In the Super Tuesday primary, the economy was the number one issue on voters’ minds, be they in Massachusetts, Georgia, Ohio, or Virginia. And that wasn’t because they were happy about high unemployment and slow wage growth. Yet according to President Barack Obama, “the economy is getting stronger, and the recovery is speeding up.” Of course, these things are relative. A disappointing recovery is underway. It just hasn’t touched the millions of Americans who remain out of work, the millions more whose wages can’t keep up with inflation, and it doesn’t offset the effects of high gas prices on family budgets.
Voters’ old-fashioned common sense about the economy was backed up by the numbers in the February jobs report just released this morning. According to the Bureau of Labor Statistics, the U.S. economy added 227,000 jobs last month. That’s the good news, and it does evidence that the recovery continues, albeit slowly. And this slow-trot recovery is why the unemployment rate remains at 8.3 percent, while the number of long-term unemployed workers remained at 5.4 million, accounting for 42.6 percent of the unemployed.
What’s more, an extraordinarily high number of Americans have dropped out of the work force, either choosing not to work, losing heart and abandoning the hunt for jobs, or accepting disability benefits. Because of the meager recovery, very few potential workers have returned to the job market to find work. With fewer people in the work force, the unemployment rate appears lower than it should as a matter of simple arithmetic. But this artificially low rate does not disguise the fact that talented, experienced, discouraged workers are choosing to sit on the sidelines instead of participating in the economy. In short, though the labor market is improving, it’s nowhere near where it should be given America’s potential.
What should the economy’s recovery look like? Take a glance at history (and the chart below). Following the 1981-1982 recession — which looked a lot like the one America saw in 2008 in both depth and duration — the economy returned to near-full employment (which is around 5.5 percent) by 1984. Today, nearly three years after the most recent recession ended, the unemployment rate remains stuck well above 8 percent. So while the economy has grown for 10 straight quarters, it’s only done so at a measly 2.4 percent rate. In fact, it’s the slowest recovery America has seen in the post-war era. No wonder millions of Americans aren’t feeling the effects of the economic rebound and are voting their displeasure. (Article continued below chart.)
Even liberal economist / columnist Paul Krugman sees the economy for what it is. In a recent column in The New York Times, he wrote, “our economy remains deeply depressed” and that “every silver lining comes with a cloud.” So what’s bringing about that cloud? Why is this economy growing, and yet growing so slowly by comparison to the 1980s recovery?
While President Obama might like to take credit for the meager growth the economy is seeing, there’s an important fact to keep in mind. It’s the natural tendency for the economy to grow — and taking credit for its meager improvement is sort of like accepting kudos for the rising and setting of the sun. In fact, the President should of course (but never will) accept some blame for the fact that the economy isn’t growing faster. The policies Obama ushered in are markedly different from those that President Ronald Reagan adopted to unleash the economic recovery in the 1980s, and the results show the difference — a powerful recovery under Reagan, and weak recovery under Obama.
For starters, President Obama says he wants to encourage job creators to ramp up their economic engines, while at the same time he has proposed $2 trillion in higher taxes, much of which would fall on small businesses — the job creators. Add onto that a discouragingly successful policy of encouraging higher gas prices by opposing domestic energy production. This policy is so unpopular that eleven Democratic Senators voted with their Republican colleagues on Thursday to overturn the Obama decision to kill the Keystone XL pipeline. Proponents failed to get the 60 votes necessary to overturn the Keystone decision, but with Democratic support it came very close. Instead of tapping proven resources, Obama puts his faith in pie-in-the-sky renewable energy projects like Solyndra. No wonder Super Tuesday’s voters were worried about the economy.
On top of job-killing tax hikes and higher gas prices, President Obama continues to embrace the burden of untenably high spending and debt — which will of course motivate the left to call for even higher taxes — and you’re left with a mess of policies emanating from Washington signaling small businesses to hunker down instead of investing for the future. A better path for growth would be to enact a budget that curbs spending, reforms entitlements, and reforms the tax code to focus it on economic growth as proposed in Heritage’s Saving the American Dream plan — all of which would free the economy to grow at a faster rate than we’re witnessing today.
While any economic growth and job creation is welcome, a barely perceptible, incremental recovery doesn’t offer much hope for those Americans who can’t feel, see, or touch the fruits of recovery. Millions remain unemployed in the Obama economy, and Washington can and should do better for the American people.
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