Twenty years ago, when Democrats tried to oust an incumbent Republican president from office, they questioned his economic stewardship. Vice presidential candidate Al Gore famously bellowed: “Everything that ought to be down is up, and everything that should be up is down!”
The argument seems more relevant today than it was in late 1992.
Republicans are trying to fire an incumbent Democrat president amid the worst economic recovery since the Depression. And the economic news is not getting better for Barack Obama as the race heads into the final lap.
This was not the case on the eve of the 1992 election, when economic reports revealed both GDP and payrolls were in fact growing at a robust clip following a comparably mild recession.
Still, Gore indicted the record of President George H.W. Bush with stat after stat – stale as they were – showing lackluster economic performance.
He zeroed in jobs and incomes to show indicators that were wrongly down, and unemployment and the federal deficit to highlight what was errantly up.
Applying Gore’s test to Obama’s economic record produces far worse results.
Here’s a breakdown:
- When Obama entered office in January 2009, total nonfarm payroll employment stood at 133.56 million, according to the Labor Department. Last month it totaled 133.30 million – a net decrease of more than 260,000 jobs. Considering the recession ended more than three years ago, any employment shortfall is unusual; but economists call the Obama jobs gap downright shocking.
- In 2009, real median household income was $52,195, according to the Census Bureau’s annual survey. Last year it dropped to $50,054 – the lowest level since 1989. When it comes to pay raises, those Americans who are working aren’t just running in place, they’re going backwards – by decades.
- When Obama stepped into the Oval Office in January 2009, consumer confidence was 61.2 percent. In August, the index stood at 60.6 percent. At this point in a recovery, economists say confidence should be soaring. But consumers remain unusually glum about the economic outlook.
- In January 2009, the jobless rate was 7.8 percent. Last month, unemployment stood at an even higher 8.1 percent, marking the 43rd consecutive month above 8 percent – the longest stretch since the Depression.
- In Obama’s first year in office, the share of impoverished Americans stood at 14.3 percent, the Census says. In 2011, the poverty rate climbed to 15.0 percent – the highest in almost two decades. The share of African-Americans in poverty was nearly double that level.
- In January 2009, the federal budget gap was reported to be $485 billion.
Last month the deficit increased $191 billion to $1.16 trillion – topping
$1 trillion for the fourth straight year. At 10 percent of the economy, it’s the highest level of red ink since WWII.
As the president was speaking at the Democratic National Committee, the gross national debt hit an all-time high of $16 trillion – an amount roughly equal to the size of the entire Gross Domestic Product.
The debt crisis threatens to further tarnish America’s sterling credit. Under Obama, U.S. Treasury debt already has been downgraded for the first time in American history, meaning the U.S. government no longer ranks among risk-free borrowers.
A recent economic study found that when a nation’s gross debt reaches 90 percent of its economy, it often loses about one percentage point of growth a year. And slower growth can reduce the number of jobs created, which in turn can depress family incomes.
The Obama camps insists Americans are better off than they were four years ago. “Absolutely,” asserted Obama’s deputy campaign manager Stephanie Cutter when asked the proverbial presidential campaign question earlier this month.
But the so-called misery index says otherwise.
Perhaps the clearest barometer of the economic health of citizens, the misery index adds the inflation rate to the unemployment rate. A combination of higher unemployment and inflation wreaks havoc on consumers – which is precisely what has happened under Obama, as Americans are squeezed by lower wages and higher prices for food and gas.
When the president took over the reins of the country in January 2009, the U.S. Misery Index stood at 7.8 percent. It’s now exactly two full percentage points higher, at 9.8 percent.
Like Obama, former President Reagan took office during a severe recession. But in contrast, Reagan was able to cut the misery index in half during his first term.
By almost every objective measure, Americans are in fact worse off than they were four years ago. In fact, Obama never really pulled the country “out of the ditch,” as the president claims.
“Sadly, we have never really recovered from the recession,” Hoover Institution economist Edward Lazear said. “The economy has not even returned to its long-term growth rate and is certainly not making up lost ground.”
He explains that during the postwar period leading up to the recession, the average annual growth rate for the U.S. was 3.4 percent. Since then, the economy has grown at an anemic clip of slightly north of 2 percent – well below the long-term trend.
That means, at this point, the overall economy is a whopping 12 percent smaller than it would have been had it resumed the growth path since the recession, Lazear says.
As the economy has stagnated, the poor, minorities and the working class – groups Obama champions – have suffered the most. Several indicators illustrate just how bad things have gotten for the lower and middle classes.
Consider the following:
- There are 12 million more Americans on food stamps since Obama’s recovery started.
- The total number on food stamps – 46 million – is the highest on record.
- More than 1 million workers have joined Social Security’s disability rolls over the last three years.
- Black teen unemployment, now at 37 percent, is near Depression-era highs.
- The share of Americans who’ve been out of work a long time – now roughly 40 percent of the unemployed – is the highest since the Depression.
- The proportion of the civilian working-age population that is actually working, now at 58 percent, is the smallest since the Carter era.
- 3 in 10 young adults can’t find jobs and are living with their parents – the highest level since the 1950s, according to Pew Research Center.
- 54 percent of bachelor’s degree-holders under the age of 25 – aka Generation O:
the age cohort who voted for Obama – are jobless or underemployed, the highest share in decades, according to Northeastern University.
- Total government dependency – defined as the share of Americans receiving one or more federal benefit payments, now at 47 percent – is the highest level in American history.
- The national homeownership rate, now at 65 percent, is the lowest in 15 years.
- The 30-point gap between black and white Americans who own their own homes is the widest in two decades and one of the widest chasms on record, Census data show.
Obama blames the Bush administration for the raft of negative superlatives and historically bad indicators. He maintains that he inherited a severe economic crisis that will require more time and more government spending to remedy.
While it’s true he inherited a severe recession, the National Bureau of Economic Research says it actually ended in June 2009 – just five months into Obama’s term.
After the president quickly got his jobs stimulus bill and other legislative pieces of his economic recovery package through a Democrat-controlled Congress, his economists confidently forecast strong GDP and employment numbers for 2010-2012 and beyond. His budget office, moreover, forecast shrinking deficits.
Of course, the actual numbers fell miserably short of the White House’s projections. Since the president failed to measure up to his own yardstick, analysts say, he cannot credibly blame his predecessor.
They say it’s plain from Obama’s rosy economic forecasts that he was convinced his big-government solutions – otherwise known among policy wonks as “Keynesian demand-side” spending programs – would turn around whatever difficulties he inherited from Bush. The reality is, they just made things worse.
August’s weak jobs report, which showed the economy eking out just 96,000 new jobs, is more confirmation the president’s policies are still failing to turn the economy around. And with weekly claims for unemployment benefits on the rise again, economists don’t expect jobs reports for September and October to be much better.
During his Democratic National Committee keynote address, former President Bill Clinton – who 20 years ago made hay of the elder Bush’s economic woes – assured voters that Obama was building the foundation of a new economy, which he called “shared prosperity.”
Trouble is, there’s not much prosperity to share.