Obama's Economy: The Green Shoot Fallacy

In an earlier post I posited the question of what motivated congressional Democrats and President Obama to promulgate policies that hindered taxpayer’s ability to pay off the substantial amount of debt assumed by families during the past several decades. The question was framed in a manner that called for a choice between higher government spending or immediate tax reductions as a means of improving the economic well being of Americans.

Clearly this line of inquiry is not simply an academic exercise. The unanimous opposition of House Republicans to the Stimulus Legislation revealed a fundamental divide in the electorate as to how an economic downturn should be addressed in Washington. However, there is more than just a political policy debate at work in this discussion. The U S economy is now two years into a recession that is accompanied by the worst unemployment seen in decades with almost 15 million people unemployed. Eighteen U S states have unemployment rates in excess of 10 %.

Employment recovery may be very far off:

Most of the country — 286 of 325 metro areas covered in the IHS analysis_ aren’t likely to regain their pre-recession employment levels until at least 2012.
Of these areas, 112 probably won’t return to their recent peaks until 2014 or later. These include Rust Belt towns such as Cleveland, Dayton and Akron, Ohio; Detroit, Warren and Flint, Mich.; the hurricane-ravaged Gulfport-Biloxi, Miss., area and the greater Los Angeles region, where the housing bubble and high unemployment have strangled the local economy…..

There are other signs that economic conditions are worsening, contrary to the jaw boning by the Obama administration and the Fed about “green shoots” of recovery. The evidence, and the analysis of heavy industry leaders, tells a different story:

“I am not particularly of the green shoots group yet,” [General Electric Co. Vice Chairman John] Rice said today to the Atlanta Press Club, referring to a phrase used by Federal Reserve Chairman Ben S. Bernanke that described signs of a nascent recovery. “I have not seen it in our order patterns yet. At the macro level, there may be statistics suggesting the economy is starting to turn. I am not seeing it yet.”


[Talk of a recovery] was fun while it lasted but if the latest set of data couldn’t kybosh the ‘green shoot’ theory, then FedEx sure did when it posted earnings results that fell well short of target and the CEO announcing that the economic backdrop was “extremely difficult”.

In that the President’s budget forecasts call for a recovery in late 2009 and robust 3.5% GDP growth in 2010, this recent news should give anyone pause to think the worst is behind us. That the president is considering another multi trillion dollar spending program (under the guise of “health care reform”) in the face of this continuing economic deterioration is appalling. Even with strong GDP growth this level of spending is unsustainable. But in a recession? Where are the adults?

If power is what motivates the Liberal left to implement the abovementioned policy then we would all be wise to remember Lord Acton’s admonition that power tends to corrupt, and absolute power corrupts absolutely. As some voters begin to catch on, others need to start ringing the alarm bell. The present levels of fiscal and monetary irresponsibility are taking this country well beyond the 1970’s era economic stagnation and into uncharted territory.

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