In one of the most embarrassing displays of disingenuity ever perpetrated by an American President, Mr. Obama lauded himself for saving our country from another Great Depression during his now infamous speech in Racine, WI last week. “Now every economist who has looked at it has said that the Recovery Act [stimulus bill] did its job,” proclaimed the President. “It put a brake on the collapse of the economy,” he continued. “We avoided a Great Depression. We are now growing again.”
It is plainly evident, however, that all of this is patently untrue. If not for the fact that 974,000 Americans had not dropped out of the workforce the past two months, the unemployment figure would be a staggering 10.1 percent. Actual Unemployment (U6) remains around 18 percent. We are seeing far less job creation than is needed to even keep up with the number of new workers entering the job market. Of the jobs that have been created by the wildly unsuccessful Stimulus Bill, the vast majority have been in the public sector, sponsored solely by those who are still working. There is absolutely nothing on the horizon that indicates long-term job creation.
The President had a master plan of infusing some of the stimulus money to encourage lending and to create more government jobs immediately prior to the mid-term elections. This will happen and we will likely see unemployment numbers fall as low as 9 percent by November. We may also see a small bump in overall productivity as businesses rush to take advantage of the Bush tax rates before they expire at the end of the year.
But all of this is short-lived. On the morning of January 1, 2011, America wakes up to burgeoning tax increases. If uncertainty about the economy has hurt job creation in 2010, then the certainty about the tax increases will desecrate job creation in 2011. The skiddish stock market is already showing signs of the pending collapse. There is absolutely nothing in any economic indicators to contradict this outlook.
The National Bureau of Economic Research (NBER) has determined the recession initiated in December, 2007. The average recession has lasted 10 months historically and even the Carter recession abated after two years (thanks to a diametric change in the White House). We find ourselves 32 months into the present recession, having poured $800 billion into a Recovery Act that resulted in virtually zero job creation in the private sector. Now we have gigantic tax increases looming on the horizon. Most economists (unbeknownst to the President) have established a growing consensus that a double-dip recession is inevitable. At some point, we should start calling this recession what it really is – a full-fledged depression.
Maybe by calling it what is really is, Americans will better appreciate the gravity of this crisis. This is not a run-of-the-mill recession. It may have started that way three years ago as cyclic corrections in the economy are normal and necessary, but our President and Democrat Congress have facsimiled FDR’s egregious spending and social engineering that culminated in the Great Depression. If we’re not there now, we are very close.