WASHINGTON, June 25, 2014 — The Commerce Department announced today that the American economy shrank in the first quarter of 2014 at an annual rate of 2.9 percent. This was worse than had been previously reported, and far worse than could be blamed on bad winter weather.
America has traditionally been the land of opportunity. The founders’ intent was to create a country where everyone had the right to life, liberty and the pursuit of happiness. It would have low rates of taxation and a limited role for government. Opportunity would ensure freedom and just rewards for all who contributed to the nation’s health and prosperity.
But in Obama’s America, there is little opportunity.
For lack of opportunity, able bodied Americans are dropping out of the labor force. In 2008, almost 66 percent of adults were in the labor force which meant they were either working or actively seeking a job. Today that number is under 63 percent, the lowest since the 1970’s. Given an adult population of about 246 million people, there would be an additional 7 million people willing to contribute to the economy if the participation rate stayed at 66 percent. And of course, with fewer people contributing, economic growth becomes more difficult.
The reason those 7 million are not in the labor force is that the Obama economy has produced virtually no new jobs. There are roughly the same number of people working today as there were when Obama took office. It is true that he entered office during the midst of a severe recession, but in the five years since the recession ended relatively few jobs have been created. Worse yet is that the majority of new jobs are low paying and offer less than a traditional 40 hour work week. No wonder people are leaving the work force. It simply does not pay for some individuals to work, especially considering the liberal policies that allow for non-contributors to receive extended unemployment benefits, welfare, food stamps and huge taxpayer funded subsidies for health insurance.
In the past 5 ½ years, economic growth has barely exceeded population growth. This is the worst performance for a recovery since the Great Depression. This is true in spite of having the most expansionary fiscal and monetary policies in the history of the U.S. Why then is there no opportunity?
The Obama Administration has never focused on economic growth. The stimulus package which totaled close to a $1 trillion did not provide any “shovel ready” jobs. In fact, most of the money was spent on politically favorable projects rather than on projects that would truly encourage growth.
Virtually the entire focus of Obama’s economic policy is geared to help the bottom 15 percent of income earners while decreasing disposable income for most of the rest of us, perhaps with the exception of the very wealthy who have profited greatly from Obama’s policies. Instead of developing policy to encourage business investment and to stimulate hiring, his increased business regulation and his raising of tax rates for successful businesses have done just the opposite.
Indeed, his large deficits, and the deficits from some states and cities who were legally able to follow Obama’s lead, created the opportunity for the wealthy to purchase risk-free securities with a guaranteed return, often free of income tax liability. This was a better alternative than to invest in expansion of businesses where the return would be taxed at almost 40 percent by the federal government, in addition to any state and local taxes.
Recent data released by the Bureau of Economic Analysis indicates that the output of goods and services decreased at an annual rate of 2.9 percent in the first quarter of this year. While the remainder of the year should show positive growth, for all of 2014 economic growth will likely be less than 2 percent, a poor performance far below economists’ forecasts last year.
We must reverse this trend. Economic actions should be exactly opposite to what the president has implemented. Tax rates should be reduced, especially for the wealthy who create investment capital. Regulations should also be reduced to lower the risk to businesses who want to expand. Policies that make it attractive to drop out of the work force should be eliminated. But most importantly, economic policy should be geared to provide opportunity. President Reagan said he wanted to encourage people to seek and find opportunity. He created an environment that did just that. “Go for it” he said back in 1984, noting that the government will not stand in their way.
Get out of the way, Mr. Obama.