Desperately avoiding Obamanomics and Obamacare

Mitt Romney can’t let Barack Obama get away with it

By Dr. Milton R. Wolf

The Washington Times

Tuesday, May 8, 2012

The intertwined strands of evil DNA – Obamanomics and Obamacare – will determine the outcome of the 2012 election, and Barack Obama knows it. That’s why he desperately wants to talk about something else. Anything else. A failed stimulus. Shovel-ready jobs that even President Obama later admitted don’t exist. Auto takeovers. Bank bailouts. Mythical green jobs. And a historic American credit downgrade. Obamanomics has become the science of downward-sloping graphs.

Officially, America is in the third year of recovery from the Great Recession, but try convincing voters of that. The average unemployment rate in Mr. Obama’s first three years was 9.3 percent. Surely, somehow that must be the fault of President George W. Bush, whom Democrats mocked in 2004 as delivering a “jobless recovery” even though the average unemployment rate in his eight years was 5.3 percent.

The real unemployment rate, when you include the underemployed and those who’ve simply given up looking for jobs that just aren’t there, is almost 15 percent. Since Obamanomics was unleashed – increased taxes, increased regulations, wildly increased spending and weak-dollar monetary policy – a million fewer jobs exist in America, median household income has dropped nearly 10 percent, housing prices have hit an almost 10-year low, gas prices have doubled, a record number of Americans are on food stamps, and the federal debt races toward $16 trillion (around $140,000 per taxpayer).

The only way out of this abyss is, of course, private-sector economic growth. In the aftermath of the recession of the early 1980s, for example, President Reagan’s economic strategy was exactly the opposite of Mr. Obama‘s: lower taxes, lower spending as a percentage of gross domestic product (GDP), reduced regulations and strong-dollar monetary policy. That produced an average GDP growth rate of 7.1 percent. Now, three years into Obamanomics, America’s GDP growth rate has slowed to a crawl: 2.2 percent.

The administration would like you to think we’ve turned the corner, but calling our current economic status a recovery is like calling the product of a Kim Kardashian wedding a marriage. Technically, it meets the definition, but, come on, nobody’s buying it.

As if the quagmire that is Obamanomics weren’t enough, the president dropped an anchor that not only sabotages his own recovery but threatens our nation’s long-term economic survival: Obamacare.

So thoroughly disastrous is Mr. Obama’s signature accomplishment that many Democrats are openly hopeful that the Supreme Court will rule Obamacare unconstitutional so it becomes less of an issue in the presidential election. Imagine that. Mr. Obama and the Democrats fiddled with Obamacare as America’s economy burned, and now they hope we will forget. We won’t.

The Obamacare house of cards is collapsing. Its price tag has doubled. Americans remain adamantly opposed to it. And the unkeepable promises have vanished like vapor on the wind: It would allow you to keep your current insurance and doctor and lower your monthly health insurance premiums. It would reduce the deficit and create millions of jobs. Lies all.

So what’s a president to do when his stimulus has failed and his health care takeover is even worse? Avoid them at all costs. Talk about anything else. Student loans. Birth control. Hooded sweatshirts. Heck, even talk about eating dogs.Anything besides the two issues that define his presidency and threaten our republic.

It’s Obamanomics and Obamacare, the intertwined strands of evil DNA, stupid.

Mitt Romney should avoid the temptation of chasing Mr. Obama down every side-issue rabbit hole. At every opportunity, he should drag him back to the main path. Whenever Mr. Romney is asked a question, whether in debates or by reporters or even at town-hall meetings, his answer should always include at least one of those two words: Obamanomics and Obamacare.

Question: Mr. Governor, should a woman’s access to birth control be a right?

Answer: The most effective way to assure access to products or services is to make them affordable through free-market competition. That’s how stores like Wal-Mart and Target provide birth control for just $9 a month. And the most moral approach is for people to freely choose to participate or not. Unfortunately, Obamanomics adds crushing burdens on American companies that drive up prices and therefore limit access. And Obamacare unbelievably forces women in churches to choose between their government and their God. American women are victimized by both Obamacare and Obamanomics.

That’s easy enough.

