|President Barack Obama talks with Prime Minister Arseniy Yatsenyuk of Ukraine at the conclusion of their bilateral meeting in the Oval Office, March 12, 2014.|
Dr Peter Morici: The latest polls indicate a weak
economy continues to drag down President Obama’s job approval rating, but those
hardly guarantee any big changes in Washington. Americans may want more jobs and
better wages but they also support many of the president’s specific policies.
Obama’s recovery is hardly better, or worse, than
President Bush’s. Both only registered 2.3% GDP growth, whereas the economy
expanded more than 4% annually for Ronald Reagan and Bill Clinton.
Granted Bush’s gains were wiped out by the financial crisis, but that calamity
was sewn during Clinton’s last years by Treasury Secretary Larry Summers’ repeal
of Glass-Steagall banking regulations, which untethered gambling on Wall Street.
The continuing mess in Manhattan is a joint venture of the Republican and
Democratic Parties, as neither seems able to break loose from its campaign
contributions. Dodd-Frank reforms have only made borrowing more difficult for
small businesses and home buyers. Big bonuses keep flowing, as the banks shift
focus from derivatives to hawking soon to fail state and municipal debt, and
other schemes. It might be saner to give them a dog track.
Too many young adults are saddled with huge college debt and living with their
parents, and one out of six men between ages 25 and 54 are jobless with few
prospects of ever finding full time employment again.
The causes are easy to identify: excessive health care subsidies and income
support that Democrats now praise for encouraging poorer folks not to work and
increase federal, state and local taxes. And entitlements divert funds from
investments in road, bridges and basic R&D.
The 2014 Economic Report of the President promises more of the same. It assumes
a brief burst of growth above 3%—mostly created by young folks now borrowing to
obtain graduate degrees in high demand fields like law and museum studies
miraculously finding jobs, paying off student debt, buying houses, and having
babies. Then, it predicts growth returns to the lethargic 2.3% for the
Over the next several years, pent up demand for houses and cars will give growth
a temporary boost, but unacceptably high unemployment will continue because high
taxes and overregulation drive away investment, and in a globalized economy
American-based business can’t compete when the president won’t level the playing
field vis-à-vis foreign competitors or let the American economy play its
Germany, Japan and China are America’s principal competitors, and each
undervalues its currency to artificially make its products cheap against
American products on U.S. store shelves and in global markets.
Onshore drilling in North Dakota and Texas notwithstanding, the United States
still imports as much oil as it produces, when drilling off the Atlantic,
Pacific and eastern Gulf Coasts could eliminate dependence on foreign oil.
Fixing those issues would increase GDP by $750bn and create 7m jobs over three
years—after that economic growth would stay well above 3% indefinitely.
Still American voters don’t seem to support rolling back most entitlements to
ease tax burdens, repealing Dodd-Frank and breaking up the big U.S. banks,
scaling back other business regulations, or drilling off shore. If they did,
Mitt Romney, who ran on those policies, would be president.
Hillary Clinton, as president, would not reverse those policies. She talks
endlessly about programs for girls, when boys and young men are doing much worse
in schools, colleges and the job market—and not much else.
Women voters don’t want to hear about those facts, and are more focused on the
glass ceiling in the Oval Office than backing any Republican who could create a
decent jobs market for their twenty-something children and middle aged husbands.
My recommendation to young men—emigrate.
Professor, Robert H. Smith School of Business, University of Maryland,
College Park, MD 20742-1815,
703 549 4338 Phone
703 618 4338 Cell Phone
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