18 states are about 30% done.

“Clean energy” also involved “targeted investments,” with the government play-acting as venture capitalist with our real money. The president visited one such beneficiary company, ZBB Energy in Wisconsin, on August 16. ZBB “received a $1.3 million stimulus loan,” and could potentially take advantage of $14 million in “clean energy manufacturing tax credits.”

If ZBB is worthy of a presidential visit, you really have to worry about how bad things are at the firms deemed unworthy. The company has burned through over $20 million in just under four years. Its sales during its most recently reported quarter were a whopping $189,000. This “represents the country’s future in renewable energy,” according to the Associated Press’s coverage of the president’s visit. If so, our future would be that of Spain. An administration genuinely interested in an economic recovery would not allow such waste to continue.

Then there are the looming income tax increases.

We’ve been operating under what has essentially been the same income tax regime for almost eight years. Could we please dispense with describing what is about to occur as a “repeal of the Bush tax cuts”? What really impends are “the largest tax hikes in history,” which, unless stopped, will arrive on January 1, 2011, with an across-the-board impact.

If this administration and the current Democratic Congressional majority were genuinely interested in an economic recovery, they would not be standing idly by as the tax-increase deadline approaches.

The items described above, along with so many other derelictions of duty, explain why voters this fall appear to be on track to decide that a different party should control Congress. Perhaps a new majority will be able to keep the Executive Branch from inflicting too much further damage in the two years that follow.

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8 Comments

  1. You do realize that the last time the unemployment rate was higher, and the approval rating of a president was lower at the same point in a presidents term, after a recession was……..RONALD REAGAN.

    Thats right…..~10% unemployment and a ~38% approval rating at the same point in his 1st term.

    Comment by Jay — August 26, 2010 @ 3:04 pm

  2. There’s a point in your comment somewhere, but I’m not finding it. Please elaborate.

    Comment by TBlumer — August 26, 2010 @ 3:34 pm

  3. Here’s a related question, if Standard & Poor downgrades US bonds from AAA to AA, how much of an effect would it be on the interest rates and the Dollar? We all know the government can not borrow money indefinitely at these volumes and rates before the market realizes the Bond issuer is not as credit worthy. Obviously interest rates would go up but by how much to 5 or 6%? The Dollar would fall, 10%, 20%? Price of Gold? $1400/oz?

    Comment by dscott — August 26, 2010 @ 5:58 pm

  4. We’ve never tested it. We’d better hope it’s not much. A 2-point change on 10 trillion is 200 billion MORE in interest. That’s a huge number.

    Comment by TBlumer — August 26, 2010 @ 6:08 pm

  5. Twitter Trackbacks…

    Trackback by Anonymous — August 26, 2010 @ 6:12 pm

  6. Would that be enough to force the government to change their spendthrift ways? Or are the current crop of people so delusional that they would simply spin by denouncing S&P as being irrational and irresponsible in order to keep up the spending binge?

    Comment by dscott — August 26, 2010 @ 6:59 pm

  7. #6, I don’t think that gambit would work. Most people would probably react with a “why did it take you so long?”

    Even if there were no ratings change, there would be Treasury auction problems or some other indicator that things are seriously awry.

    Comment by TBlumer — August 26, 2010 @ 10:35 pm

  8. [...] turns out that the “Recovery Summer” the Obama administration has turned into a national joke really is taking place — just not [...]

    Pingback by BizzyBlog — August 29, 2010 @ 2:46 pm

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