The 2012 election will be the most consequential of our lifetimes, probably of our children’s and our children’s children’s lifetimes. We will choose between Mitt Romney’s opportunity society and Barack Obama’s government-centered society. Voters deserve an election that addresses rather than avoids the important issues that will determine the difference.

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A Nobel rebuke to Obama’s economic policies

The conservative argument against President Obama’s policies got a boost from an unexpected place Monday: the Nobel Prize committee.

Thomas Sargent, who with Christopher Sims won this year’s Nobel Prize for economics, was rewarded for a body of work that demonstrates the folly of Obamanomics. While it’s not always easy to translate the words of Nobel-winning economists into terms that into the political debates of the day, Sargent spoke plainly enough in an interview last year with Art Rolnick of the Federal Reserve Bank of Minneapolis. (H/T: Ira Stoll at Reason’s Hit and Run blog.)

On taxes (from the interviewer’s summary of Sargent’s “rational expectations” work):

[P]olicymakers can’t manipulate the economy by systematically “tricking” people with policy surprises. Central banks, for example, can’t permanently lower unemployment by easing monetary policy…because people will (rationally) anticipate higher future inflation and will (strategically) insist on higher wages for their labor and higher interest rates for their capital.

“Tricking” is a good way to describe the desired effect of Obama’s policies: The idea behind his original “Making Work Pay” tax cut was that it would be so small that workers wouldn’t even notice the extra cash in their paychecks, and therefore wouldn’t be tempted to save it rather than spend it.

Along with Milton Friedman’s permanent income hypothesis, Sargent’s theory helps us understand why all tax cuts are not created equal: A temporary payroll tax cut provides little incentive for employers to hire, or for workers to spend more, when longer-term tax increases loom over the horizon. That’s why it’s absurd for Obama to talk about using such tax cuts to stimulate the economy, then talk about raising taxes a year or two from now, and then act surprised that job growth has been slow.

On the 2009 stimulus itself:

The calculations that I have seen supporting the stimulus package are back-of-the-envelope ones that ignore what we have learned in the last 60 years of macroeconomic research.

Ouch.

But the most important thing Sargent might have said in the interview, given that long-term joblessness is arguably the biggest long-term economic problem America faces, had to do with social safety nets, particularly for unemployment benefits:

[W]hen people now become unemployed, they’re taking a more or less permanent hit to their level of human capital…. We have a theory that people build up human capital while they’re working on a job, but lose human capital when they’re displaced from a job. … Unemployment compensation systems typically award you compensation that’s linked to your earnings on your last job; those past earnings reflect your past human capital, not your current opportunities or current human capital. That can make collecting unemployment compensation at rates reflecting your past (and now obsolete) human capital more desirable than accepting a job whose earnings reflect a return on your current depreciated level of human capital. …

The prospect that concerns me might sound like I’m hardhearted, but that’s just the opposite of my feelings. What you’ve seen in the recent recession — and it’s quite natural because it’s been so severe — is a tendency of Congress to expand unemployment benefits, over and over again. What [our] theory tells us is that if, in the United States, we create a system where unemployment and disability benefits are permanently extended in their generosity and their duration, we will inadvertently put ourselves into the situation that much of Europe has suffered for three decades.

These extensions might be done, Sargent says, “out of the best of motives,” but they are still likely to have a perverse result. Now, not all of the long-term unemployed are refusing jobs available to them. But to the degree unemployment benefits encourage someone to stay out of work a little longer than necessary, hoping a better opportunity will come along, they are doing that person a disservice in the long run.

What’s more, they are delaying our coming to grips with the fact that the world has changed in ways that mean we won’t just pick back up where we left off. Sargent argues that the erosion of a worker’s skills has become worse during the last 30 years because of “various technological changes going under the umbrella name of ‘globalization.’ ” Like Obama’s stimulus spending, the continual extensions of unemployment benefits require an assumption that better times are on the way, and all that is needed is a government-provided bridge to close the gap between now and then.

If that assumption is wrong, however, and more structural economic changes are needed, government spending and benefits are not going to bridge that gap. They just might widen it.

– By Kyle Wingfield

Original Article

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